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I've heard of 529's (two types I believe). Do you use them? If so, how did you set it up and how is it going? I only have a savings account going right now for my daughter with very little in it and an abysmal interest rate. I plan to put in $35/wk. I'd love to hear/read about other ways you're prepping for the future for schooling.
Our former state had a prepaid college tuition program, so we bought a college education for both of our children when they were babies. We also invested in a 529 to pay for books, etc. but it didn't do very well, so I'm glad we had the prepaid tuition account in place.
Also, I wouldn't hold your breath on the interest rates of basic savings accounts going up anytime soon, your daughter may be in middle school before savings accounts pay at least 1% again based on the pattern of things now.
Thanks for the responses and this is exactly what I was looking for.
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Originally Posted by Sunnydee
Our former state had a prepaid college tuition program, so we bought a college education for both of our children when they were babies. We also invested in a 529 to pay for books, etc. but it didn't do very well, so I'm glad we had the prepaid tuition account in place.
Huh, no kidding. That's something to think about. Was the prepaid college tuition program the same or similar to the 529 prepaid? There's a prepaid and a savings plan. I'm assuming that your kids had to go to school in state. Was that for any school in the state, public schools only, etc?
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Originally Posted by Wmsn4Life
Each time I was pregnant, we went to our financial advisor and started a very aggressive mutual fund for each kid.
We deposit $100/month in each via automatic withdrawal, though now that the oldest are in 10th grade, we are upping the deposit amount.
They have a lot of savings bonds their grandparents have given them over the years, but even those won't mature in time.
College costs are suffocatingly high, and I am not counting on any kind of scholarships.
I was thinking that might be a way to go as well. My 401k has done pretty well the past five years despite the economy being in the crapper. Then again, Sunnydee's experience shows that doesn't always work out. Although, it probably doesn't touch upon an aggressive strategy. My company offers all kinds of advisement opportunity. I should take advantage of that.
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Originally Posted by The Dissenter
You may consider a Coverdell IRA. At the financial institution I work at, it is not a well known product but could be a good option.
Thanks, D. I'll check it out. Can I get this through any bank, you think? Maybe I could close that savings account an open one of these instead.
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Also, I wouldn't hold your breath on the interest rates of basic savings accounts going up anytime soon, your daughter may be in middle school before savings accounts pay at least 1% again based on the pattern of things now.
The savings account was just something I opened at my company's federal credit union so I could refinance my home last year. I figured it could be a place saver for some monies for my daughter until I could figure out what I was doing. I know interest rates will never be good again. I remember a time when money market accounts were bringing in around 6% IIRC. How times have changed.
We have small 529s for our kids and have chosen instead to work on paying off our mortgage in time for our oldest to start high school. Then we should be able to at least mostly cash flow college. It's not a perfect plan and wouldnt work for everyone but hopefully it will work for us.
DW and I both work and our combined income is pretty high. College tuition in my state is high, but not astronomical. So, the answer for us is just that we scrape up the money when it is due. Our son lives at home, so our expenses are simply for books and tuition.
There is a tax credit available for people who do not have an income above a certain level that is just excellent. I emphasize this is a credit and not a deduction. So, it literally becomes a choice of whether you pay the IRS or pay your son's college tuition. That ought to be a no-brainer for anyone who can afford it.
Even so, it scares me to death. College tuition continues to increase at a rate 2 or 3 times the rate of inflation and colleges keep making excuses for it. States continue to take money away from higher education and spend it on things like Medicaid for the poor which are necessary, but contribute far less to society in terms of growth and economic development.
Graduate school tuition is higher, but if we have too, we'll find a way to pay for that as well.
We had a unpromise card we used for years as well and the money went straight into our son's 529. Over the years we ended up with over $5,000 in there just from daily spending. Although that was a drop in the bucket last year when that first bill was due.
I hope things change for those of you with small ones and that tuition gets under control. Our son was on campus last year as a freshmen but will live at home this next year and commute. That alone will save us a ton of money.
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