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Author: bobbank1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8174  
Subject: Is my plan crazy? Please comment Date: 1/19/1999 10:34 AM
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Our college savings plan is a bit unconventional and I wanted to post and get a reality check. My kids are currently 4 and 8. My wife is a stay at home mom. We live within my salary and are maxxing out my 401k (s&p500 index fund). The house will be paid off when my oldest turns 12 (4 more years). We have no other debt (we hate the stuff). In 2 years or so, my wife will start working part time again. She was a programmer, so she should be able to get a decent wage. We will continue to live on my income and bank(invest) my wife's. By the time my first child reaches high school, my wife will be working full time and making good money. We will probably be able to fund a college education for both kids without touching any savings by using my wife's salary. Yes, I know that we would have a LOT more money if my wife works all along, but we wanted the kids to be raised by a parent (but, then again that's a whole other can of worms for a different discussion board).


I ask you.........ARE WE CRAZY?
or might this approach have a chance?

Bob B.
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Author: RecoveringFool Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 454 of 8174
Subject: Re: Is my plan crazy? Please comment Date: 1/19/1999 10:47 AM
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<<I ask you.........ARE WE CRAZY?
or might this approach have a chance? >>

With a subject line like that, who could resist responding ! I think it's a reasonable plan with a couple of caveats. Be sure your wife takes some courses while she is home to keep up with the latest in languages and systems. Even if it's not what she's hired to do, she looks better on paper(interested in improving skills, etc).

Here's the part you may not want to hear. I have a lot of similarities to you but with older kids and some college savings. I have worked part-time, full-time and been a stay at home mom(also, a programmer/analyst BTW). It has been far more difficult to work since I had a child start high school that ever before. While kids don't need much physical care, I have found I simply need to be around more. Older kids have no patience with talking to you when you might be available - it's usually when they get the urge to talk. Also, schedules in high school are much more erratic and you have far less control over all of it. Example : My son is a freshman - today is a full day, tomorrow 7:30-noon, Thurs 8:10 - 11:30, Fri - he's off. Next Fri - he's off. He is one of 3 children. Just food for thought.

Jacki

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Author: RECCLES4 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 455 of 8174
Subject: Re: Is my plan crazy? Please comment Date: 1/19/1999 10:51 AM
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Absolutly not. I just have one question. What if your wife doesnt want to go back to work? (ok two) Or what if she only wants mothers hours?

Your plan to raise your kids your self is great (we did and still are) but may I suggest that you start a college plan now. The extra years of compounding will be of great help. Then if your wife does eventualy go to work full time, you will be that much farther ahead and maby you will be able to do other things with the money. Ie two weeks at Disney world, buy investment property, add to you retirement nest egg, or maby even retire early.

If you can afford to do it now, why waite. Time is our greatest friend, but it can be our greatest enemy.

I still think you are very very saine.

just my .02

rec

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Author: bobbank1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 456 of 8174
Subject: Re: Is my plan crazy? Please comment Date: 1/19/1999 12:20 PM
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<If you can afford to do it now, why waite. Time is our greatest friend, but it can be our greatest
enemy.>

You're right. We're at the point that maybe we can put away some for that purpose. But almost all of our savings goes into retirement(401k). We've just worked up to maxxing out (9% of salary)the 401K; and paying off the house is an important priority for us(that fear of debt thing again). The kids have enough money saved for us to put them into an index fund or some other investment to which they can add a few hundred a year (gifts from the grandparents) plus we can put in a few. Perhaps between us we could fund an education IRA, but I'm just kind of skeptical about the whole idea. I don't like the 10% penalty if it isn't used by age 30. I would feel better if it could be rolled over into their retirement IRA if not used fully. We've just gotten FOOLish with some other IRA and are beginning to get a bit more educated about this whole money handling thing. Thanks for the replies and we're interested in reading more from you other FOOLs.

Bob B.

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Author: RECCLES4 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 457 of 8174
Subject: Re: Is my plan crazy? Please comment Date: 1/19/1999 12:39 PM
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We've just worked up to maxxing out (9% of salary)the 401K; and paying off the house is an important priority for us(that fear of debt thing again).

This is great, but if you are saving all you can, then you should have at least 3 to 6 months expenses saved. Not too mention, if you have no debt and only are paying the house note, then your monthly nut shouldnt be all that big. So if fear of not having enough for retirement or fear of debt is your stumbling block, I think, in my humble oppinion, you should get over the frear and reconsider.

The one thing you dont want to happen is when the time comes the kids want to go to colleg, you hate debt and dont want them to take out student loans (which in my book is a big negative for a person to start out life in but it does teach charicter and the basics of personal finance) and there isnt enough saved in their college funds, so you refinance your house. OUCH. (Happens all the time)

Just something to think about. Otherwise, keep up the good work. You are in an envieable position to a lot of people. And your hatred for debt sounds like it rivals mine. (That is why I have college funds for each of my sons and they are starting their own investment funds with their own money and money the grandparents give them.) Vive' le debt free living!!

rec

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