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#11
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college vs retirement
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#12
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college vs retirement
I wrote:
If the link doesn't work, search the archive for "college financing" under yesterday or Sunday, November 30. Sorry...the link *didn't* work for me. You'd have to go to www.seattletimes.com if you want to search the archive for the article...I forgot to mention that part. beeswing |
#13
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college vs retirement
In article ,
Banty wrote: In article , Elizabeth Gardner says... In article , (Robyn Kozierok) wrote: In article , Richard wrote: Robyn Kozierok wrote: : I believe it's usually possible to borrow from your retirement funds : for education expenses, if necessary. Yes, it is, though I would consider that close to a last resort. I'm curious as to why you would consider it a last resort? Can't speak for Richard, but I'd consider it a last resort for the reasons previously mentioned--that you can always borrow for education, but you can't borrow for your living expenses in retirement. That said, if you put all your resources into retirement savings (up to whatever your contribution limits are, of course) with the express intention of taking them back out again for education if necessary, I don't see why that wouldn't work on some level. That way, you've got the tax-free compounding and if another source of money crops up (say today's active toddler turns into an athletically inclined 18-year-old who gets a four-year free ride on the football team), you aren't stuck with a large amount of savings earmarked for education and nothing else. That may be true with good planning. What needs to be accounted for, though (and one that many frankly wouldn't well account for) is that one subsequently needs to maintain enough income to pay this loan back. And one's plans concerning maintaining this income won't necessarily come to pass. For employment reasons, for health reasons. So there's a significant risk against what is one's own sustenance the remainder of one's years on this planet. I'm not saying therefore it's wrong, but one *really * has to have eyes open. The thing is - education is an investment in the future of the grown child. Which may for that reason be best financed from the income which comes from that investment - future income of said grown child. Continuing income and health is a much much surer bet for a 22 year old than it is for a 52 year old. All very true. If you have to choose between the two, then obviously the retirement money comes before the education fund. But if you were going to stash money away for college anyway, it might be better off in your IRA than in a savings plan earmarked for college. The only advantage I can see to the latter is that people other than yourself (like grandpa) can contribute to it also. We have a 529 plan, but it's mostly so that we can collect bits of change here and there from our uPromise activity. |
#15
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college vs retirement
On Mon, 1 Dec 2003, Elizabeth Gardner wrote:
We have a 529 plan, but it's mostly so that we can collect bits of change here and there from our uPromise activity. Do you mind if I ask which one you went with? I haven't opened one of theirs yet because it looks like the fees would eat up the little bit of uPromise earnings we get. -- Cheryl Do the kids in your life have books they LOVE to read? http://www.CarolinaKidsBooks.com |
#16
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college vs retirement
In article , Zarah says...
On Mon, 1 Dec 2003, Elizabeth Gardner wrote: We have a 529 plan, but it's mostly so that we can collect bits of change here and there from our uPromise activity. Do you mind if I ask which one you went with? I haven't opened one of theirs yet because it looks like the fees would eat up the little bit of uPromise earnings we get. For me uPromise woudn't add up to a heck of a lot, which is why I never bothered. Only a few merchants I would normally buy from go have uPromise, and to try to get more I'd have to actually lose money. One example - sometimes for convenience I use the local Mobil station, and I could add to uPromise that way. I'd do better if I were to use the cheaper gas station, and send the savings to an ordinary college plan. I suppose it doesnt' hurt if one is very aware not to spend more on items just for uPromise, and is already budgeting well. Do it but don't let it fool you. That is - continue to spend frugally, and reap what uPromise benefits one gets in the course of that. But all in all I think it's more of a feel-good thing. JMO, Banty |
#17
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college vs retirement
In article ,
Elizabeth Gardner wrote: All very true. If you have to choose between the two, then obviously the retirement money comes before the education fund. But if you were going to stash money away for college anyway, it might be better off in your IRA than in a savings plan earmarked for college. The only advantage I can see to the latter is that people other than yourself (like grandpa) can contribute to it also. We have a 529 plan, but it's mostly so that we can collect bits of change here and there from our uPromise activity. Actually, there are tax advantages to saving in the 529 plan that are not present in a retirement account---if the student goes to college before you reach retirement age there may be substantial penalties for withdrawing the money early from a retirement account. I expect to be retiring in 16 years, a couple of years after my son finishes his bachelor's, assuming a normal schedule for both of us. I would not want to acquire a lot of debt just before retiring, and I'd rather my son did not start his career with crushing debts, so we've been saving money every way we can, including the California "Golden State Scholar" plan. -- Kevin Karplus http://www.soe.ucsc.edu/~karplus life member (LAB, Adventure Cycling, American Youth Hostels) Effective Cycling Instructor #218-ck (lapsed) Professor of Computer Engineering, University of California, Santa Cruz Undergraduate and Graduate Director, Bioinformatics Affiliations for identification only. |
#18
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college vs retirement
In article ,
Banty wrote: In article , Zarah says... On Mon, 1 Dec 2003, Elizabeth Gardner wrote: We have a 529 plan, but it's mostly so that we can collect bits of change here and there from our uPromise activity. Do you mind if I ask which one you went with? I haven't opened one of theirs yet because it looks like the fees would eat up the little bit of uPromise earnings we get. For me uPromise woudn't add up to a heck of a lot, which is why I never bothered. Only a few merchants I would normally buy from go have uPromise, and to try to get more I'd have to actually lose money. One example - sometimes for convenience I use the local Mobil station, and I could add to uPromise that way. I'd do better if I were to use the cheaper gas station, and send the savings to an ordinary college plan. I suppose it doesnt' hurt if one is very aware not to spend more on items just for uPromise, and is already budgeting well. Do it but don't let it fool you. That is - continue to spend frugally, and reap what uPromise benefits one gets in the course of that. But all in all I think it's more of a feel-good thing. JMO, Banty I agree--the key is to change your habits as little as possible, and never do anything that will lose you money on a net basis. Actually, the big payoff is if you get the uPromise Citicard, which pays in one percent of your monthly card bill, up to a yearly maximum of $300. My spouse and I each have one, and my dad recently got one, too, so that's a potential $900 a year that we can amass without changing our habits at all. Since we all pay off our balances each month, interest rates are irrelevant, and there's no fee for the card. The way we use credit cards is basically to put everything on them and exploit the float for our own advantage, while giving the cc company as little as possible. But that's our strategy no matter what cards we're using. The other potential big payoff is in restaurants, which contribute 10 percent of the bill in most cases. I have to admit I don't know how they can afford to do that, but the margins in the restaurant business must be higher than I thought. It's not worth it if there aren't any decent ones around, but fortunately our favorite Chinese takeout is on the program and so are a couple of others that we like to go to. The rest of it is just pocket change here and there. I don't buy things I wouldn't buy otherwise, but I do choose my stores, to some degree, on whether they do uPromise. A lot of my faves already do, but if I have to choose between, say, Linens n Things and Bed Bath and Beyond, and one of them does uPromise and the other doesn't, it's a no-brainer, since they're otherwise pretty much indistinguishable. As for how we picked the plan, there weren't as many choices when we opened it as there are now, so we went with our state plan. But I may revisit that decision at some point. All investments did so horribly there for awhile that it didn't really make too much difference, but with the market reviving, it might. I know there are places on the Web that rate the 529 plans on performance and fees, though I don't have links at the ready. |
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