529 savings helping

[sdoll]

We are finally in a postion to start funding our boys 529 accounts. Our boys are 3 and 5. I am thinking that we can do $200 a month each. Is that too much? Is there such a thing as to much?

Please help with any advice.

Thanks!

 

[bettymae1121]

That depends on your goals. Is your goal to totally fund your kids college in full? Do you want/expect your kids to contribute - if so how much do you want them to contribute? Are you looking at less expensive in-state schools or more expensive private or out-of-state schools? Will you need to fund room and board or will they live at home? Some of these you may not know the answer to quite yet, but it all factors in to how much money you'll need to save.

Also, for your 5 year old, you only have 13 years until you'll start needing that money, look at your investment choices, with that relatively short time frame, you may not want to be too heavily invested in stocks. If there is another big market crash, you may not have time to recover before you need the money. You may want to consider safer investments like bonds. This means that your average annual returns won't be as high, which will also affect how much you'll need to save.

 

[Pakey]

I've put $500/month in for my grandson since the month he was born. I don't expect that it will cover his entire education; I'm just hoping to help out.

 

[dzorn]

It all depends what your goal is. I would also consider how much you are putting aside for retirement and emergencys.

Denise in MI

 

[prncess674]

It all depends what your goal is. I would also consider how much you are putting aside for retirement and emergencys.

Agree completely.

If you haven't fully funded your retirement account and emergency fund (6 month expenses) then you shouldn't be putting that money in a 529. Sure you want to be nice parents, but the best thing you can do for kids is being self sufficient in your golden years. If you spend all your money on their education you may be saddling them with the much larger debt of taking care of you in your old age.

 

[ceecee]

Agree completely.

If you haven't fully funded your retirement account and emergency fund (6 month expenses) then you shouldn't be putting that money in a 529. Sure you want to be nice parents, but the best thing you can do for kids is being self sufficient in your golden years. If you spend all your money on their education you may be saddling them with the much larger debt of taking care of you in your old age.

Good point, also depending on your age...you could do a Roth IRA for you or your husband and use it for child's college. If you won't be that old when your child is starting college, it wouldn't work.

 

[FINFAN]

well, I think you are helping your kids a lot...$400 a month is great. While it may not fund them 100% for all 4 years, what a gift to be able to offer them. I agree do not short your own retirement, my folks were not prepared and now my brother and I are down fast trying to care for our mom, and I have 2 to get thru college and their funds have had to be *borrowed* from. I am trying desperately from the same thing happening to my kids, having parents that were not prepared.

 

[sdoll]

i guess I should give more info.

We are debt free other than our house. We each are putting 7% of our income in 401k's. We have about 65,000 in other money. We are saving $500 in our ing account right now each month as each our cars have over 100,000 miles. We also put about $300 extra each month on our mortgage. Which like many others we owe more than it is worth but are in as good of a postion as we can be in. We learned a lesson a few years ago after the birth of our first son. We sold our beautiful house and moved into a smaller easier to handle and afford house before the market burst. So we cleaned up on our last house but now own a home that we paid $180,000 for and it is now worth $160,000. We have no plans on ever moving so we are dealing with it.
Hopefully that helps with any advise you can offer us.
Thanks

 

[sdoll]

Oh and if it matters my husband is 38 and I am 34.

Our DS will start Kindergarten next year and our youngest DS in 3 years.

 

[ICF]

I've put $500/month in for my grandson since the month he was born. I don't expect that it will cover his entire education; I'm just hoping to help out.

very nice of you....I'd say it will cover a very large part of it, unless he goes to some sort of private school.

At even a 0% rate of return, 18 yrs x 12 mo x $500 works out to be $108K!!

 

[QVCshopper]

I'm very close to your age, with kids 4 and 5. We started saving for them at birth. Right now, they have about $40K+ combined in ESAs and 529s. Plus, their grandparents have put aside an undisclosed amount (I'm guessing $10K per child). I wanted to start saving early so the money could have time to grow. Saving money now means less money needed later.

Anyway, this is how I save. First, we own our home outright. Long story, but we got big "bonuses" from a WONDERFUL company that we used to pay off the mortgage. Second, we each save about 25% of our income in 401(k)s to get into the 15% tax bracket. Third, we save the $5K per year for both DH and I in a Roth. Fourth, we fund the ESAs with $2K per year for each kid. Last, we put in $100/month into their 529s and have a credit card that gives us 2% back on all purchases into the 529 plan (about another $500 per year). Anything left over goes into our emergency fund/car fund.

I hope that helps. We have a good nest egg built up for our age (I just turned 34). But, as you can see, we save, save, save so much. I'm doing the no-buy month; it's fun to see how much you can save. We hope to retire after our kids finish college with at least $2 million, but who really knows what will happen.

BTW-I put myself through college, so I hope to help my kids out as much as possible. It was hard paying for myself, but I did it!

 

[Halle]

QVC SHopper, I am impressed with you and your DH. I am mid fifties, our parents put us through college and we put our 4 children through. We were thrilled to be able to do it. We recently became grandparents and are happily saving for another college education which DH and I view as priceless. Good luck to you and your family.

 

[QVCshopper]

QVC SHopper, I am impressed with you and your DH. I am mid fifties, our parents put us through college and we put our 4 children through. We were thrilled to be able to do it. We recently became grandparents and are happily saving for another college education which DH and I view as priceless. Good luck to you and your family.

Thanks! We try very hard. I grew up fairly poor and my dad was out of work a lot, so that's really influenced me in adulthood. Anyway, good luck to you--four kids through college is a great accomplishment! Enjoy the grandchild(ren).

 

[Swimalie]

One thing to look into is how much of what you put can be put on your tax return. In my state only the first $2000 can be claimed. So we put in around that each year but we put a lot more in to savings that will be used for college for our 5 year old.