Category Archives: College

Are High Semi-Known Colleges Worth the Costs?

by

In an unusual paradox, it seems like there are huge college education cost bubbles in the United States that makes me question whether semi-known colleges are worth the costs?

I think college costs are a paradox in the fact that most of the information that they teach can be found on the internet for free and to top that, then information that most college teach is practically obsolete in contrast the knowledge needed to be successful in today’s business environment.  In the not too recent past, if you had a question about a particular and sometimes complex subject matter, you would have to hopefully know a local expert knowledgeable in such matter, and those with such knowledge could charge a decent fee for such information.  Today, most of the frugal and cost aware among us google our questions for a quick and mostly precise answer that often make the need for local knowledge experts much less valuable.  Not every topic, but a good percentage of them.

Learning Finances

Learning Finances

So that makes me question whether the high costs of some semi-known colleges are really worth the cost?  Using the site at Money.cnn.com, I check some of the “highly ranked” colleges in my local state, then compared them to the cost of going to Harvard.  I was shocked to find that they were comparable in costs and often just 5k less in price than my local colleges in my mid-eastern state.  Now to me, the price of Harvard would be worth the cost, but the semi-known colleges in my state do not seem to be worth the costs to me… well because they are semi-known only to my state primarily.  Why pay Harvard prices for a college that is not well-known, especially outside of the state I live in?

So what would be more reasonable?  I personally think going to one of the better public colleges would make more sense.  Those big public colleges everybody knows, even outside of the state the reside and they are much more affordable!  Usually the education is just as good and the costs are usually half the price of the semi-known private colleges that I looked into.

Here is the real shocker, most of the people work in a position that they didn’t even major in while in college, check out this post story if you don’t believe me:  College Major not my job nor what I do.  So again, I have to wonder if expensive, mostly unknown colleges are worth it if they aren’t known and you don’t even get a job in that major that you studied while in college?

While I think going to college has value, I would approach it thinking of value received from going, rather than just going to the most expensive college you can afford.

Bests,

Don

 

 

Why The Age-Based 529 College Approach Has Failed For Me

by

I hate to say this but my college “Age-Based” 529 plan selection has failed to live up to my expectations.

It seemed like such a brilliant idea 13 years ago.  It was an Age-based plan that in theory would re-balance the asset investment types for me based on the age of my kids.  To me it seemed like a slamdunk!  Unfortunately, the stock market decided to do the exact opposite from the strategy that my state’s college 529 plan was following…. What a huge disappointment!

So, instead of it being a great investment vehicle, at most it’s been a glorified savings account.  At least I get to deduct the amount I contribute to it from my state income tax!

Future Concerns:

Now as my kids are growing older, the age-based plan starts to re-balance the money in the plan from equities to bonds.  Unfortunately, this is also a bad time to do such a re-balance since the US Treasury rates are rising!  As the treasury rates rise, the bond funds should suffer.  Obviously this just adds insult to injury!

In fact, the only thing that has worked for me is that I’ve been able to dollar cost average my contributions along the bump stock market road.  This at least give my account a bit of a return, but still less than have of what my “all equities” 401k plan has been able to accomplish.

So in conclusion, if you are considering a similar college investment route with your kids and their college 529 planning… I recommend thinking long and hard about other options that just the Age-Based option!  If I had to do it over, I wish I would have choose a mix like half in the age-based plan, and half in an “all equities” plan.

It’s not too late for me though, I still might change the strategy since my oldest is only 13 years old.

Learn from my mistakes,

Don

 

Seeing Opportunities That Others May Miss

by

Two years ago, my son’s soccer team didn’t have a coach for 1 particular season, so our soccer organization asked the parents of my son’s team if one of us wanted to become the coach for that season.  I wanted to do it, but my wife talked me out of it because of my lack of experience.

So instead another dad took over, but he knew less that I did.  Now two years later he is the coach and unfortunately not the best choice.  I missed my opportunity, but it’s my own fault and although it’s a small regret, I kn0w that I will regret it for the rest of my life.  Believe in yourself, even if others don’t…  they don’t know your capabilities and passion!

So today when I was reading an article at www.freemoneyfinance.com called Would You Waste a Year of Your Life for $100k?, I saw an incredible opportunity, but not for me at my current stage in life.  The deal was the coupon site Groupon would pay a person $100,000 if they try and live on coupons only (no cash) for a year.

Now personally, with me having two kids I couldn’t do that, but if I were a college student, this would be a great challenge!  Especially if the student could take a few classes online.  The company payed for the person to stay in a hotel for a year, so living accomadations was taken care of.

Most of the freemoneyfinance commenters shot this down, but I think this opportunity requires a 2nd look, and below is a list of reasons why:

  • This person (a male) would learn to be an frugal expert via saving with coupons!
  • The company might pay him after the fact as a spoke person
  • TV show might find him appealing and so he might get paid interviews after the experiment.
  • He would write a book about what he learned since he would be the ultimate coupon using expert!
  • He might even develop a seminar that taught others his tricks.
  • He gets $100,000 and free living conditions!!!
  • The limited contact with others would enable him to concentrate on his studies (this would be like getting payed to study… a win win)!
  • Did I mention that he gets $100,000?  That’s a lot of money for a college student!
  • Fame!!!  This is definitely a feather that you could put in your hat.  At the very minimum, it would be a great family story!!!

So, I think this would be a great opportunity for a college student, especially if he could do that college year via online classes!  I would take some of my hardest classes that period, since I couldn’t do much else!

Yes, while I couldn’t do it now (wife, kids, etc), I would definitely do it as a college student.

What I make of it after the experiment is over and I have $100,000 in my pocket…, would depend on how ambitious and creative I was…

So, do you think this is a hidden opportunity, a diamond in the rough so to speak?

-MR

529 College Savings Plans vs Coverdell ESAs, My Choice

by

I’ve reviewed both options as saving plans for college, see the links below:

I personally went with the 529 plan instead of the Coverdell ESA!

Why:  The Coverdell ESA at one time only allowed an incredible small amount ($500.00) to be the maximum that you could contribute to the plan per year.  I thought that was crazy, so I chose my state 529 plan.  Now they have bumped up the maximum contributions amount to $2,000.

With a 529 I also like the fact that since I opened the plan, I’m in control of it.  With an ESA, the beneficiary gains control once they turn 18.

I do like the ESA’s investment options!  Basically it’s like having a brokerage account that you can trade investment vehicles in it.  With 529s, you are limited to the mutual funds and investement options identified within the plan.

So the question is, if I were to choose today, which would I choose?  It’s a harder decision, but I would probably still go with the 529!  Another perk is the deductibility of the 529’s contributions from my state income taxes.

If you have some real investing skill, you might do better with a ESA.  However, I would still consider contributing some money to a 529 plan, because contributing only $2,000 a years (especially if you start contributing late), just doesn’t seem like it’s enough.  The important thing is to start though, every little bit helps! Who knows, you may suprise yourself.