We’re huge Dave Ramsey fans used most of his principles to become completely debt free (including our home) a few years ago. One of his baby steps (baby step 5) is to handle college funding for children. When our first child was born, we started her college fund in a 529. With small, but consistent contributions, that fund is up to roughly $5,000 (she’s 5 now). When our next was born, we started him a college fund, too. He’s 2 now, and he has almost $2,000 in his fund. Along comes baby #3 and what do we do? Well…you’d think we’d just keep the 529 thing rolling, but we haven’t. Why did we stop funding our kids’ college savings? Read on.
Retirement is Inevitable; College is Not.
We are a single income family. While this blog does generate some income, we are not like most families where mom and dad both work, kids go to daycare and we have retirement savings from two working family members. We have a 401k through my current employer, as well as our Roth IRAs. Per Dave Ramsey’s baby steps, we’ve got the 15% of income going into retirement baby step covered. We decided committing to consistently and intensely saving for retirement now was more important than saving for college (at least for now).
Our Kids May Not Choose College.
I used to think college was a requirement to get on in this world. After reading Cy Vanover’s book, Earn a Debt-Free College Degree, and then Steve and Teri Maxwell’s book, Buying a House Debt Free: Equipping Your Son, we started doing a lot of thinking, discussing and soul searching. Where did we land? College isn’t for everyone and for those who decide on college, it doesn’t have to cost a fortune. While we want our kids to be well educated, intelligent and productive members of society, why does college have to be the answer to get them there? If they decide on college, there are plenty of options as far as student loans go. In fact, many institutions are quick to offer student loan refinancing. On the other hand, Stacy and I are both living examples it is possible without debt or huge infusions of cash from Mom and Dad. Plus, spending 529 savings is pretty restrictive, and so what happens if one of the kids wants to pursue something that a 529 doesn’t cover? (Yes, we know you can transfer the monies to other kids; withdraw with penalty, etc., etc.)
“Retirement” May Come Before Age 65
Stacy and I have talked for a few years now about the idea of me coming home. Monday-Friday, I’m up at 6:00 am and leave the house at 7:00. I get off at 5:00, get home about 6:00 and the kids are in bed around 8:00. Then we’re in bed around 10:00. Do that math: assuming I have no errands to run or other things that would keep me away, my kids see me for roughly 2 hours each weekday; Stacy and I have about 4 hours total. As the leader of our home, I want more time to be there. I’m not one of these dads/husbands who goes to work to escape. I go to work to provide for my family and I don’t want to be gone any longer than necessary to do an excellent job for my employer in return for my pay.
In mid-2014, Stacy and I committed to start a “pre-retirement” account to start saving in the hopes that I may be able to “retire” earlier than age 65. This doesn’t mean I’m not going to work when I “retire” – quite the opposite. We are just praying that one day I may be able to come home to work. That probably means doing our small business hustles full time instead of on the side. It probably means (at least at first) a pretty big cut in pay. It probably means we’ll be paying our own health insurance. It is a RISK. But even if I “retire” at 45, that will mean Annie (our oldest) will be 16. I will have SERIOUSLY missed out on a lot of things with her by that age, but I don’t want to do something rash that would jeopardize providing for my family in the name of being home. Anyway, I still bet she’d be tickled to have her Daddy home at 16 (or even later, although at that age she probably wouldn’t admit it).
I Didn’t Say We Weren’t Saving.
We are setting aside money for our family’s future – our entire family’s future. If you don’t know us, we’re natural savers. We currently have my 401k, our Roth IRAs, an emergency fund, a car savings fund, a pre-retirement fund and a general savings fund. Why? We aren’t big spenders and we want to save for tomorrow. We don’t do debt.
How SPECIFICALLY are we saving for our kids’ future? I don’t know. Right now, we have their Christmas money in cash envelopes with their names on them while we pray through and ponder the best course of action. We will possibly (probably) put that money in their 529s, along with at least some of all future gift money. We may put it in something else designated for them that isn’t education-bound. We’re still figuring that out (and we’re open to ideas, if you have any). But we have stopped putting money in their 529s from our income – all that extra is going toward retirement and “pre-retirement” savings. We have consciously stopped funding our kids’ college savings. I think it is the right decision for our family. What do you think?