[USER]

Opinions needed please: I’m trying to plan for the next 10 years…feeling torn. Still learning, fairly new to the FI concept but I’m %100 in.

I’m 41, Single mom/co-parent, 50/50 time and finances. Two kids, HS Sophomore and 8th grader. I’m self-employed and a fairly high earner (~$300k a year).

After my divorce, I started at zero (well…less than zero, I had to pay my ex to keep my business…) and charged hard.

In the first year I bought a house in a HCOL area and then went from 18k to $440,000k across my 401k & brokerage accounts over the last two years. ::Edit over the last 2.75 years::

Here is my question: In that time, I’ve saved $13k in each of their 529 accounts, and I add $500 to each account, every month.

Should I shift my focus to beef up their college funds?

Or keep going towards my goal of FI and then pay as needed for the difference once college starts in 2.5-ish years?

More context: Oldest wants to go to a UC (California) and I want to support him in that.

It’s likely to be north of $160,000 minus his loans ($27k?) divided by two parents ($66,500 for my part).

I would love to move to a LCOL area and be FI in 9 years. But who knows if they’ll fly the nest on time.

It’s hard to say how much my monthly need would be because of the switch from HCOL to LCOL.

Any thoughts for this newbie? Thanks so much!

[Arun]

The best advice I learned for this dilemma is from the Bogleheads guide on investing: “Loans are available for college, but not retirement”.

Take care of yourself first, and then you can plan for kids’ education. What are your annual expenses?

Will you be able to get to 25x that in the time frame you want to?

[Walter]

Keep paying yourself first. You can always gift money to your children in the future, but you can never get money back from a college if something happens to your business.

I’d look more closely at the costs and returns for college as well.

$160k for is incredibly high unless they’re becoming a doctor or lawyer, and if it’s those positions then they should be able to pay their own loans in the future.

Perhaps community college for the first 2 years, then an expensive university?

Run the numbers on the cost of a loan and have your highschooler pick up a job to better understand how much they have to work to just pay off the loan.

They may think twice.
Another perspective: $160k over 44 years at 10% is $10.6 million dollars…

You could basically set your child up for life by investing those funds instead of paying for college.

[Tony]

This is probably not the answer you want to hear, but after working in and around higher ed for +/- 25 years, I personally feel like paying that much for college is absolutely not worth it.

During my time working in admissions, I’ve seen students make decisions to attend based on:

– the weather during Accepted Students Day (there’s always a spike in enrollments if the weather was nice)

– campus ‘vibe’
-popular athletics programs
– hitting it off with a tour guide.
– etc.

I’m not saying your son is making his decision like this, but I do know that most decisions to go to expensive schools are almost never made rationally or based on ROI or things that actually matter regarding college attendance, and I don’t think you should mortgage your retirement timeline based on emotional factors.

If you still can, I recommend putting up financial guardrails and encourage your son to consider affordable in-state options based on a more reasonable ROI.

As I’ve mentioned before in other posts, you probably wouldn’t let your son buy a tricked out BMW or Land Rover if it was his dream car, if a Toyota Corolla could perform the same required duties.

The same thing should be said of dream colleges.

[John]

Take care of yourself first. You need time in the market imo. You can always help with loans as it happens if they are low interest.

Also gives them some skin in the game.
Curious what others say

[Rick]

What is your desired outcome for their college experience?
Most parents say be successful. When pressed, it becomes not strapped for money, aka not broke.

When pressed further, so they can avoid struggling. And when pressed to stop repeating themselves, to become wealthy enough to live a good life and retire happy.

Which is what almost $200k given to them and not a university would do over the same time frame.

So many people give money to someone else, university, to hope their kids are finaidallly scuccesful.

When you could have just made them financially successful without the middleman taking your money.

Just something to consider.

[Chelsea]

Do you mind if I ask what your contribution rate/breakdown has been over the 2.75 years for that massive growth?

As someone who just got on track in the last year, those numbers are so inspiring!

I’m following answers also as I continue to struggle with the thought of whether the Florida Prepaid College contributions we make for our three kids monthly (about $250 per month sum) is the best thing to be doing, but I’m committed to catch up and continually looking to optimize more and more.

Best of luck to you and your kiddos!!

[Author]

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