October 31, 2016

Picking our 529 plan for JuggerBaby

529This was one of my annual goals for 2016.

We’ve been setting aside money for JuggerBaby’s care and education since 2014 but I hadn’t committed to a specific savings vehicle outside of our savings account. I wasn’t ready to think about it in the first half of the year because the first half of the year totally sucked but I finally started getting stuff done in the fall, including picking and funding a 529 plan. (That felt GREAT.)

I finally sat down to do some more research after my first halfhearted attempt last fall.

California’s 529 plan, the ScholarShare College Savings Plan, was the logical first place to start.

They allow earnings grow income-tax deferred, and the money is also free from federal income tax when it’s used to pay for qualified higher education expenses, but all the plans do. What they don’t offer are  any tax incentives to keep the money in the state, and they hold their funds in TIAA-CREF which I don’t much like, so I went looking elsewhere.

Since any other state’s tax incentives do me no good as a California resident, I just targeted companies that I like: Fidelity and Vanguard.

Nevada’s Trust is administered by the Board of Trustees of the College Savings Plans of Nevada, and the plans themselves are held in the Vanguard 529 College Savings Plan with 3 age-based plans and 19 other choices. I don’t much care about the 19 other choices at this point, the money just needs to go into an aggressive investing mix right now, so the age based plans are what I care about.

Vanguard works with UGift which means that anyone who wants to contribute can just enter the code that I give them and quickly set up a bank transfer without any confidential information changing hands. I don’t want your bank information and you’re not getting JuggerBaby’s SSN, period. That’s non-negotiable.

Sidebar: some thought was given to whether it made sense to hold a plan in our names or in the gifter’s name, based on the concern that when assets are considered for college funding, assets in our or JuggerBaby’s names are counted as primary assets.

Our assets at this point in time wouldn’t disqualify JuggerBaby entirely from receiving grants, but in 17 years? If I’m doing my job, and I will, then our total assets would be sufficient that JB wouldn’t qualify for any need-based aid. If either one of us is gone, we’d have life insurance to supply some of the contributions. And frankly, one of the selling points for people planning to open 529 plans in their names instead of the beneficiaries is that they can change the beneficiary at any time. I’m not banking on JB’s future with assets in someone else’s name. I’m not saying a gifter would take back the money, but as long as that money isn’t in zir or our names, then it’s not really ours, is it?

That brings us back to the technicality that if you want to open a 529 plan in someone’s name, you need their SSN. And with the amount of identity theft and fraud out there, I’m not taking that risk in any way shape or form. JB’s SSN stays with us and whatever financial institution that I enter it into when I’ve vetted them, that’s it. I’m not widening that net of risk.

Ok, back to the program. Fidelity administers New Hampshire, Arizona, Delaware, and Massachussetts’ plans, and also has a good secure way for people to gift to the beneficiary.

PiC and I both have enough assets at both Fidelity and Vanguard to be a little more than your run of the mill investors and so we have some advantages at both, but what it came down to were the fees. Vanguard charges 0.19% on their age-based portfolios. Fidelity charges two sets of fees: a program management fee, plus investment management fees and other expenses in each of the mutual funds. It’s different for each of the four states and is a mess to figure out. But they start at 0.88%.

That’s pretty much no contest!

Vanguard, as ever, is my friend and so I’m moving cash to JuggerBaby’s account there to let it flourish and grow. But I’ll wait until after October to add more money to it, since it’s been a rather rough period in the markets.

Now we just have to get on with raising a kid, making sure ze wants to attend college, and is adequately prepared to make the most of it. I paid my own way through college but the days of being able to do that on your own are probably limited with all the rising costs of school and living.

I don’t want zir to get a free ride through life, far from it, but I don’t want zir to be crippled by the burden of many student loans if it can be avoided. At the same time, it’s possible that ze will have good reason not to want to attend college for one reason or another. If that’s the case, I’d need to consider how we might redirect these funds.

:: How did you pay for college? If you have kids or niblings, are you saving for their possible future education? How would you spend $50,000 in educational funds?

November 13, 2015

529 Savings plans and saving for LB

Like Brian, I’ve been reviewing investing and savings vehicles for LB. As a California resident, my first step was naturally to see what the Golden State had to offer in the way of the 529 plan. Spoiler alert: Nothing awesome.

  • California has a 529 savings plan, but does not currently allow a deduction or credit on your state income tax return for the annual contributions you make to the plan.
    • Note: MEH.
  • There is an overall limit of $371,000 in contributions and earnings that can accrue in the plan for each beneficiary, after which no further contributions can be made.
    • Note: Not a problem.
  • Qualified withdrawals of earnings from the California plan are exempt from state income taxes for state residents.
    • Note: Good.
  • California residents may also make qualified withdrawals from other state 529 plans on a tax-free basis.
    • Note: Good?

Right now, all of LB’s savings are held in a regular online savings account and we’re going to be paying taxes on interest earned. It’s not such a substantial amount that I’m worrying about having to shelter it from our tax bracket, yet, and there’s still quite a bit to learn and research about the best ways to save this for LB’s future education and care needs.

Has anyone already done this and have some thoughts to share? What are your favorite savings vehicles, with or without children in the picture?

June 14, 2013

First forays into homebuying

“We have to get this guy a house.”

Back from our various vacationtimes, we immediately saw that, while Doggle was thrilled to see us, he was also happier, peppier and more engaged than ever before. He’d been hanging his shingle in a house with a yard, kids and other pets for a week and amid the shameless spoiling, it was clear that he’d been taking dog lessons from someone.

Apparently the quiet life in a small apartment with DINKs doesn’t quite inspire the still-reticent Zendog to come out from his shell and do a doggy dance, or dash around happily pouncing on his toys four times a day nearly so much as the chaos of a full house does.  It’s probably too much to hope that he’d picked up the notion of catch, but we actually have hope now that he might try.

So are we serious about getting a house for the dog?

Well, we’d been kicking around the idea of buying a house for some time now, and we designed our budget this year with a specific goal to save for a new down payment.  It does feel like providing a yard is the next best thing we can do for our beloved Doggle.  And yes, we want it for ourselves too, but let’s be honest, we’re doting parents and the dog is our happy excuse for a lot of things.

But  … real estate around here is absurd.

Early explorations of Zillow and Trulia revealed real estate listings that are literally jawdropping.

We’re planning to stay outside the city.  Many 20 and 30-somethings may find it appalling that people would actually prefer suburbs to the bustling city, but it’s true of us. We love visiting the city but it doesn’t feel like home to either of us. Between the traffic, the lack of (free) parking, the tight quarters, we’re just not city people.  And with the tech industry out here, and the salaries they pay, we couldn’t afford the city if we wanted!  So, y’know…

We’d like to be within fifteen or twenty miles of the city for reasonable commutes, which also suits my need for a warmer microclimate, so that was our first search parameter. We’d definitely be paying more for the luxury of better weather and saving time on a daily basis. If we were willing to be in say, Hayward, where I know the weather is as hot as even I would like, prices would be far closer to reasonable. But the compromise is better weather for me, not great for me and utterly crappy weather for him. For this, we shall pay.

We’re looking for at least two bedrooms, we’d really like two bathrooms and a two car garage, and a decently large kitchen is important to me. If there was a room I could start converting into my own private library (The Dream), that’d be the best but I will settle for a good amount of wall space and storage. We have no storage where we are now.

Last, PiC is reminding me to keep searching in specific areas where the schools are better. Which is sensible, this may be where we stay for a really long time. It needs to be a pretty safe neighborhood with some staying power. Which also means we probably should look at more than 2 bedrooms if we’re going to have any spawn. I grew up in a small 2 bedroom apartment but as an adult, I don’t really want to do that again, albeit from the other side, if I don’t have to. It might be character building but I’ll find another way to impart that.

Search results: moderately horrifying

We’re finding one and two bedroom, one bathroom, one car garage single family homes in moderately close/decent neighborhoods are starting at A. Million. Dollars. Seriously.

This shouldn’t be any surprise when in some neighborhoods, $800k hardly gets you more than a two bedroom, x bathroom(s) condo or apartment.

And three bedroom, two bathroom with garage SFHs run more like 700K-3M.

*gulp*

The estimated monthly payments on those homes that are 3k-7k (in more extreme cases) are almost beside the point.  I’d only feel comfortable to committing to a new loan if we had 200K in cash with a healthy uncommitted cash flow. We do not have 200K in cash.

We could make a pretty good run at it but it’s not going to happen overnight and as much as I fantasize about taking another job, that’s not going to happen either. Freelancing, maybe. A whole other job would be crazy and crazy-making.

Making it happen

We still hold hope this can work and maybe even in the next year or so. Not that I expect the market to get much friendlier over the next year, but we have steps to take to increase our buying power, and reduce our stress.

1. Reduce our current fixed expenses, including the current mortgage to make a significant dent in the down payment goal. We’re refinancing and going over all the other expenses to trim back.

2. Keep those fixed expenses low – I don’t want to commit ourselves to either too much house (payment) or too strict a budget. After nine+ years of living on a shoestring income to debt ratio, I refuse to find ourselves coming up empty on cash for the sake of a house.

3. When we get a decent cash cushion in place, I’ll focus on foreclosures to see if we can’t stretch our buying power.

4. Hope hope hope that mortgage rates aren’t abominable twelve to twenty four months from now.

It’s time to dig deep and turn on the saving engines again. It’s not worth cutting off our allowances, I don’t think, since it’s not much per month anyway, but I’d love to pull back a little bit everywhere.

::What else should we be doing? 

December 5, 2011

Married Life: Mortgage Prepayment for Refinancing

With just about all savings interest rates in the tank, PiC and I have agreed that without waiting for me to further flesh out our annual budget for 2012, his next expired CD will go into a large prepayment toward the mortgage.

It isn’t the amount we need to get us at the right loan to value ratio for a refinance but it will be a substantial step in the right direction, and there’s no reason not to start this process. This is our primary residence, and the interest rate is nearly 5% while savings rates are barely hovering around 1%.

Even if we wanted to move out and turn this place into a rental, the current total mortgage and HOA costs are too high in comparison to market rental rates for the same sort of housing for us to break even in this economic environment. Between bringing down the total loan cost a significant amount and locking in a much lower interest rate, I think we could ultimately save approximately 40% of the current mortgage.  That’s no small beans in cash flow and would make it easier for us to take any kind of rental situation risk.

I plan to sock that saved cash away again because I’m pathological like that. 😉

Actually, there’s a good reason – we would just have put something like $65,000 cash into the process. That’s my current estimate of the cash cost. We should be able to swing it if we put together our savings, prioritized carefully and set aside a new emergency fund. The huge cash defusion will still give me indigestion, committing that much cash when I’m still worrying about my next job-related moves is worrisome, but I do think it makes sense overall.

As for allocations: while that increased cash flow needs to replenish our savings because it will have been much decreased and that makes me nervy, we still have to set aside money for mid-sized savings goals for 2013 as well.  That’s yet another reason it would make sense to let loose the cash bomb, we’d only be limited to looking for ways to increase income to fund any expenses for the upcoming year that can’t be carved out of this year’s budget. I’m a fan of planning a year in advance to break down the savings necessary for really big bills like property taxes, travel, and that sort of thing.

I feel like I’d better hurry up and make all the changes we need to, I’m running out of steam already!

:: Is this normal to feel so responsible for stuff this early on? Was the first of married life this hectic for anyone else? 

December 2, 2011

Married Life: Benefits

With everything going on, it took two and a half weeks into married life to even look at the benefits. Ree-diculous. I’m normally obsessive about benefits but even I am now thinking 30 days post wedding is simply  not enough time to deal with those changes.  Still, we managed to wade through the majority of the issues.

I’ve been added to his full benefits package – Medical, Dental, Vision – and am retaining my own FSA. I was rather on the fence about that one – does it make more financial sense in terms of tax breaks for me to have the tax benefit, him, or does it come out in the wash since we should probably file together?  I hadn’t a minute to do any tax estimates for the purpose of estimating how we should file so I just had to let that go for now.

A few things are still left to be done. 

Because my additions to his benefits were made during his open enrollment period, his company won’t activate my benefits until the new year.  Lovely.

Meanwhile, it turns out that I cannot, because of the way my benefits are structured, retain just my Dental and Vision with him as a dependent so that we have secondary coverary while dropping the Medical that I’m paying for.  So I will have to drop all my benefits.

{Break for a moment of spazzing: Even though I’ll still be fully covered, that makes me feel naked. I haven’t not had my own full coverage since I was 17.  Seriously. This is insecurity “I’m a dependent-what??” territory.}

I will now focus on the fact that I am exceedingly grateful to have the choice between two decent insurance plans that we can afford, even though his is more expensive, because there are too many people who can’t afford insurance at all including my own family. {That’s why the reaction, actually – I’ve always worked past the point of breaking to make sure I’d have coverage.  Now we’re dependent solely on his job to provide.  Dependent. *breathe*}

You will note that while I may fully intend to make rational decisions, I still have emotions about my money.

Estimated cost: Increases in monthly premiums of approximately 20% overall, but coverage will be more extensive for routine procedures. 

One example: I’m expecting a slew of dental work to the tune of $1000+, and after the deductible, my cost was going estimated to be $388 on my own plan with a $100 deductible and an 80% basics coverage.

PiC’s has a lower deductible ($50) and covers 90% of basic treatment.  While we’re paying $8 more/month for that premium dental plan, I’m clearly going to be saving at least that $100 difference right off the bat with this single treatment between the deductible and the extra 10% coverage.

Next up: When my coverage starts with PiC, I have to cancel my own benefits using the Life Status Change for Reason of “Insurance Coverage Changes”. I didn’t even remember that was one of the options under qualifying life event/doesn’t have to wait for open enrollment to change your plan!  Learn something new.

We also increased our life insurance to more adequate amounts based on our new financial obligations and added each other as beneficiaries. That was weird. But necessary. I wouldn’t be able to carry this mortgage plus all the other finances without extra help and both PiC and my dad would need some financial assistance if I were bumped off.

That means filling out more paperwork this weekend and once again at the start of the year.  After that, we should be in good shape until the next open enrollment period!  *whew*

So much for simple, huh?

August 16, 2011

Frontloading the Pain, Wallow in the Gain: A Saver’s Tale

As I raised my fork a last time, scarfing the final bite of my turkey meatball, PiC’s expression registered in my brain.

“Whaff?”
“You didn’t even cut it up!”
I chewed. I swallowed. “Why would I? It’s the last thing I had to eat.”
“It’s huge!”
“…so?  Now I’ll only remember the best stuff.”

Ah yes, after nearly (counting on my fingers now … 7? 8? years), I can still horrify my beloved future spouse with my eating habits.

Actually, the fact that I engulfed half a “huge” turkey meatball in a bite was less weird to him than the fact that I saved an entire meatball out of my bowl of pasta, brussels sprouts, and cucumber salad.  But it’s what I always do.  At least, it’s what I always do when staring down a food I don’t enjoy.

We all know brussels sprouts have to be done right and they were verily not done right that night.  Facing still-bitter brussels sprouts, I immediately reverted to my nine-year-old self’s reliable strategy: choke down all the bad stuff first, paired with the good stuff in small amounts, save some thing really good for last to eliminate the horrid flavors to save the meal by finishing off with the best flavors again. No bad aftertaste for me!

Plus, I don’t know about your parents but the more you whined about the gross stuff, the more you risked annoying them so you shut up and you ate it.  None of that napkin business, either, Eagle Eyes would give you a few dozen reasons not to sit for a week.  At least that’s what I assume, never having been bold enough to try it.

I got to thinking.  Didn’t he know that was normal?

If memory serves, that’s always been par for the course.  If I had to do something I didn’t want to do and had the choice between Now vs. Later, I’d want to do it now so I could have all of later to myself.

If I came home from school with homework, my desk lamp flipped on and the homework was laid out to be done first … well, because I was a nerd and actually thought it was fun at first. When the shiny wore off and it was just work versus playing with the dogs or reading, I did the work first so that I could play ALL NIGHT.  Never mind that I might actually go to bed in half an hour if the homework took too long, I would still work first, play after. Play after always felt more fun.  It wasn’t tainted by the foreboding of stuff to do later.

As a teen, I came home on Fridays to clean my room and did the laundry. Why? Because if I did all the chores on Friday, then I had the whole weekend to do absolutely nothing I didn’t want to do.  And it didn’t matter that something could come up. It would just be a blip on the radar of all that free time.  Weekends were great because at least I could guarantee it wouldn’t be interrupted by anything silly like something I knew I could have done the day before.

This extended to how I felt about Things: given a cache of candy, I’d hoard it for later. It was insurance that Later, I would have treats.  Same with money: everything went into a piggybank. When I had bills, I paid them and saved everything else. I couldn’t think of anything more sweet than having that cash for later, because that was security. Whatever Later was, it was better.

Time off, oh yes, I definitely hoarded paid time off. When I left one job, I had something like 350 hours of vacation time. I loved that big squeezeable number that meant if anything happened, I could take all the time off I needed to deal with it.

When I discovered Fatwallet and PF blogs in the early 2000s, it was like nerd nirvana, y’all.  Savings Valhalla. So. Many. Ways. To. Save!  Even now, I daydream about making six figures mostly to play-budget how much I can save.

Now, I realize this might sound insane. But this is precisely the mechanism that made it possible to do what I did for those 10 years. It’s like I was engineered to be thrilled to pay off debt (that wasn’t even mine) because “later, I’ll be happier when I’m done.”  I was so focused on the outcome of “later” that the Now wasn’t an issue. The only conflict was in that the paying off debt part meant I couldn’t save, but that eventually resolved itself when I worked a (few) thousand hours of overtime to pay everything and then start saving.

*****

These days, the idea that Now Matters has sunk in.

Balance is still fairly foreign to my vocabulary, but I’m liking the idea.  I think PiC has a lot to do with that because he’s very much the opposite. He enjoys the present and prefers to have his goodies now rather than later; it’s weird to me to keep running out of his favorites. He enjoys sharing good times and good foods with me and family now rather than solely focusing on the future, and this has distracted me from my intense focus more frequently.  We’re finding ways to meet closer to the middle.

I spend a lot of time Now taking care of it Later, but it lies in the background more than ever before. I still love saving the best for last, still hoarding my Kit Kats but now I actually enjoy one when the craving strikes instead of pretending they don’t exist.

…. but I always refuse to eat the last one until there are more.  Because I’m still a saver/hoarder at heart. 😉

Can anyone relate to this?  Or am I also the circus freak among my PF friends?

{————Carnivals————}

My thanks …..

to Nelson at Financial Uproar for hosting this week’s Carnival of Personal Finance and for including my post An Annual Evaluation, Belatedly.  Be sure to submit to next week’s Carnival.

August 6, 2011

Convenience behooves thee: mail ordering prescriptions

After nearly three weeks of frustrations, run arounds, failed attempts and unanswered requests, I finally managed to get a prescription filled at my local Kaiser pharmacy.

To add insult to injury, it cost an extra $10.  I nearly said something but before I could, the clerk ringing up my order mentioned casually, “you know, it’s cheaper if you order online.”

Wait, what?

“Yes, I noticed that this was more expensive and was just about to ask about that since I normally always order online. This was just thanks to all the trouble I’ve been having in getting this particular order filled.”

Not in the mood to explain the whole thing, even though he asked to hear the story, I glossed over the details and got to the good part: why exactly was the online order cheaper??

He explained: to encourage people to use the mail order service, when they order a 3 month supply, one month of the regular co-pay of $10/month is discounted.

!! You mean to tell me that the price I’ve been getting when I ordered online wasn’t a regular price, it was a discount??  (You had better not tell me that they’re going to take it away at some point, either.)

Honestly.

I’m happy that my busy life + laziness has been saving me at least $20/every three months for the past couple of years but if they wanted to change behavior shouldn’t they have been trumpeting this little detail from the rooftops instead of handing out tote bags when people say they’ll try ordering with mail delivery?

Would a 33% discount plus the added convenience of having your medication delivered by mail be incentive enough to convert you if you normally physically pick up your own prescriptions?

And in this day and age of having groceries, baked goods, and just about anything else you can think of delivered, why on earth would you need to be incentivized to have your medication delivered?

Who LIKES sitting in a creepy pharmacy smelling of astringent and urine waiting for their prescriptions to be filled?  (Maybe that’s just mine. But still. Every pharmacy feels slightly creepy.)

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