Need Help with College Plan for Kids.

Updated on December 17, 2009
S.W. asks from Dallas, TX
5 answers

I need help. I feel so incredibly guilty that I haven't started a 529 plan for my boys (2 and 4) yet. I know this MUST be done. My New Year's resolution is to start one for each of them. If I could please get a brief answer as to which plan you have (and why), is it with TX or another state (and why), and how much is beneficial to contribute monthly (and why)? Thank you so much in advance....any input will help me greatly!

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answers from Dallas on

Call Bob Sweeney at ###-###-####. He is a personal financial representative with Allstate Financial Services. He is a very sincere person and very knowledgable. He will guide you in the right direction and give you peace of mind.


answers from Dallas on

I dont have a good answer to your question, but what I do know is to start saving NOW. It can be daunting to figure out what to do, so in the meantime just set up a non-touchable savings account and start putting something in it each month. Who knows what the cost will be in the end. Anything you have saved will help.

Second, do you own a home and do you have a mortgage? My husband and I bought a smaller house than we could afford, got a thirty year loan and started paying extra on it each month so that we actually were able to pay the house off the first year our oldest went to college. It's easier to do than you think and it is an incredible help to pay for college without a house payment to worry about. So I would advise that as an additional way to save.

Get started, then worry about the specifics later!



answers from Dallas on

We've got an Oklahoma 529--OK because that's where I work, PLUS TIAA-Cref administers the plan. In all the comparisons I've read of 529's, the TIAA-Cref administered ones are always the best, so I benefit from BOTH having a good plan, AND getting the state tax deduction. The calculation would be different if all of your income is in TX, but you can find comparisons on the web. Since we don't have state income tax, there's no real income tax advantage to taking a TX plan over another state's. As for how much to contribute monthly, "as much as you can" is a truthful answer, but not all that helpful. We only put in $50/mo, which is paltry, but, I figure, better than nothing. When I was pregnant with DD, I used one of the online calculators to figure how much we needed to put away monthly to send her to my alma mater (Ivy League). The answer was over $1000/mo. That's simply, in no way possible for us, unless we all want to camp out in a one bedroom apt. (Those with a firm head for numbers would go apoplectic at the finances of getting an Ivy League degree to teach in rural OK--but I love what I do, and regret neither the education nor the current job--at least most of the time! lol!) So we do what we can, and just generally try to put ourselves in as strong a financial position as possible (paying off all debts, paying ahead on our mortgage, driving old cars, etc.) You can also use funds in a Roth IRA to pay for college--that's what my parents did, in the days before 529's. So do what you can, try not to feel too guilty, and keep your overall financial picture in mind. GL!


answers from Dallas on

Stacy, don't beat yourself up... you are not too late. At least you are planning this now.

It depends on how comfortable you are with financial decisions you make on your own vs an investment officer for "reality check" or financial officer for majority control of advice and investing of your money.

My hubby is very much a numbers man and as good as he is with the financials......we still have an advisor at Edward Jones. You have to keep emotions under control with investments because of market swings and the crashes we've recently had in the last few years.

All that said....your retirement plan is extremely important and something that needs full attention as well. As early college grads (too many yrs ago, LOL) we were working on retirement funding. When we decided start our family, we started the college fund before daughter was born. It takes a lot of discipline but in the long run it is worth it. We have made sacrifices to make sure that our retirement as well as her college is funded. It is called delayed gratification, as you already know.

It is a personal opinion but we feel it is our obligation to do this for our daughter. She needs a good start out of college without being in debt from day 1. I'm not saying she gets everything free and clear with no obligations of her own. If that were the case, she would not appreciate the value of this college education.

We have a 529 plan, regular savings plan, other investments such as bonds and coins. We did not want to limit daughter to TX or any other state. We want her to go where ever she chooses. We basically bounce our thoughts and ideas off our Edward Jones advisor and then move forward with more investments or changes of funds. Basically, he does what hubby tells him to do unless something simply is not reasonable, hence "reality check".

We believe it will take $250,000+ to fully put her through 4 yrs of college. We put the monies we had saved during pregnancy into a good 529. Our goal was to put in a minimum of $10,000/yr to be completed by her birthday each year. There have been some stressful years with the market and there have been times we have put in more than that to cover the down market and keep her funded.

Now, IF she happens to get scholarships which she is qualified for with orchestra, academics and cheer, that is just icing on the cake. IF she does not use the full amount of $$ in the 529, it is transferrable to her children and so on for education.

Now something that has helped us tremendously is that we carry no debt. We do have a mortgage which is almost done and that's it. We do use our credit card for business, etc but we NEVER, EVER carry a balance. It is always paid in full.

There are tons of plans out there. My best suggestion would be to find an advisor you trust and do your own research as well.

Good luck and Happy Holidays!!



answers from Dallas on

We have ours through Texas because we went through our State Farm agent and they can only write through Texas. My husband works for State Farm so we couldn't look elsewhere. My old boss had his through Utah and from what I know about him, he wouldn't invest in anything unless there was a good return. If you look up 529's on google, you should be able to find a website that compares all the states and let's you determine which is best for you. Different states have different interest rates and penalties for taking money out early. Also, have you looked into Upromise. I have to admit I haven't done it either, but from what I understand about it, you can link a credit card to Upromise and it can start saving money for college that way too. The good thing about Upromise is that you can have your parents link their cards to it too. I would do a little online research and then find a financial advisor to talk to. I think Fidelity does 529 planning. My dad uses Fidelity for his retirement planning and can never say too much good stuff about them.

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