So Monday was about some reasons parents choose to pay for their kids’ college. For some parents, they have been planning on this as soon their kids were born and they have worked hard to give this gift.

Why Parents Shouldn’t Pay For College

Now on the other side is the debate, there are just as caring and sincere parents who argue that having their kids pay for their own college tuition is a great opportunity that they want them to have. Some reasons I’ve heard boil down to:

• Self-Sufficiency: I’ve heard parents say that part of the college experience is to learn how to stand on one’s own two feet.  They feel that having their kids take care of their own college education is a valuable learning experience.
• Family finances: Parents have to look at the big picture when it comes to college expenses. If paying for college means there’s no money for retirement than that can be a huge problem.
• Smarter Consumers: As college tuition becomes expensive, some parents are trying to encourage their kids to be more conscientious shoppers when it comes to getting a degree. They want their kids to have some skin in the game so they hopefully will look for schools that offer a solid education while keeping costs reasonable.

I have to admit that I feel like these  are all very valid reasons not to pay for college. I think that every couple has to look at both the numbers and the family when deciding what to do. I truly believe that before you can help you children financially with an expense like college, you have to have your finances in order. After all you’re trying to help them avoid having a huge debt, so you have to lead by example.

Many grown children are struggling with supporting their parents during retirement while raising their own families. Many parents want to do their best to avoid this emotionally and financially draining situation. Having a retirement plan ready now can help you and your children down the road.

Are You Paying for College?

I would love to get your feedback on this huge concern for many families. If you aren’t paying for your kids’ college expenses, what are your reasons?

Photo Credit: Schlüsselbein2007

There are many parent debating whether or not they should pay for college for their children. For us, we’re a bit divided. My husband and I want to have a bit of money to help out with college, but we don’t want to give an unlimited line of credit.

We’ve discussed this before as well. Right now we’re focusing on paying down the last student loan before we make any contributions in a college fund. I think that parents should get their own finances in order before killing themselves over a college fund. Hopefully we’ll only have a year or so before we have to sit down again and make a decision about what we’ll do for our little one. For now, I’d thought it would be helpful to go over the pros of paying for college today and then tackle the pros of NOT paying.

Why Parents Should Pay For College

I’ve heard plenty of reasons from parents about why they have a college fund for their kids. I want to share them along with a few of my thoughts.

• Having college paid for means they can focus on learning. Parents worry that if they didn’t cover college kids would be stressed over paying bills and getting an education. Instead they’d prefer their kids to focus on studying and getting the best grades.
• Gives them a debt free start. Parents say that paying for college means that their child begin their adult lives debt free. That can be true, but that also means that the student has to avoid other debts, including credit debt.
• Gives them freedom to explore options. With no student loans to worry about, students can then try opportunities that may not pay well in the short term, but be a good investment for the future like an internship.
• Family tradition. For some parents, paying for their kid’s post-secondary education is par for the course. Having their college paid by their parents, they feel an obligation to continue that tradition.
• They have the money. If parents have the cash to pay for college, some feel like it’s their responsibility to do so.

As for me, I can see the first one being a reason to have a college fund ready. It would make it feel good to know that our daughter can focus on her studies instead of juggling bills. However, just because we pay for college doesn’t mean she wouldn’t have a budget she’d have to keep track of. Going to college isn’t about living in a bubble.

Are You Paying for College?

Of course that is just one side of the debate. I’ll discuss the other in my next post. Until, though, I’d like to hear from you if you’ve been saving up for your children’s college expenses. Why do you decide to help them pay for college? How much are you trying to save up?

I mentioned that maintaining your car is financially important as car emergencies can ruin a family’s budget quite easily. For couples looking at paying down debt, investing more for their future, or saving up for a paid for vacation, it can be incredibly frustrating to see huge expenses come up with their cars.

Every Car Needs Maintenance

Fortunately though, many car expenses aren’t emergencies, but simply scheduled repairs that weren’t planned. While you can definitely minimize many big repairs, you still have to spend money to keep your car running, especially if you plan on driving it for many years.

Besides oil changes and tune ups, here are other common car maintenance care services you’ll probably need as a car owner at some point:

• Rotate and balance wheels and tires
• Replace windshield wiper insert(s)
• Replace air conditioning filter
• Inspect A/C and heater operation
• Replace oil drain plug, gasket
• Inspect shocks and struts
• Inspect and adjust drive belts

Putting it On Your Budget

To show you how to plan ahead for your next appointment and keep your budget in tact, I’ll use the example of having your timing belt replaced.

For some vehicles timing belts are replaced around 90,000 miles. When I checked repair shops in my area, I found estimates of $550-$650 for everything. At some point in the next year I’ll need to get this done, so budgeting some money now will make it much easier on our finances.

I’m going to go with the higher amount ($650), so that comes out to around $55/month. I can either go ahead and schedule a regular transfer into savings for that amount or I can keep that money in checking and use it when needed. Either works – savings will give us a bit more money, but with that amount, it’s not much so keeping it checking is not a big deal.

Don’t Forget the Other Expenses of Owning a Car

Besides maintaining the cars, we also have to pay property taxes and registration fees for them. in fact I just had to take care of that with our Honda. Fortunately it wasn’t too bad, but it’s still an expense in our budget. Factoring those expenses in with your family budget and help you stay on top of your finances.

Thoughts on Keeping a Car Budget

How have you been doing with staying on budget with your cars? How much do you two spend on your cars each year?

Photo Credit

At the beginning of the month we examine last month’s finances and see how it’s affected our net worth. The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on.

April was a month of money moving around. We had taxes to pay for my business, our car needed to be repaired, student loans were paid down, and we opened IRA as we simplified our finances.

The Debt Movement Over?

So April was the end of The Debt Movement‘s 90 day challenge. If you remember Jeff had a huge goal of getting $10 million paid off. It was reached, but in just 3 months over $415,000 of debt was eliminated.

How about us? We paid off $4,362.13 off since January 1st. That means we decreased our student loan balance by 25%! Just because the 90 day challenge is over doesn’t mean we’ll quit on getting rid of the student loan. The challenge was the perfect jump-start for the year.

We’re planning and scheduling extra payments for the rest of the year. Let’s see how much we can get rid off in 2013!

Things Are Looking Up in Our Neighborhood

It looks like things are picking up in our development. Sales have seemed to increase and building is winding down as builders are finishing up with the last court of homes being built.

One of our neighbors recently listed their place for sale. We’re thinking of putting our place for sale, but we’re waiting to see how things go with them.  They have a similar layout and square footage to our townhouse, so that makes us a bit more curious to see what it sells for. They listed it higher than we estimated for our places, but they may be right on the money.

In the meantime, we continue with our mortgage payments as usual and we’re prepping the house should be make the move to put it on sale.

Car Troubles

The Celica had the same problems last month with it once in a blue moon not starting. We took it into the shop and it was a defective battery. After swapping it and testing it out for about a week, the mechanic said it looked good. Let’s hope that it stays in good condition for awhile.

Retirement Accounts

Our retirement contributions aren’t included in our joint expenses above simply because they are taken out before the money hits our accounts. For the most part, everything is automated, so we just check on a monthly basis that the accounts are alright.

We’re not planning on making any changes to our retirement contribution amounts right now as we focused on paying down our debt.

Thoughts on April

Now that everything has been summarized, it’s time to look at the numbers. Here’s our net worth from the spreadsheet:

Net Worth (as of  April 30, 2013): $92,587.85

Happy to say are finances are moving in the right direction. I shared our progress and bumps in April. Any tips? I’d love to hear from you about your family’s own money review. How was last month for you?

Whether you two are new to investing or you’re looking to optimize your current investment plans, I hope this week’s articles help both of you build your family’s net worth. Like I mentioned Monday, we’re getting our retirement system optimized and that included opening a retirement account in 20 minutes with Betterment. It was easy to set it up for my husband and now he has a Roth IRA that is simple to maintain.

Now it’s my turn with getting my retirement accounts squared away. I’m moving all of my accounts to Vanguard. The best part? It took less than 30 minutes to get it done.

Why Rolling Over Can Help You Build Your Portfolio

There are two basic reasons that make rolling over your retirement money a financially smart move.

• More Choices: One complaint some people have with 401(k) is that they can only choose what is available in the employer plan. On top of that the few options you have aren’t doing so well. Opening an IRA gives you more freedom in what you can invest in.
• Lower Costs: Reviewing my husband’s 401(k) plans, I’ve noticed that the mutual funds selected aren’t the cheapest. They are actively managed and have fees associated with purchasing them. Having an IRA can allow you to find lower cost funds.

I’ve seem people move their money to also consolidate their account, but usually it’s simply cutting down accounts and using the best one they currently have.

Why Vanguard?

With all the companies out there why did I go with Vanguard? I like Vanguard for a few reasons:

• Save Money: Being with Vanguard means I can buy their ETFs free. Since I already buy these it would save me some money. If you register for e-delivery of account documents, Vanguard won’t charge you an annual account service fee.
• Solid Reputation: Vanguard is known for having great customer service and being a valuable resource when it comes to investing. They offer investing advice in an understandable language.

Vanguard is the name you associate with low cost index investing. Why should you care what your mutual fund fees are? According to MorningStar, the low cost funds have on average beat higher cost managed funds.

Vanguard gives you a lot of freedom when it comes to picking out your individual funds (provided you meet the minimum investment) and ETFs. With Betterment you can set your account allocation up and let them follow your plan automatically. Vanguard is a bit more maintenance  but they have some tremendous low cost options. Since I like to be a bit more involved with my investments, I went with Vanguard and he’s enjoying Betterment.

Moving My Retirement Account to Vanguard

Rolling over my retirement accounts was simple. Basically if you want to speed the process up, just have this  information ready.

• Personal information (full name, address, SSI#,work status, etc)
• Current retirement/brokerage information (name, account number, and account balance)
• Beneficiaries (Just have the full name and date of birth of the people you want to name)

Afterwards I had to verify my identification with a couple of questions. Like Betterment the the process was fairly straightforward  I had the additional step of printing, signing, and mailing over transfer papers. The whole process took about 20 or so minutes as I had to find some contact and account numbers. According to Vanguard’s site, the process takes about 2 weeks to complete. When all the accounts move over, I’ll update this post so you can get an idea of what to expect.

But that’s it – moving your old retirement accounts, whether it’s a 401(k) or an IRA is a cinch.

Thoughts on Rolling Over Your Retirement Accounts

I definitely like Vanguard and Betterment as places to invest your IRA contributions. They are both some great no hassle, low cost options that make it simple to invest in your future.