My husband and I are contemplating a temporary stop to the college fund investments. Right now we fund each daughter's ESA account with $2,000 per year, which is $167 per month. Each month that is $334 allocated from our budget.
While running two households our expenses are tight. We are not yet clear what all the new expenses will be, as some utilities bills have not arrived. Gas usage is still up in the air. I'm on the low side right now, since school and activities are not in session. DH seems to be using more money on food than I expected. He is working on it though. I think some of it comes from boredom.
If I showed you a proposed budget with our investments and required expenses and cash we have budgeted for groceries and fuel, we would have about $330 extra, which is an average of $165 per pay period. It feels really tight.
I'm aware of upcoming expenses that I'm just not sure where the money would come from except from the emergency fund, if we don't stop the college investments. Examples: at least airline tickets for return visits and eye glasses for two.
I'm not decided yet. But it seems that if we stop the contributions we could set that money aside for these bigger expenses on the horizon with out dipping into our emergency fund. Now, if at the end of the year, we have some of that money left we could still make a lump sum contribution.
One idea would be to simply reduce the amount of contribution to $50 each. And make up the difference later.
I actually thought of reducing retirement, but changed my mind when I remembered we can't borrow for retirement! We can borrow for college if needed. Although, we think we will have access to GI Bill funds for our kids, scholarships, and more income at the time they attend where we could cash flow some expenses. We also aren't against them working during college, too!
Some expenses have already been reduced around here: cancelled the newspaper (but miss it), gym membership is going down by about $25 since DH isn't using it. I'm also considering cancelling the netflix discs that come to our house and just go with streaming.
Any thoughts? Would you stop college investments temporarily to keep from raiding your emergency fund, knowing that the reason you are running two households is for the stability of the kids?
Temporary Stop to College Fund
July 31st, 2011 at 07:15 pm
July 31st, 2011 at 07:37 pm 1312137434
July 31st, 2011 at 07:54 pm 1312138493
The other thing is that your investment time horizon is probably pretty small for college (less than a decade?). So, it's not quite the same as how skipping a retirement contribution now will significantly impact your retirement savings. It will less significantly impact your college savings, because you don't have decades for it to grow. (Heck - I've got 5-ish years to invest for my 8-year-old - if I follow the rule to take money out of stocks 5 years before money is needed. This is largely why I much prefer to cash flow college - investing isn't going to give me much edge. & well, look at interest rates for cash alternatives. Yuck).
All that said, it just depends on the big picture. Would I be content to be unprepared for college in exchange for student loans? No. If I felt strongly that I *needed* to save more for college, I would. I would hustle to find more income, cut other expenses, or whatever it takes. But if a slowdown didn't really matter in the grand scheme of things, so be it. You just have to examine your goals and priorities.
July 31st, 2011 at 08:37 pm 1312141070
July 31st, 2011 at 10:39 pm 1312148343
@crazyliblady: DH is not authorized to eat in the mess hall for free. He is not eating out at all, it is simply the groceries that are adding up. Likely lots of snacks. He is complaining about his weight, so I expect those will get cut out soon. He is taking his lunch to work/school which is primarily sandwiches. He also hasn't lived alone for over 15 years and handled the cooking for one person...so I think it's a learning curve we are working with at the moment. Thanks for the suggestions.
August 1st, 2011 at 03:36 pm 1312209415