Paying for private school

Tips and tricks for sending your child to private school

A Financial Super Power You Can Use: The Snowball Effect

Paying for private school is a challenge but there is a secret super power available to you to help called the snow ball effect. The idea is that small changes start to build upon each other,  much like a rolling snowball,  to have an out sized total result in a surprisingly short amount of time. Usually this is associated with compound interest over many decades enabling a comfortable retirement.

However, unlike early retirees who strive to benefit from decades of compound interest we don’t have the luxury of waiting. We need the money right now! I first read about the more near term concept in the Tightwad Gazette and recommend you get a copy (from the library, of course) if you haven’t read it.

The Snowball Effect In Practice

Earlier I spoke of the power of moving to a decent, but not the best, school district as a savings enhancer. A small house, with its smaller mortgage or rent has other financial benefits – lower utilities being one of them. And this includes the peer pressure effect of self-reliance in the blue collar neighborhoods you will now likely reside. Wastefulness is correctly seen as a source of shame and embarrassment.

Small Differences Add Up Over Time

In such a neighborhood you feel pressured to do simple chores (like raking the leaves) yourself. This social pressure changes your outlook in a most valuable way and is the true turbo boost benefit from a smaller house in a decent, but not the best, school district.

An Example

Here is a real life financial snow ball example.

When we moved here the 30 year old home did not have cable. It *never* had cable. Ever. To get it installed would have meant drilling, installing and all sorts of mysterious things. So we skipped it and learned most folks on the street do the same. Fast forward ten years. That one decision to avoid a $120 a month extra expensive saved us many hours of time, protected us from adds to purchase stuff we don’t even know about and netted $14,4000*, tax free.

Our house comes with a free car every ten years.

All because the home wasn’t wired for cable and folks around here simply don’t do that sort of thing.

Now Roll It!

Later, we sold an old Subaru for $4000 and replaces it with a used station wagon for $12,000. I couldn’t help but notice the net cost of the car ($8000) was more than covered by the cable savings.

The savings on cable ($14,000) paid for the used car.  The used  the car was $45,000 new so that saved us  and additional $33,000.  Those very simple moves added up to a lot of savings we would have otherwise spent which went towards tuition expenses.

With some of those savings we paid the tuition and we bought a coffee machine which saves another $1000 a year.

In ten years we $12,000 saved on cable. We used those savings to pay for a gently used car and saved another $33,000. Those savings then funded a coffee machine which saves us another $10,000 over ten years. That is $55,000 in savings with three simple and repeatable steps that take less time and effort than the alternate steps. No need to tune into the latest shows (we can’t), nor to get our used car detailed (why would we do that) or drive to the coffee shop (we have it here).

What About The Extra Time

The savings go to the tuition payments. The extra time? We spend it leisurely looking for additional clever things to do .

Once you start a snowball it is a lot of fun to keep rolling the sucker.

 

What To Look For To Start Your Own Financial Snowball

Look for neighborhoods where folks are sweeping their own sidewalks, mowing their own lawns and washing their own cars. That is the correct place to live. Or starting living the way now – you don’t even have to move.

Are you sure you can’t afford private school? Reconsider the power of the financial snow ball.

Enormous snowball made in South Park in a snow-covered Oxford by Kamyar Adl

Enormous snowball made in South Park in a snow-covered Oxford By Kamyar AdlFlickr, CC BY 2.0, Link

* We have been here 11 years so total saving is actually $15,840 on the cable, a few thousand on items we never bought and a few thousand more for productive things we did with all that free time that we didn’t have to pay for. So it is more like $25,000 in savings but for this exercise you get the point. You can do this.

 

 

 

 

 

 

Adjusting your Amazon Echo’s Time for daylight savings November 5th, 2017

We are fan(atics) for Amazon’s Echo technology. It is a low cost way to replace radios, clocks and ipods with a single device.

The Echo Didn’t Adjust For Day Light Savings

However, this morning (November 5th,  2017), our Echo dot did not automatically adjust to daylight savings. Alarms went off an hour late and there was a stern set of inquiries asked of Alexa, including the all  important “Alexa, what are the laws of robotics? ”

After much searching for a solution we started  fidgeting  with the thing and found that going to the Alexa application and switching the time zone to Amazon time adjusted the device time to match  the correct Eastern Standard Time. This shouldn’t work (as Amazon Time should be Pacific Time since they are based in Seattle) but it did. Until the bug is fixed on the server side this is a work around for our fellow east coast folks.

How To Fix It

To try this on your Amazon Echo dot,follow these steps:

  1. Start the Alexa Application on your tablet or computer
  2. Navigate to the Home->Settings area.
  3. Find the list devices of devices section.
  4. Select the device you want to modify and click on it or tap it.
  5. Find the section under General called Device Time Zone area.
  6. Use the menus to select US  and Eastern Standard Time for the time zone combinations.
  7. Wait 30 seconds
  8. Test it buying  ask the device the time.  Confirm the time is correct and matches the day light savings time.

The America and Eastern Standard Time zone combination is the one that doesn’t work. If that fails for you the American and Amazon zone also gave me the correct time.

And yup, you will have to do this again even if you corrected it in March during the last day light savings change over.

 

Recommendations on better ways to do this are encouraged and welcomed in the comments.

Our son was transformed within a few weeks

Holly Robinson has an amazing article about how one of her children seemed to need – and then benefit- from a private school education. She reports that “our son was transformed within a few weeks”.

This is an amazing story of where a program and child align well.

Each child is different and  it’s great to at least have the option of something other than school that happens to be closest to your house.

 

The power of a cold shower

Paying for private school requires change from within.

The costs might require taking a promotion that is both good for your organization and good for your family but not in your comfort zone.

Or, it might involve forgoing a worthwhile and generally enjoyable vacation, or upgrading the coffee maker. Or, in a peaceful way, it might involve saying no to a lot of things.

Voluntary Discomfort As Mind Training

In short, it requires you to be proficient at voluntary discomfort. This requires you to be prepared to act with integrity in the moment. And training is what prepares you.

Enter the cold shower. I know, it sounds crazy but bear with me.

This technique is quick, low cost, effective and good for you and the environment.  And it makes you

caption2

By Miguel AndradeOwn work, CC BY-SA 4.0, Link

appreciate the simpler things such as,  oh I don’t know,  room temperature air and, well, not being in a cold shower. This last part, while amusing at first, is where the power of it comes in as it changes your mind set. You build patience and tolerance to discomfort. A brief cold blast of water puts a tough meeting later in the day in perspective and makes it easier.

 

Instructions:

  1. Start with your shower at the normal temperature.
  2. After a minute or two turn it down just a little.
  3. Repeat until you get to cool and slightly uncomfortable
  4. Adjust the water temperature to make it colder still and end the show with a cold blast of water for a few seconds.
  5. Mind training complete.

Your voluntarily discomfort practice will enable you to focus your mental powers on what is important. Soon enough you will scoff at ‘pampering yourself’, ‘indulging’ or ‘you deserve the very best’ advertisements and correctly see them as a form of weakness.

You need the clarity of mind to shake that stuff off and decide if paying for private school is appropriate for your family and then the mental toughness to stick to it.  A cold shower regimen can help tap the power of voluntary discomfort training for any worthwhile endeavor that requires focus over time.

This is Not New and Can Make You Healthier

And this is not a new form of training. Thomas Jefferson bathed his feet in cold water every morning for 50 years (they didn’t have showers).

As an added bonus it *actually* makes you healthier and tougher by increasing brown fat cells (little space heaters in your body).   It might even help you stay healthier longer –  read this  2015 interview with Ed Ronthalier who started the practice in 1918.

 

 

 

The school district shuffle

Housing is one of the largest expenses a family takes on. And reducing that expense is a potential source of funding for your children’s education.

Villa Haas Mansion - Source: Wiki Commons

Villa Haas Mansion – Source: Wiki Commons

We purchased our home knowing that we were sending our child to private school. And this meant avoiding housing in the best school districts and saving a lot of money.

The numbers

In California, for example, housing in the best school districts cost 50% more. The median home value in California is $472,100 in 2015. A house in a great school district that cost 50% more would be $708,150. That is an additional $263,050 right there. And that doesn’t include the lower cost of upkeep for will be a more forgiving neighborhood. And the lower cost of ongoing operations in a smaller house (air conditioning, heating, hot water, replacing the roof and so on).

A good kind of peer pressure

US Currency - Source Wiki Commons

US Currency – Source Wiki Commons

We did exactly this in the DC area and our house is  now worth about $400,000 (on a really good day). That might seem like a lot but it’s on the low end – even for our neighborhood.  We live in a largely blue collar neighborhood with wonderful salt of the earth people. The only pressure to keep up with the Jones is to be self-reliant. With two mechanics on our street the idea of someone else washing our car or mowing the lawn is readily frowned upon. This “peer pressure” is a further financial turbo boost and part of the education of your child.

Sure the house won’t be as fancy as the more expensive version but that has its own appeal. And you are doing this for the benefit of the kid. Stop caring what other people might think of you. Embrace voluntary restrictions on consumption. Grow up. Be the adult here. You can still be cool. Forget square footage. These days it is all about how much more environmentally friendly your smaller (and presumably older) house is for the planet. Brag about your stewardship of the planet. Your an environmentalist now!

Tiny House. Source: Steven Walling, Wiki Commons

Really Tiny House. Source: Steven Walling, Wiki Commons

Your child will eventually move away from home – but the values, mental models, and behaviors they pick up at school will be part of their identity for their entire lives.

 

I look forward to seeing you in our neighborhood soon as you downsize. You are welcome to use our leaf blower – I will show you how to use it.

 

“The beautiful thing about learning is no one can take it away from you.” — B.B. King

 

Do you want a $20,000 raise? Learn to use your kitchen table as a financial power tool.

My table saves us money. You can have one too. Chairs are optional but encouraged.

Here is how you use a table to save money; if you eat out at a restaurant get it to go and eat at the table you have at home. That will save you 15-20% on the tip. Ideally you should eat at home most of the time but if you don’t this simple technique saves time and money.

Paying for Private School French Country Kitchen

Paying for Private School French Country Kitchen

Tips add up

Let’s take a look at the numbers. Assume you tip 20% and eat out as a family, three times a week for a total expense of $150 a week. 20% of that cost – or $30 dollars – is spent on the tip. Skip that and in a month you will save $120 while eating the exact same food. In a year that is $1,440 not spent. And you don’t have to wait for the check.

In ten years you will have saved $14,440 in expenses which would have cost over $20,000 in income before taxes to pay for during that time. All that from  thinking differently about your kitchen table.

Keep at it!

Keep reading to collect ten of these money saving techniques and suddenly paying for private school might not seem as daunting.

Public school teacher sends child to private school

A public school teacher  wrote an article for The Atlantic on Why I’m a Public-School Teacher but a Private-School Parent

Public school teacher perspective

This was written by person who has 40 years experience working within the system;

“ …I’m not trying to be combative, but I do find it ironic that many people who argue against private schools work in the private sector. For 20 years, I have deliberately invested my life in teaching public-school kids, coaching them, and advocating for the ones who don’t have the same support that other kids have. In fact, I chose to teach in a public high school precisely because I pitied the children who felt forced to be at school, who felt trapped like I did when I was their age. I spend my own time and money advising clubs, tutoring those who struggle with English, helping students apply for college, and, sometimes, feeding kids who aren’t sure if they’re going to have dinner. On a daily basis, even as I’m surrounded by a million competing interests and distractions, I work hard to make their compulsory experience something for which they would volunteer….I am, however, concerned about the general culture at public schools—at least at the ones I’ve seen—of disengagement and compulsory learning. So when it comes to my daughter, I opt to invest a little more—to ensure she’s immersed in a community where it’s acceptable, and even admirable, to show natural enthusiasm for knowledge. I trust this particular private school, one that was created by like-minded parents, will best set her up for success.”[1]

Old School House Sign - Source: Wiki Commons

Old School House Sign – Source: Wiki Commons

Choose what makes sense for your family

The point here is not to bash on public schools. It is about choice. Choosing to send your child to a school that matches your value system. This may be a public school. And it may be a private school. And there is nothing wrong with either choice despite what others may tell you.

[1] http://www.theatlantic.com/education/archive/2015/03/why-im-a-public-school-teacher-but-a-private-school-parent/386797/

Education options

Public education has many benefits – it provides standardized and excellent education. It is a safety net and builds community and a shared appreciation for democratic values. And it solves a core challenge which is providing education to all children. It’s a great solution – particularly when you consider what life was like before it. 

However, in the course of human history it is new.

For most of human history education has been private in nature and provided at home and by the community and religious organizations.

What is best for your child? What values do you want them to learn? Is the state the right provider of education for your situation?

Values over facts and figures

Who your child becomes as a person (values) is way more important than what they know (academic achievement).

Maybe it’s not for you

If you have doubts that public school is a match for you have come to the right place. We assert that the quality of private education, through market forces, in aggregate, will provide a more balanced education your child. Read on to learn more.

Investment pick of the month- Smuckers!

If you have been following the tips on this and other blogs you will become a producer instead of a consumer. And you will find joy in the simple life. And eventually, ever so slowly, even with a gigantic tuition you will have some money to put aside. For me that goes into dividend stocks that are high quality, repeat business companies that align with my values.

This month it is J. M. Smucker. At it’s current price of $105 this is a good source of savings and income.

Peanut butter

I have been watching SJM for a while now – it has a lot I like- automatic pilot repeat purchase items with good return on equity (10%) and a long history *and* is majority family owned so they won’t risk the company on making some bold acquisition. They have been slowly picking up brands over the decades.

 

Thursday the stock dropped a nice 10% after a missed quarter and I noticed it today at the 52 week low. The earnings yield is 7% – I prefer 10% but for such an excellent company with good finances and safety I am willing to pay more. Not perfect but 25 years from now it will be as reasonable return.

A 7% yield on a 11 billion company where people use their products daily – out of habit to eat and enjoy. Wonderful!

My investing hero

My investing hero is Anne Scheiber. She built a great portfolio on an average salary and then gave it all away to charity (for education, of course).

She didn’t follow the recommended path and she took a lot of criticism  for it in the press when the bequest became public. They only  wrote about it at the time of her death because she was able to give away $22 million  despite starting investing later in life and never having a high salary.

Ann Scheiber Photo

Ann Scheiber: Source Investing Engineer

It will come as no surprise  the pundits were critical of her life choices and her investing style. The put their values on her life – “she should have spent more on herself” – perhaps a nicer place or a personal jet! The idea of living with less to provide resources for someone else (exactly what parents paying for private school are doing) doesn’t even occur to them as perhaps worth the modest life style. Nor do they consider that a modest life style in of itself has value (simplicity, environmentalism, community).

Her investing style was and is quite unique and wrong by everything we ‘know’. Most writers overlay other models they already know to explain the results (which is incorrect) because they don’t have the time to understand what she actually did. Sort of like how financials experts write today that one *must* own your house to do well and anyone who accumulates wealth without the house managed to overcome that deficiency. This despite the many counter examples (which are brushed aside as anomalies). I will admit to studying Anne investing style since 1996 in an effort to reverse engineer it.

Anne Investing Approach

Four things of note:

1) She never paid a single mutual fund cost which helped and focused on low brokerage costs.

2) She was a focus investor and saved for years, invested for five more years and then put all of that money ($10,000  – years of salary at the time) into a single stock (Schering-Plough, later purchased by Pfizer) .

One should never do that right?

It was worth $7.5 million when she died – a 750 bagger on that investment alone.

3) She gave it all away to help remedy the inequality she experienced. This was made a big impact as the dividends when she died were over $800,000 annually.

4) Folks write about her as though she bought blue chip dividend stocks stocks which is not entirely accurate. She had a much more nuanced approach including owning MCI and Apple computer when they were relatively new companies.

She lived simply and did it her way. Your way might be different and that is ok. Don’t accept those who use existing frameworks to describe all behavior.

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