Paying for private school

Tips and tricks for sending your child to private school

Category: Philosophy (page 1 of 2)

What’s in Your Closet?

Like many of you I am an office drone and spend my days dressed in the knowledge worker uniform which include a  pairs of wool/polyester pants.

The second life of pants

Here is a money saving tip someone showed me years ago. When the dress pants get a bit frayed and need to be replaced, keep them for the weekends. Or for painting a room in the house (once you send your kid to

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private school you are going to be in-sourcing a lot of work you use to hire experts to do).

My favorite pair of pants last saw the inside of an office 5 years ago. And they have permanent black stains on them from when I refinished the driveway in them (two points added to the man card, thank you). But they are *really* comfortable.

Save time and money

What is amazing about this approach is what didn’t happen. I haven’t bought weekend pants, jeans, or pants to work in the yard over 5 years. That is a few hundred in expenses saved right there and less stuff going to the land fill. And it is better for the environment. And it is easier – I always know the pants that move to the weekend pile (I use a permanent marker to mark the inside tag so I don’t accidentally wear them to work) fit and it requires no shopping on my part.

Take a second look-but don’t over do it

The mind set of taking a second look at anything you are going to toss or recycle to see if it has a second life can turbo boost your cash flow over time and help pay for a private school tuition.

You just have to be careful to not save things that aren’t used. I only keep 3 pairs of former office attire in the weekend or yard work draw. The rest go off to be donated for a tax write off.

The pants progression

Here is appropriate life of a pair of dress pants:

  1. Dress pants for work (helps earn the income)
  2. Weekend pants (saves on buying a second pair)
  3. Donate to the thrift store (tax deduction)

 

 

Boundaries

Fancy terms are tossed around for those who reach some impressive goal. Will-power, strength, perseverance, forcefulness and might. Awesomeness!

Super Heros

These are good and make for excellent attributes of world leaders and super heroes.

Jedi Knights

What you need to save money is more along the lines of a monk (or Jedi knights); patience, flexibility, willingness to compromise, teamwork and collaboration.

Set Boundaries and Win

But above all you need boundaries. The ability to say no to others and yourself.

Boundaries are the super power of paying for private school.

Indeed, the best way to save money for a higher purpose is to not spend it on a million other valuable things. To resist the impulses bouncing around in your 3 lb. brain driving you to get this (I might need it), visit that (it would be a great experience) or eat those (I need the energy).

Become comfortable with not having the best of everythingGive your self permission to being disliked. You will find life much less stressful as a side benefit.

Get this Book

Get this book: Boundaries: When to Say Yes, How to Say No, to Take Control of Your Life – Slightly Imperfect.

Fair warning it has a slightly religious tilt (which I like).

Did you catch what just happened?

Wait A Minute

If you are new to this this whole frugality thing you probably thought “I need this now!”  and were tempted to click on the link to purchase it. Slow down. Go pick it up at the library or at least purchase a used copy.

Slow down. Let it stew. You didn’t know about it a minute ago. Meditate.

And while you are at the library or borrowing books from Amazon pick  up The Psychology of Persuasion so you know how to catch yourself next time someone presents their problem (I need to sell books)  as yours (you need to buy this book).

There you go – together we just saved $40 in under 60 seconds.

Was that so hard?

Better put an UGG on it

Consider UGG boots for the family as one of your four holiday gifts  (something to need, want, read and wear). They will be appreciated (or will be soon enough) and yield dividends.

Fight the cold

Winter floors can get really cold. Putting on socks – or even house shoes – is too much of a hassle. Cold feet lead to the heat creeping up. UGGs are slip on house boots that have wool in them. They keep your feat toasty warm. Wearing them on even a mild day can be uncomfortable because they are the perfect winter house shoe.

Be an environmentalist *and* save money

Don’t turn up the heat up to walk around the house. Put an UGG on it! We keep our house at 62 degrees Fahrenheit (16 Celsius) in the winter and everyone has a pair of UGGs.

With a onetime investment you are able to keep the heat down for years. This in turn enables us to increase our available cash for tuition payments.

Combined with a down blanket we lowered our heat from 72 degrees Fahrenheit (22 Celsius) at night to 62 degrees (16 Celsius) with no loss in comfort. Saving 3% on our bill for every degree we lower our heat means we dropped our bill by about thirty percent. And this applies for every month of the winter. Every year. On a $200 heating bill (it’s cold where we live) that is $60 bucks each month that can be sent to the school to pay for tuition. And it reduces are carbon emissions.

Keep going!

Your job is to find five of these kinds of savings. And then, once you have that done try to find more. To start off, turn down the heat and put an UGG on it.

Get Ready For Black Friday!

Black Friday is in just a few days. One can save thousands by acting fast!  One day sales only! Plan ahead! Quick! Save hundreds by spending thousands. Sure, your cash balance

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By Powhusku from Laramie, WY, USA – Black Friday, CC BY-SA 2.0, Link

will drop and credit card balance will rise but hey, look at all the new fancy stuff you didn’t even know you needed!

Resist

Slow down.

Get out of line. Empty your online cart.

That stuff will still be there next week. And the week after that. And without time pressure you can buy fewer items and spend less money overall.

Simplify

How about this instead? Consider just 4 items as gifts for the holidays.

  • Something they want
  • Something they need
  • Something to wear
  • Something to read

Give them the benefits of a frugal Christmas. This in turn may allow for higher quality items to be purchased while creating less waste.

 

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

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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.

 

 

 

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.

Occasionally, when other parents find we send our child to private school, they discuss their thought process for their own children.

Wait and see

For the few that consider private school as a possible path, a recurring theme  I have heard for those that can afford it is that they will wait to see if the child has potential to justify the expenses.

Old School House Sign - Source: Wiki Commons

Old School House Sign – Source: Wiki Commons

And I get that one wouldn’t want to waste money but I struggle with their wait-and-see viewpoint.

Who should go?

Shouldn’t all children be educated to their potential, even if it is not ‘success’  by conventional  standards? Indeed, isn’t a struggling child the ideal case for a private education and most likely to see beneft?

If it makes sense for your situation, move now to develop that potential and make it inevitable.

Tell your children they are a more worthwhile investment and more important than a supersized house.

Villa Haas Mansion - Source: Wiki Commons

Villa Haas Mansion – Source: Wiki Commons

Tips and tricks – the paying for private school links page

We aren’t the only voice out there discussing the details of how to pay for private school. Here are some great reads to help you consider the options and the trade offs:

Broad Brush Tips

Real Life Inspiring Stories

Frank discussion of the trade offs

 

Options Analysis

Have a link that you think will help parents and students? Post a comment so we can include it!

Free your mind

Wait, are you saying I just need to  do things differently, do some basic stuff for yourself  and avoid some junk and then I can send my kids to private school, retire early or donate stacks of cash to worthy causes?

That is right.

Why isn’t everyone doing this? Isn’t it going to be hard? I mean, after all if it was easy everyone would be doing this sort of thing, right?

Theory of the mind (or mind control for beginners)

There is an answer to these questions and it is called theory of the mind. This super power like ability enables you to mirror the experiences of someone else simply by watching them or hearing their story.

And throughout history this has been very useful. You can watch someone knit a few times and start to mimic them. Or you can hear a vivid story of an adventure over the hills and forever remember to avoid the cove of three trees. It’s like you are there – because, in your mind, you are there!

Fantasy Island

This also makes entertainment, well, so entertaining. You can follow your favorite team all season and when they win the championship you will share in their jubilee and say “we” won even though the team doesn’t know you exist. Or you

can escape into a fantasy land where you easily relate to and experience emotions of the hero Hobbit. And there are often valuable morale lessons in these fictional tales and they can provide much needed perspective but it comes with a steep price.

It’s Fake (News)

And, it is worth noting, it is all fake. You aren’t doing any of it. Sure, going on a wild adventure in a movie or book is a wonderful experience. But it is fake. And doing the dull but profitable job of keeping accurate records is downright boring in comparison.

 

The matrix is an illusory world

The way to fix this is to free your brain up. Specifically, force yourself to turn off the video and close the book. Sit still.  Wait a bit until you get bored. Then, think about what tiny super easy thing you can do that can improves your situation. Then do it. Repeat.

Stop watching fictional people live out their fictional lives while yours slips away. Go for a walk in your boring old neighborhood. A real walk.

G Ruga Coral Maple Tree Photo

Coral Maple Tree

As you step outside and see the soft glow of the people watching their programmed lives you will soon realize you have almost no competition, few are interested in easy, unexciting, but highly profitable tasks. You have already won by simply unplugging. Everyone is busy consuming visual symbols to stimulate their brains electrical impulses.

Now you know better.

Welcome to the real world. Let’s get to work.

Half priced cars ! On sale now! And every day!

An introduction to mispricing

Use the economic concept of mispricing.  to reduce your costs and free up more money for tuition.

Mispricing occurs where sellers out number interested buyers for a particular item and where the item is able to be repriced lower based on that demand imbalance.

The example usually comes up in relation to financial assets such as stocks, bonds, real estate and so on but applies to consumables as well.

An Example: Mispricing in the stock market

Charlie Munger executed this perfectly in the 2009 financial panic as described in an article in Bloomberg News.

“By diving into stocks amid the market panic of 2009, Munger reaped millions in paper profits for Daily Journal. The investment gains, applauded by Buffett at Berkshire Hathaway’s annual meeting in May, have helped triple Daily Journal’s own share price. While Munger’s specific picks remain a mystery, a bet on Wells Fargo probably fueled the gains, according to shareholders who have heard Munger, 89, discuss the investments at the company’s annual meetings. “Here’s a guy who’s in his mid-80s at the time, sitting around with cash at the Daily Journal for a decade, and all of a sudden hits the bottom perfect,” says Steve Check, an investment manager based in Costa Mesa, Calif., who has attended the publisher’s meetings since 2004.

The stock market profits were first disclosed in a May 2009 Daily Journal regulatory filing under the heading, “Liquidity and Capital Resources.” The section outlined how the publisher was sitting on about $9 million in gains after spending $15.5 million buying common shares over six months through March 31 of that year. The results kept getting better. By the end of September 2009, they had appreciated to almost $48 million.

[1]

The five steps to benefit from mispricing

To execute a mispricing purchase you first must recognize one and then be able to act on it. This requires a number of elements to be in play at the same time:

  1. Patience
  2. Cash
  3. Analysis
  4. Flexibility
  5. Willingness to purchase an unpopular item in scale

We use the mispricing approach for our own benefit on vehicle purchases.

Early on we were striving to get the “best” instead of “good enough”.

Flexibility

So we went with a popular vehicle at the time, a Toyota 4runner. These were popular and expensive and we used the only mispricing technique we knew about at the time which was flexibility. We purchased a new 4Runner from the left over trucks from the previous model year. The $45,000 vehicle only cost us $40,000. We didn’t get the color or exact features we wanted but we saved $5000. Woot! And that popularity was not unfounded. We had the car 14 years and it is still on the road today.

Product is Currently Unpopular

For the next vehicle we got a little better at finding mispricing. The SUV boom was well under way and hatchbacks were unpopular and considered no longer cool. When we actually looked at the features they delivered enough mass and safety features to be safe, better gas mileage and all the functions of a full size SUV (that we needed). They were simply unpopular compared to the monster truck models of the day.

We combined the unpopular feature with the late model technique and got a Subaru Forester for $20,000. This was half the cost of the previous car purchase. Woot! $20,000 saved! These cars have since become popular again as more and more folks figured out the many benefits of these mid sized sport utility vehicles so mispricing affect is largely gone (on this model).  We were in style again, at least for a while.

Cash, Analysis and Patience

For our most recent purchase we added analysis and patience to the mix and to further benefit from mispricing. Many cars are rated by reliability. And they if aren’t rated top tier for reliability they really suffer in the used car market. People don’t want to own something that wasn’t best for reliability when purchasing something used. But when you do the analysis a middle tier rated car is actually more reliable than cars of the past.

We saved $30,000

We combined flexibility, our reliability analysis and the unpopular status of middle tier to watch, wait for and eventually obtain a used Volvo wagon for $12,000 dollars with very low miles. Woot! $30,000 saved! The battle wagon doesn’t have a lot of advertisments 

 

In summary

The market (us buyers and sellers) occasionally misprices goods and servies and assigns artificially high prices to the best and artificially low prices to the runner ups. You can discover and use this mispricing if you conduct the analysis, are flexible, patient and willing to select something currently unpopular (not easy as it sounds) that meets your particular needs. Just do your homework to make sure it is actually mispriced and not low cost for a reason you care about.

What about you? Have you benefited from temporary mispricing conditions?

[1] https://www.bloomberg.com/news/articles/2013-07-25/berkshire-hathaways-charlie-munger-shows-a-golden-touch

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