Paying for private school

Tips and tricks for sending your child to private school

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A Stitch in Time Saves Nine …Hundred Dollars

I am a fan of LL. Bean’s washable wool dress pants  as I wear fancy pants to my office job.

LL Bean is known for durable easy care high quality items. Their dress pants are a mix of wool and polyester which results in torrent of financial savings for the office dweller like me. Recently, a relatively new pair had the hem come undone and flapping in the breeze.

Think Before You Toss ‘Em

LL Bean Washable Wool Pants.

LL Bean Washable Wool Pants.

Normally I would have tossed it in the Goodwill bag and gotten a new one. More on that in a minute. First, a little more about these productive pants.

Their secret super power is that you can wash and hang them and they come out looking great without a trip to the dry cleaner. They can be more expensive up front, but as you have already learned sometimes it make sense to pay more up front.

The Savings

Let’s take a closer look at the numbers.

 

LL Bean Washable Wool Dry Clean Only Pants
Cost of pants $119 $119
Dry cleaning cost per wash 0 $5
Water cost per year $4 0
Number of times worn over 3 years 156 156
Gas cost of driving back and forth 0 1
Dryer costs 0 (we hang these on a dryer rack) 0
Hassle factor Low High
Total cost $124 $899
Cost per wear 80 cents $5.76

 

What? And that is just for one pair of pants. Assuming you wear dress pants 5 days a week the fancy drying clean only pants will cost you $4495 over 3 years. And this is before you consider shirts.

Surprisingly, we have found that doing this ourselves saves time as well. There is no driving and parking needed. And there is rarely a line at our drying rack.

$5000. And time saved. And it is better for the environment.

Back to the unfurling pants. My wife took up the hobby of sowing. She took one look at the unfolded hem on my near new pants and a moment later had them back in order. No need to ditch them.

Another $119 saved that can be added to the $5000 to use for tuition costs.

You can do this.

 

The Way to Wealth is Through Saw Dust

Problem: You need more storage

We needed more storage in the living room for stuff that had been piling up on the floor.  Ikea offers a number of credenzas but the size we wanted was about $500, before taxes. And I wanted something made of solid wood since we would be looking at it a lot and I find they are much easier to repair.

Solution: Used furniture 

Craiglist to the rescue! After many weeks of checking we found  a Modern Skovby Danish Teak piece.  Apparently these are normally thousands of dollars new and approaching $1000 used.   The one near us was being unloaded for $200.

There was a catch -the owner noted it was being sold for such a low price because it had some bad water stains.

No problem. I read that one could often iron them right out! This thing would be as good as new in no time!

Water Stain City

My buddies and I went and picked it up.

Woah.

It had a lot of water stains. Some over a foot long. And blue paint. And dents and nicks and scratches galore. Luckily, I had planned for such a possibility and bought it with plan b in mind – sand blast it!

Danish Oil To the Rescue

This summer I picked up a $40 palm sander to learn how to use a palm sander and to refinish the back patio table which was weathered.

I  put on a breathing mask and went to town on this thing – lightly sanding and buffing this thing to get the old finish, water stains and paint off. Some areas required extra attention because of what appear to be teeth marks from dogs. Woof!

The starting point was dusty, dark and deeply stained furniture

The Progression

Here is a photo of one (of many) water stain on the bottom left corner.

Photo of one (of many) water stain

Photo of one (of many) water stain

Here it is after a light sanding.

 

Lightly sanded

Lightly sanded

 

And the restored surface after refinishing it.

 Tried and True Danish Oil to the Rescue.

Tried and True Danish Oil to the Rescue.

 

Please be aware that Danish Oil left in the open will light on fire with no sparks at all through a rapid oxidation process. This will start a major fire. Always put your used rags and brushes in water immediately after use.

Costs

And here is the same model, in rosewood instead of teak, for $2800. And the teak ones go for about $1000 although I found a good one for $685 before shipping costs. Again, these are used prices for these functional works of art.

The Way to Wealth is Through Saw Dust

When it was all said and done we have a refinished side board for about $300. Depending on how you count it we either saved $200 (compared to Ikea) or $1800 (for a comparable product) or more likely somewhere in between. Importantly we learned a new skill (the entire family pitched) in and had a lot of fun. And it was cheap enough if it didn’t work out it wasn’t a big deal. We could get two for the cost of a new economy item.

Of course you can do much better than this by getting low end furniture used. But this point is that one way to pay tuition expenses is through a cloud of saw dust. And this is of course, an analogy for actual hands on work.

Should I Raid My 529 to Pay for Private Elementary School?

About 529 Plans

 A 529 plan “is a tax-advantaged savings plan designed to encourage saving for future college costs.” [1]

New Tax Law Expands 529 Use

The recent tax overhaul bill expands parents funding options to pay for private elementary and high school tuition.

Specifically, the new bill enables one to dip into a 529 plan to pay for any private school [1] – not just colleges. For example, if you have a large stash of cash in a 529 saved for college but the realities are that your youngster is struggling at school  this might be worth exploring. After all, if college is at risk because of present challenges a private school might be able to help.

Should I Raid My 529?

Raiding college savings funds to pay for lower school tuition isn’t something to be done lightly. However, it is an option now and one being worth aware of if you are considering private school for your child.

Before doing so it is worth stepping back and considering three things.

  1.  First, carefully monitor and learn about your expenses for a month. Observe your actual expenses not what you think they should be in the future. Can you still save for college or pay for some colleges based on your current situation or with some viable adjustments? And what will happen if the tax law changes again in a few year? Will you still be able to pay?
  2.  Second, with our kids it is easy to panic. Get rationale. Can some less drastic changes at school or at home help with the issues? Are charter schools or other public schools (yes, you have to move) an option? What is the full spectrum of options – and which qualify as good enough?
  3.  And finally, after the the rational exploration in steps one and two (and some meditation), follow your heart. Specifically, what do think you  wish you had did 20 years from now?  Do that and make it work by being the grown up.

If your family determines that private school is for you and you are going to raid the 529 plans to make it happen, immediately become a reader of this blog (paying-for-private-school.com) and the many other excellent financial management blogs out there. We can help.

References

  1. “An Introduction to 529 Plans.” SEC Emblem. December 04, 2017. Accessed December 30, 2017. https://www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html.
  2.  Hobbs, Tawnell D. “Losing Students, Private Schools Try to Change.” The Wall Street Journal. December 29, 2017. Accessed December 30, 2017. https://www.wsj.com/articles/losing-students-private-schools-try-to-change-1514557437.

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.

A simple approach to the holidays

There is constant pressure to buy lots and lots of gifts to wow the children with great big piles of loot. But there are limits to available resources.

How about this time tested approach instead? Consider just 4 items for each child 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.

Expect complaints. And comparisons to what other kids received. Be ok with that. Instead give your kids a great education and the tools, later in life, to buy stacks of material goods if they so choose.

How to properly value Bitcoin

Bitcoin has really gone up quite a bit this year and I have been hearing confused news anchors simultaneously declare  that ” it’s over valued” and  “buy it now”.

So who is right?

This post is intended to provide a framework for you to value Bitcoin using rationale thought rather than market price action (also known as guessing).

What is Money?

First it is helpful to understand  money.

At its essence, money is anything that can serve as a store of value, unit of account and medium of exchange.[1]

And the six characteristics of money are durability, portability, acceptability, limited supply, divisibility and uniformity.[2]

Bitcoin, fits this description perfectly. Indeed, it is a better fit than almost anything before it except for universal acceptability.

What should Bitcoin be worth?

With that framework in money in mind we can now determine possible valuations of Bitcoin by comparing it to other stores of values and then doing the simple math. Your job is to determine if Bitcoin will become a more or less common store of value over time. I have no idea but with this framework you can at least calculate the value based on your assumptions.

As of this writing (I did this analysis in the spring of last year but the concepts still apply) a Bitcoin exchanges for $1058.48  U.S. dollars.[1]And there will be, at most, 21 million Bitcoins in existence. Currently there are 1.5 Trillion in U.S. reserve notes in circulation[2]

 

Scenario Projected Bitcoin value
Today, speculative investment $1058 (current)
Bitcoin replaced by other digital currency $0
Shadow currency eventually reaching 1% of U.S. currency in value $714.28
Replaces all U.S Currency $71,400

 

From here you can extrapolate out. If Bitcoin replaces the worlds currency it will be larger than $71,000. And if it gets replaced or supplanted by a government issued crypto currency then this might go to zero. And, gold the original reserve currency totals about $1.8T so it’s replacement value would be similar.

None of this includes speculation or over-buying of the Bitcoin which may add a multi-factor increase to any of these numbers. A buyers versus sellers model could help you with that part if you want to get fancy.

It’s all very exciting for technology geeks like me (although block chain is the real marvel of Bitcoin) to observe but I suspect you can make a lot more money – and make it right away which you need to help with tuitions – with a quality dividend stock.

A much better investment than both of these options, of course, would be in education for you or a family member. Take a class instead.

[1] Coindesk. “Bitcoin Price Index – Real-time Bitcoin Price Charts.”

[2]Current FAQs Informing the public about the Federal Reserve.” FRB: How much U.S. currency is in circulation?

 

 

[1]Back to Basics: What Is Money?” – Finance & Development, September 2012

[2] Amin, R. K. Economics for engineers; a text book for engineering students. Anand (W.R.) India: Charotar Book Stall, 1963.

Stock Pick of the Month: Newell Brands

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 that align with my values.

This months stock pick

This month it is  Newell Brands maker of tupperware and sharpie markers.

This is a chance to hold a boring household products company at a discount. They own paper mate, sharpie, crock pot –rubber made – many of the items in our house that have worked out fine.

On sale for a limited time- for 30% off

The company missed some quarter  estimates and the stock prices has been in a down draft ever since. They dropped 30% in a single day this month. We cook with their pots, use Crockpot, have a Coleman stove and a draw full of sharpies and Elmers glue! Even those Contigo drink containers are theirs. Ten years from this will be a blip for patient dividend investors.

Crockpot

Super (or should I say Supper) Awesome Crockpot. Image source:  Newell Company

Invest now for 10% earnings yield

The purchase thesis is pretty simple – it’s a chance to own part of a household products company at an earnings yield of just under 10% (and that is at the depressed forecast that caused the stock sale in the first place). This won’t shoot up but will deliver us 10% every year – and a yield of .23 cents a quarter will, at these prices send home 3% of that and leave plenty for further investment and acquisition.

Margin of Safety

Even if the companies earnings drop in half from here the yield, at this morning prices will still be 5% – way more than one can get at the bank. Plus you will be part owner of company that sells stuff used by salt of the earth do-it-yourself people like you and I.

 

 

About Newell Brands

Newell Brands (NWL) is a leading global consumer goods company with a strong portfolio of well-known brands, including Paper Mate®, Sharpie®, Dymo®, EXPO®, Parker®, Elmer’s®, Coleman®, Jostens®, Marmot®, Rawlings®, Oster®, Sunbeam®, FoodSaver®, Mr. Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®, Rubbermaid®, Contigo®, First Alert®, Waddington and Yankee Candle®. For hundreds of millions of consumers, Newell Brands makes life better every day, where they live, learn, work and play.

To learn more,  Newell Brands are available on the company’s website, www.newellbrands.com.

 

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.

 

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