Paying for private school

Tips and tricks for sending your child to private school

Tag: frugality (page 1 of 2)

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/

Hard work and self-restraint

Paying for a private school is really challenging. And while there are many mental frameworks that help one in particular is required as the basis for the rest; industry and frugality. That is a fancy phrase for the combination of hard work and self-restraint.

This is not a new concept. Benjamin Franklin wrote the following Advice to a Young Tradesman on July 21st, 1748;

“It depends chiefly on two Words, Industry and Frugality; i.e. Waste neither Time nor Money, but make the best Use of both.”4

I urge you to read the full text. What isn’t often stated is how satisfying it is to get stuff done. Checking stuff off the list! Saving tens and sometimes hundreds of dollars in the process! And redirecting those dollars to someone else’s benefit.  “Work is love made visible“. ― Kahlil Gibran

It is ok to not be the best

I am probably the least handy person on the planet. To pay the tuition we regularly apply both industry and frugality.  It started with raking the leaves instead of paying someone to do it. And, slowly, ever so slowly, and with the help of lots of YouTube videos, we added more stuff to the we-do-that list. Last year, I carefully replaced the bathroom faucet. And someone heard I was doing the work myself.

caption2

By JanekpfeiferOwn work, CC BY-SA 3.0, Link

They were quite impressed. My chest puffed out a little further (for about a minute) and it occurred to me it is kind of fun being able to get stuff done. It is even more fun to understand how something was installed so when a problem invariable occurs you can usually understand what is going on and when to call for help – and when to simply tighten a bolt.

There is dignity in work

It is very easy to be a consumer. To wait in lines for stuff and services. To pay for private school (or home school) you are going to have to change you mindset from consumer to producer. It is quite satisfying. I have repeatedly noticed that the few wealthy people I know tend to like to do stuff themselves. It is not for the money. There is dignity in work. Do stuff yourself, however small, instead of standing around watching others do it for you. It’s a lot more fun (well, when you are done) even if you have to do the same job three times in a row to get it right.

Read the Money Mustache article introducing and explaining the Consumer Habit Loop versus The Mustachian Habit Loop. And then read it again. It will take a while to sink in but it a key framework in enabling you to pay for your children education while simultaneously enjoying a more satisfying life.

Roll up your sleeves. Get your hands dirty*.

You can do this.

 

 

*Not really. I go through about 100 Raven Nitrile Power Free Gloves every six months. They enable me to do jobs that normally I would resist from the gross factor alone (this includes all cleaning, car and plumbing work).

 

 

How to save $500 in twenty minutes

 

Our storm door locking mechanism failed. People locked in – and out. A new door is $300 and installation presumably more.

Don’t but your way out of a problem

My instinct was to purchase a new door. Instead I went over to StormDoorGuy.com and watched his awesome video.

 

Frugality is environmentalism dressed up in overalls

The offending locked was removed and I am off to replace it.  Instead of an entire storm door going to the dump the only the handle will be replaced.

$500 saved in 20 minutes. Thanks Storm Door Guy!

Should I get a loan?

No, you should not get a loan to pay for private school elementary or high school.

A loan means you don’t have the money

A loan means you don’t have enough money to pay for the school. A loan means you would spend more than you have, every month. That is not sustainable for the long haul of tuition for private school which can go on for decades.

Debt has specific uses

caption2

By Sander van der Wel from Netherlands – Depressed, CC BY-SA 2.0, Link

Debt is appropriate for a business venture where you can reasonably expect to recoup it and then some – such as a highly employable four year college degree or a medical emergency. Or for a house where the deductible interest usually (depending on interest rates) makes the loan cost less than paying cash outright.

Everything else is a pants on fire debt emergency. Don’t add to it.

Here are your options

  • Cut expenses
  • Increase income
  • Choose a lower cost school
  • Choose a public school

What!

Public school?

Yup, public school is an excellent option. Seriously consider it. It is ok to not go to private school. It is not ok to destroy your family life and health in the pursuit of this singular goal.

Confront reality, and then adjust

Confront reality, whatever that may be – don’t put yourself in bondage and mortgage your future time just because you wished things were different.

Instead, you can send your kids to public school and pick up a  tutors and religious education on the side to augment the education. That is an acceptable and perfectly fine version of private education. So is home schooling. Remember the goal: an education for your child that results in a balanced, centered, inquisitive and knowledgeable adult with an internal morale compass. There are lots of paths to get to the end result without selling your future on this  one way of achieving your goals.

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

Are you a bad person for sending your kid to private school?

A recent slate article proposed that if you send your kid to private school you are a bad person.

The thesis for this claim is that if every single child to public school they would improve.

No studies or data are presented to back this up.

And she might be right – but convince us!

Will putting more people into a bad system help? Maybe. But why didn’t it help from the previous generation? Or the one before that? Were those parents lazy? Didn’t they use their influence and connections to improve the education system? Is it better?

An alternate approach is creative destruction. In a system where bad actors (second rate phone companies, restaurants that get everyone sick) are allowed to fail and good actors (first rate phone companies, barf-free restaurants) are enabled to thrive, over time, the bias tends towards more good actors.

That is the private school system. A public school can be reformed but, until folks move away it can also continue to operate “as is”. Indeed, private schools put pressure on public schools to get better by their higher performance. I emotionally get the “we all need to go to public schools to improve it”. Then I think of the clogged roads and how teleworking is opting out and improves

caption2

Does more here help? Image attribution: CC BY-SA 2.5, Link

my circumstances and enables more of a scare resource (roads) to be more available to those who need it.

We can do better than sacrificing a child’s education in the hopes that doing so might improve the over all system. A better use of these energies is to educate the children who need it now and thereby raising the standard upon which all schools are evaluated.

Wait for it. Wait for it. Steady. Steady…..Now!

When paying for tuition for years on end I found that be willing to wait can be an ally.

We are going camping soon and usually it’s a school thing (includes tents). But this outing is a separate tent and we needed some gear.

Reviews of the low end tents revealed they are ok unless it gets windy or rainy. A wet tent would not be good for little (or big) people so we wanted to upgrade. Car camping tents can become really expensive quickly. And each night not in a hotel sort of pays for itself.

What we wanted it the glorious 6 persons REI Base camp tent. Ventilated awesomeness. With a footprint and tax it comes in a very reasonable $500. However, we aren’t reasonable. We are paying for private school. So I kept an eye out for a week, and then weeks, and then months. Prices would vary but even on Ebay the used ones were going $300+ something. They must be great tents. We spent weeks looking for one to rent from numerous places (check out lowegear.com if you camp).

Didn’t work out. We really wanted that one. But we have since learned it can be productive to be ok with second place. REI (who we like to support because of their fantastic educational programs and supporting community and the natural environment) had a two week only sale in the spring – 25% off on goods upon check out.

They only had one tent for sale with that would comfortably fit us – a Big Agnes. The reputable brand had a model with good, but somewhat mixed reviews. It was presumably on the way out for improved models so it was 25% off. After further reading I realized it wasn’t selling because bad reviews were being posted about that actually referenced a previous model. So this was an excellent tent and more than we needed for basic car camping and was small enough to serve for other trips as well.

Curious, I put the tent in the basket and saw and additional 25% off. This sucker, new, we being dumped because of mistaken reviews (or REI needed to clear inventory, or both).

It was cheaper to buy this tent new than rent the exact same model. By being patient, and flexible we were able to get an excellent tent for a price that didn’t bust our budget.

Big Agnes Tent

Not a camper? It is low cost adventure option. The long weekend we have planned would have been $600 in hotel costs alone – it is much less money to camp for this particular outing.

 

Be ok with second place

There seems to be a built in mechanism in most of us to want the best of everything. What is the best car at the best price? Where is the best place to live? Reports are written and millions in advertising spent to help you get the best. And given that you earn enough income to consider private school you are probably (over) trained to analyze, sort, prioritize and select the optimal solution as part of your work life.

Stop trying to optimize at home.  To pay for private school, for many of us, this is the route we take. Sure, measure, but often second, third  or fourth place is just fine. Indeed, you don’t even need the best private school – just a school that fits for your child. And that may be your local charter or public school.

Add the phrase “good enough” to your lexicon and your life will get a lot simpler and you can focus your resources on the things that matter most to your family.

 

 Lt. j.g. Aaron Lanzel takes second place at the Armed Forces Cross Country Championship with a time of 39:32. Source: Wiki Commons

Lt. j.g. Aaron Lanzel takes second place at the Armed Forces Cross Country Championship with a time of 39:32. Source: Wiki Commons

The Granny Smith cash multiplier method

There is a very subtle multiplier effect which is essentially a tax free income booster that can help you pay for a private school tuition. Here is how it works.

In November my wife was looking for a tree to plant on our very (very) small yard as a screen for a nearby street. The tree had to be fairly small given the constraints of said small yard.

She happened upon one that was ascetically pleasing with a maximum height and width of 30 feet by 30 feet. Measured from the location of where we would place it with a yard stick (it’s a small yard) at full size the tree will expand 15 feet each way. Perfect!

Method Tip 1: Avoid having to earn as much income on the purchase by purchasing a lower cost item.

The ten foot tall tree, while ideal in form and habit, was half bereft of leaves with a bit of a Charlie Brown Christmas Tree look going on. The tree was originally $120 but was marked down to $30. A sale!

Enter step one of the multiplier effect. She saved $90 dollars on the original purchase.

US Currency - Source Wiki Commons

US Currency – Source Wiki Commons

That saved amount removed the need to earn that extra $90. Let’s assume a 40% cumulative, federal, state, sales taxes and mystery fees on the income. That extra $90 would have cost $126 in earned income to cover. Whew!

To restate- that is $126 in earnings we didn’t have to make to actually end up with the $90 extra we would have needed for the full price of the tree.

Method Tip 2: When making a purchase, have it solve multiple problems at once.

My mother told me that her grandmother had a purpose for every plant around the farmhouse, in addition to looking nice.

In our case we were looking for a small tree that provides a summer screen from the nearby street but still looks good and drops leaves in the winter for additional sunlight in the colder months. This works for both screening and sound attenuation in the winter as it is quite dense with branches.

What else could it do for us?

In our case the tree selected is a Granny Smith apple tree! It should produce about $20 bucks of

caption2

By No machine-readable author provided. Fievet assumed (based on copyright claims). – No machine-readable source provided. Own work assumed (based on copyright claims)., Public Domain, Link

organic apples every year (ok, more like $50 but I want to be conservative here to make a point).

And we placed it on the west side of the house to shade (and cool the air) going into the AC and near the house.

What about having to pick the extra apples that we won’t eat, giving bags of them to neighbors, family, coworkers and the local food pantry and then still having to pick busted ones off the ground? What a hassle right? Sure, but we have arranged our lives such that we get regular physical activity with this sort of money saving effort all year long. Annual gym memberships were cancelled long ago but we will only count the month of apple picking and leaf raking mayhem here for another $50 saved.

And for the grand finale, our nearby park has crab apple trees. These can be used to cross pollinate Granny Smith apple trees (they self-pollinate but word in the fields is that a nearby pollinator will help with yields). That is a second $30 tree we didn’t have to buy (nor had space for) because we selected a compatible tree for our neighborhood.

Total economic impact

The first year we saved $90 on the tree and $30 on a second tree we didn’t need to purchase. The tree (fairly big already) should produce apples about three years hence and provide the shade to assist with house cooling.

Lets look at the numbers using the Granny Smith multiplier method.

Year 1: $120 saved

Year 3 on: $50 saved on gym membership, $20 on apple costs and $5 on AC costs for an annual savings of $75.

Ten year economic output: $645

And remember this is all tax free after the initial $30 we spent. That is a money tree that offers $60+ annually in savings, builds community as we gift organic apples, screens the street and provides a beautiful tree to look at. Plus it is pretty cool to have an apple tree.

Let’s assume my conservative numbers are *still* too high and it only saves us half that, or $30 a month.

Fine. An investment with a yield will take a hit of 15% on the income so I would need $34.5 in monthly income ($414 annually) to produce that same value.

A typical safe stocks yield 3%. We would need a stock portfolio with a market value of $13,800 to produce that same income. And to purchase that stock we would have had to earn $20,010 in gross income to purchase that investment.

Oh, and the yield on the Granny Smith Apple Tree is $30 a year or 100% of its original purchase price, annually.

We just trounced the stock market and avoided having to earn an additional $20,000. Thanks Granny Smith!

Don’t overdo it

The multi-purpose mindset does have its limits. Spending an extra $10,000 on a fancy pick-em-up-truck because you might need to haul a jumbo pack of toilet paper someday is just a slow way to lose money. Just think about it first and run the numbers is all I am saying.

Get into the multi-purpose mindset. You can do this.

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