Paying for private school

Tips and tricks for sending your child to private school

Tag: money for school (page 1 of 4)

Don’t complain. Build.

In November of 2016 Mr. Money Mustache (required reading) retweeted a post by Elon Musk that said “Don’t complain. Build”.

Create, design, join or invent a way to make your situation better. Is your local school system mediocre and you can’t afford private school? Get involved and improve it.

Us amateurs work really hard to create something pretty mediocre only to have to do it again. And again. I had to install the disposal in our kitchen three times before I got it right. This is 30 minutes of work for an average plumber. It took me two weekends. I don’t care.  Honey badger doesn’t care either. It works, it has been there 5 years and I saved $300 in labor. Plus, I prevented a plumber from having to do something basic. And I *really* know a lot about disposals now. When it had a problem last month I was able to fix it really quickly

caption2

By JanekpfeiferOwn work, CC BY-SA 3.0, Link

without a reference manual. I even remembered where the stupid screw that came loose was located. How could I not after spending 20 hours under the sink looking at something with only 3 parts?

Critical thought is an important skill. Identifying what is wrong and how things could be better is important as well. But this must be followed up by action. Repeated attempts, slow progress actions is the grit of making stuff go. Posting a complaint hidden as a comment revealing how insightful you are doesn’t actually do anything.

Don’t complain.

Build.

Increase your food expenses!

Food is  a big portion of household spending. You probably think you want me to cut expenses drastically here as well. Nope.

You have enough income to consider private school so most likely you have a two income household where everyone works in competitive and draining jobs. And now I am asking you to think about cutting costs and to take regularly repeated actions. This takes a lot of energy and a clear mind.

Going for the pancakes instead of an egg white omelet with mushrooms and peppers because the pancakes are a fraction of the cost makes sense right?

Not always. Paying for private school means developing your children to their full potential. And that applies to you as well. Some things make sense to pay more for and actually ending up costing less in the long run.

Pancakes, for example, can cause a temporary spike, and insulin rush, a crash and then a fuzzy fog hours later. We need you to have steady and calm energy all day and then in the evenings, after a long commute, feeling like you could be productive. That way you will have enough energy to do some money saving record keeping after a full day at work. Slow and steady wins this race. Eat whole foods.

You will find your food costs might go up a little but your energy levels become a steady fire once you drop the spikes associated with sugar and ultra refined flours. Soon enough, after a ten hour work day followed up by dinner and dishes, more work will be quite simple and enjoyable. This is an investment in yourself, just like private school is an investment,  and will soon pay for itself many times over as your steady energy enables you to do more.

Don’t worry. You come from a long line of people who worked from dawn until dusk six days a week.  All you need to do is eat like them. Don’t eat anything your great

grandmother didn’t eat. If the dish appears to be traditional eat that – most likely it is mostly vegetables with a protein mixed in and sometimes a whole grain. Do this for a week for each meal and prepared to be amazed.

And when you are outside your dwelling some evening because there is something you need to do to save money and because you eat well you will have the energy to do so. You will invariable notice the soft glow in the windows nearby just sitting around being passively entertained. At first this will be alarming. Eventually you will realize you are playing a game where only a few are even showing up to participate.

 

 

Think multi-purpose

Ever noticed all those low profile and uninteresting hatchbacks, mini-vans and station wagons wheeling around?

Time to get excited about them because they are awesome.

We purchased our battle wagon for a net of $8000 even though it only has $70K miles and gobs of air bags.

Last month we needed a new side board (well, a side board, we never owned one).

New side boards were $1000 for low end ones unless you go with those glue and saw dust ones that have to be replaced soon anyway.

Too much! Guess those boxes stay on the floor.

We looked on Craigslist for weeks. And weeks. Even the cruddy stuff at low end stores was $500. Sigh. We were very close to dishing the money out for a new piece and cutting in other areas to make it work.

But wait, Craigslist has a 5 foot solid wood one for sale that on the Havertys awesome web site sells for $1000 new (love their stuff – so cool). And it is only $200 bucks and within a few miles of the house!

If only we had something to move it with – I am too lazy to rent something and it would take too much time. It might be gone and what if I don’t like it when I see it. In comes the incredible station wagon with seats that fold down! volvo-wagon-blueAn hour later the sideboard was now gracing our home instead of headed to the trash heap.  Money saving environmentalism.

On the way home I couldn’t help but realize the $800 saved was the equivalent of a 10% yield pay out on the wagon. That is pretty sweet contribution to the tuition.

Keep costs low and think multi-purpose.

Is A Used Car Cheaper To Own Than a New Car?

Is a used car cheaper than a new car to own? For those of us scrounging to pay for tuition there is a better (and easier) question to ask. And that is, what is my cost per use for this car?

Consider Cost Per Use Instead

Folks paying tuition don’t get to pick any car they want to won. Instead, we buy the safest cars possible and determine the correct one by comparing cost per use (in this case cost per miles).

Instead We Consider Cost Per Use on Large Purchases

Here is an example. Our car cost $45,000 new.  A long time ago. We paid net (after sale of the old car) $8000 for it second hand with 70,000 miles on it. Same features as the original owner had but with more miles on it, some character and a bit of a vintage feel. Let’s use the cost per use method to see if we paid a fair price for the vehicle.volvo-wagon-blue

Before we get into the numbers I realize some of you hate this sort of conversation. You find it is tedious and you never trust the numbers you end up with.  Send me a note or post a comment and I will run the numbers for you. And don’t worry about getting the match exactly right, just remember to keep cost per use in mind when facing a major purchase decision.

On to the numbers!

The original owner paid $45,000 for 75,000 miles of use or 60 cents for each mile driven, not counting fuel, tires, service and parts. Assume we keep the car another $75,000 miles and get the 75K, 100K and 125K maintenance work which will cost in total about $4000. Our combined cost for the car is $12,000, again ignoring consumables. Our cost will be 16 cents per mile or only 25% of the cost of the car if it was purchased new.  I declare this to be a good deal as we can get four of them for the same cost as the car was new.

Is A Used Car Cheaper To Own Than a New Car?

This doesn’t mean all used cars are cheaper than all new cars.

Today on Autotrader.com a 2013 Jeep Wrangler with 45K miles is selling for $25,900 despite having a poor side impact safety rating and marginal front impact rating. At the same time a new Subaru Forester, is selling for $26,100. Not as cool looking but stellar safety ratings.

If both cars are driven for 100K miles the Wrangler will need both the 75K, the expensive 100K services and a more expensive 125K service, and new tires for about $5000 in parts and labor. The Subaru will only need the $1500 75K service.

Let’s compare the cost per use of each vehicle in the handy table.

Wrangler (21 MPG) Forester (32 MPG)
Up front cost $25900 $21600
Service $5000 $1500
Gas for 100K miles @ $3 a gallon $14285 $9375
Total cost $45,185

 

$32,475

 

45 cents 32 cents

 

The Forester, despite being newer, safer, and more reliable and more gas efficient, at first glance appears to be about the same price as the used and cooler looking Wrangler. But the cost per mile reveals the Wrangler is 40% more for each mile driven. A brand new Forester is much cheaper then the used Wrangler.

The astute reader at this point will wonder – wait a minute – wouldn’t a used Subaru save us even more? I am glad you asked because today on Autotrader.com a 2013 Forester is $16,488.

Let’s compare cost per use of all three vehicles.

 

Wrangler (21 MPG) New Forester (32 MPG) Used 2013 Forester (27 MPG)
Up front cost $25900 $21600 $16488
Service $5000 $1500 $5,000
Gas for 100K miles @ $3 a gallon $14285 $9375 $11,111
Total cost $45,185

 

$32,475

 

$32,599

 

45 cents 32 cents 33 cents

 

Oooooh!  So sorry! The new car is still the most economical. The less gas efficient 2013 Forester combined with that 100K services hit really put the new vehicle in the lead.

We have found it helpful to think cost per use to get the most out of something so extra funds can be redirected towards tuition and hope you will too.

So the three cars I chose for this example were pretty close. Ideally, you are looking for comparisons that are really easy so that it is fairly obvious by adding up some numbers. But you get the idea. If you find a car that is safe and reliable but makes you go “meh” it is likely to be the correct car. That is why there are so many of them on the road as lots of other folks have come to the same conclusion.

If you are thinking a particular car you are looking into is so cool, move on. Get your excitement out of some fancy new shoes instead.

Simplicity

Years ago a statement from Bruce Lee about punching stuck with me as a good life philosophy.

“The height of cultivation is really nothing special. It is merely simplicity; the ability to express the utmost with the minimum. It is the halfway cultivation that leads to ornamentation.” – Bruce Lee

Bruce Lee

Bruce Lee

This same philosophy applies to paying for private school. Your child’s education isn’t about social status, fancy sweatshirts, a beautiful campus or a list of college admissions lists. Those are at best artifacts of a private education but more likely are distractions. They aren’t the purpose of an education.

Keep your specific purpose for sending your child to a private school in mind. It might be very different than my purpose. And that is OK as everything else is a ornamentation.  Your success on this endeavor will help both your child and the broader community by educating its citizens with a diversity of thought.

 

You can do this.

 

“It is not a daily increase, but a daily decrease. Hack away at the inessentials.”
― Bruce Lee

That is One Long Cable!

Eleven years ago we moved into our current home. And the previous owners had not installed cable television. To get it installed meant an all day visit and lots of holes would have to be drilled into the relatively intact walls. And then we would have a $100 a month bill.

We put it off. Then we thought about it. And then we passed on it and just used Netflix and then eventually Amazon Prime for videos and a fancy “digital” antenna for local television stations.

In the first year we spent $1200 less than we would have otherwise. Importantly, we missed all those advertisements that likely would have increased our spending even more. Ten years later we had avoided $12,000 in costs.

Last year we got a sweet deal on a used Volvo XC70. Originally $45,000 when it was new, we picked it up used for $12,000. After selling the previous car for $4000 the net cost was $8000.

Volvo Wagon - New to us!

Battle Wagon – New to us!

By skipping on the cable expense for the decade prior we essentially got a free car with all the gas it will need for many years paid for up front. And that is good because we need to pay the tuition bills.

Limit those little expenses. They add up quickly.

A Tale of Two Dishwashers

Our dishwasher was not functioning well. Repeated repair attempts had extended the life a bit but dirty dishes after each wash was the motivation to finally replace it.

We selected a washer that made sense for us (hard food disposal!) and had decent reviews.

Picture of an awesome Maytag Dishwasher with hard food disposal.

Awesome Maytag Dishwasher with hard food disposal.

There was a fancy one for $598.  Let’s assume we would have it installed for us rather than attempt to get the thing in ourselves.

The Numbers

 

Below are actual quotes from the site we purchased The Awesome Dishwasher (rhymes with West Guy).

 

Fancy Stainless Steel Version – Installed Fancy Stainless Steel Version, DYI
Base price $494 $494
Installation $139 $0
Install Kit $29 $29
Haul Away $15 $0
Totals $677 $523

 

So $154 more for the installed version. That is 30% more for the same functionality.

The Time

This might seem like a waste of time as I am wholly unqualified to install a dishwasher. And despite daily practice my ability to even use one has come into question (hence the hard food disposal). It would take a pro 1 hour. It took me two hours on a Saturday and another two hours on a Sunday. Since we took our time I was able to clean up all the junk under it, test it multiple times for leaks and line it up just right under the cabinet. The previous, professionally installed one, was a miniature leaning tower of Pisa.

And I didn’t have to wait for a contractor and can do it in the morning. 4 hours to save a measly $154. That is only 38 bucks an hour! Based on this calculator that is $79,040.00.

This is looking better already.

But wait – this is tax free money. I don’t have to earn that $154 which would have taken $215 in gross income (before taxes, withdraws, sales taxes and mystery fees). Now we are bumped up to $53 an hour.

The Adjusted Savings

That is better. $53 an hour equates to $110,000 annual salary.

Of course your salary takes priority but if you were going to spend a lazy afternoon with a non-fiction book you can have just as much fun watching a you tube video of how to install a dishwasher.

Change Your Mind Set To Make The Grade

Paying for private school means changing your mind set on seemingly small things. You can do this.

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.

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.

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