Paying for private school

Tips and tricks for sending your child to private school

Tag: money for school (page 1 of 3)

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.

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).

 

 

Sending your kid to private school will save you $1,053,000

Time Magazine reports that private school can save you money by giving you home location flexibility. This in turn can save you $50,000. They are right! Indeed, you can save even *more* money if you take the right steps after moving in.

Small is Beautiful

We live in an OK but not great public school district.  As is typically the case for such school districts, the homes are older and smaller.  Our smaller home costs less to heat and cool. And it costs a lot less to repair. There are less materials needed and they often cost less to replace. Don’t be scared into buying  or renting a brand new place to avoid costs – over time the smaller home will come out way ahead in many ways.

As one of many examples, our current roof cost $3000 to replace back in 2010. For larger homes a roof replacement can be $8,000   to replace with just basic materials. And larger homes are often fancier requiring you to get better materials to fit in. And this leads to the next benefit – keep up with the neighborhood expectations.

Less Pressure To Spend

Keeping up with the Jones is a lot different in our neighborhood. Folks are lot more down to earth. Literally. Hiring a lawn service is considered either 1) a mark of shame or 2) you must be ill and we should step in to help.

People who move here and hire a lawn service seem to eventually shift to mowing it themselves. Every Saturday morning they see countless examples of how do get it done. And the entire street is a tool sharing enterprise. Having auto mechanics and DYI folks as neighbors really helps as well. A a lower cost neighborhood is lower cost on many levels and with more down-home kind of folks we prefer.

The Up Side – More Earnings

And private school raises the odds of your kiddo going to college. You will be used to saving lots of money and shelling out tuition expenses anyway so you are more likely to be set up to pay for it. And that equates to a million an extra income over their career (typically). Start to think across the generations and it starts to get impressive.

And while money isn’t the main driver for a private school it is worth noting that you save a lot more than $53,000 when moving to a lower cost neighborhood and paying for private school.

And lower costs houses are smaller, older and closer to area of employment. Your car costs will go down and with that shorter commute you will be more rested and eventually promoted.

You will save $53,000 on housing expenses and realize $1 million in extra income for each child. That is not a bad deal for providing your children an education that matches your values.

 

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!

The truth exposed

The truth about how to pay for private school isn’t very exciting. While good income, low costs, careful spending and regularly saying no to a myriad of worthy spending choices are important they aren’t “it”.

Voluntary Self-Sacrifice

Instead, they are signs of an underlying philosophy that is rare these days but common throughout history. And that is self-sacrifice.  In short, this is giving up something worthwhile for you so someone else can have something even more worthwhile.

This framework may seem familiar to you as it the basis or morality of most religions.

US Currency - Source Wiki Commons

US Currency – Source Wiki Commons

This beautiful concept has a stark reality. Rare vacations. Older cars and furniture. A higher thermostat in summer. A delayed retirement. Smaller living quarters.  On paper this sounds good but the reality is a bit different. For example, my old Subaru leaked gas fumes in the car when the temperatures dropped by 30 degrees (a clip as contracting too far). While not overwhelming it did result in the windows down in January and February.  Freezing winds, icy rain and strange looks penetrating even the fuzziest of ear muffs.*

Voluntary self-sacrifice is how family of limited means pays for private school.

This can make you all stronger

Madeyski Suffering -Source: Wiki Commons

Madeyski Suffering -Source: Wiki Commons

As an extra benefit, these hardships are part of the education process. They build toughness, humility, empathy, resilience and demonstrate to all the ability to focus as a family on higher goals. They teach you to be resourceful and solve difficult problems without simply purchasing your way out of every discomfort. It helps prevent a family with extra resources spoiling their child. By definition they will have less materials goods, entertainment and goods as a result.

A better quality of life

You will invariably become an environmentalist as well as produce more and consume less. You will make mistakes, adjust and move on. It might not work. But you will take the leap. Some will praise you but most will criticize you. Be ok with people being upset with you because they think you are wasting money or choice is seen as undermining the public school system. It is ok not to have every one agree with you. Indeed, it is desirable.

.* The Subaru was eventually replaced by a 10 year old Volvo station wagon – a low cost way to get a top IIHS safety rating on the cheap. The second week I had it the passenger window fell into the well. Forever open. Instead of rushing to the dealer I checked the weather (no rain for a week!) and after a lot of research and $19 later the window opens and closes again.  It’s not perfect, but it works.

Volvo Wagon - New to us!

Used Volvo Wagon – New to us!

 

 

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

Frugality is a quality of life compounding machine

 

In my grubby little hands I am holding a wonderful 12 ounce bag of dark roasted Starbucks Café Verona coffee. This powerhouse of anti-oxidants and wakey-ness  is sustainably farmed and all of the Starbucks employees get educational benefits and health insurance. So this is the good stuff.

 

A look at the coffee numbers

Each cup of coffee we brew at home takes 2 ounces of the delightfully aromatic Starbucks grounds. And in 12 ounces there are 72 US teaspoons so that means we get 36 cups of coffee from a bag of grounds.

This bag costs us $8.59, or 26 cents a cup. A year of home brew will costs a whopping $96 dollars. For two people that is $191 bucks. We use half and half for an additional $2.29 a week or $119 a year. Total coffee expense is around $310 a year.

That same drink is a very reasonable $1.85 made by a hard working barista. For two people over a year that would be $1,317.

Wow, a savings of $1317-$310 or $1007 over a year.

Right?

Wrong!

A second look at the numbers

This is what is so counter intuitive about frugality. Frugality itself is a compounding machine. It took me years to notice it and first I shrugged it off as improbable if not impossible.

What is missing here are the secondary and tertiary by side effects.

The first is the actual financial savings.

Lets take a look.

It takes me less than a minute to scoop the coffee, add the water and push the button.

The drive, wait and drive back to our local Starbucks is 20 minutes.

While waiting for the coffee I usually make breakfast. Nothing better to do as I have plenty of time. But with a 20 minute commitment to pick up coffee in the morning I simply don’t have time to cook and I will add another $15 in breakfast vittles. Another $3750 in  annual expenses to add to the total.

And we aren’t done yet. It is a mere 4 miles to our local Starbucks and back. Sweet! Or is it? The federal government estimated cost of 51 cents per mile in car operating costs. Add another $2.04 to the cost or $532 bucks a year to the total.

  • Coffee savings – $1000
  • Breakfast -$3000
  • Car – $500

 

This results in a grand total  (and I rounded down a  lot here) of $4500 in expenses annually. That home brew actually saves you $45,000 over ten years.

The second benefit is even better. The quality of life effect is what keeps so many already financial independent people to stick with their frugal ways.

Once you have bought a coffee maker, got into the habit of buying ground coffee and then learned to operate the dang thing the actual process is easier than going to get coffee. And there is never a line.

Self taught barrista super powers

This means, after you become a coffee brewing expert, you will have a choice.

Choice 1: Stand in your kitchen drooling with one eye open until the coffee is ready about a minute or two later.

Choice 2: *Or* you can throw on some clothes, find your keys and shoes, rush out, feel the cold rain go down the back of your neck, fight for parking, wait in line and then zoom back home to reverse the process.

If both choices are available which would you choose? Yes the coffee isn’t quite a yummy as the store made stuff but your overall quality of life is so much better.

This is the power of frugality and of doing just some of the steps yourself.

The skeptics among you will note you don’t go to Starbucks 356 days a year and certainly don’t scoff down scones.  I don’t want you to believe me. I want you to try it out for a month and make your own assessment.

This is just a single example. You can find a lot more ways to pay for private school that are much bigger such as avoiding Black Friday, saving $3000 in a single weekend, or using the Granny Smith cash multiplier method.

 

An ode to Peapod

First up, this is an unsolicited article. No one is paying, pushing or promoting me to write this piece.

Here is my typical grocery shopping experience;

Grocery shopping experience diagram -multiple ways to waste

Grocery shopping experience diagram -multiple ways to waste

I will admit, I am very impressed with people who can clip coupons, keep a price book and then find everything on their list, in exactly the right size, in a massive store with an average and ever changing 47,000 items in the store. I have tried many times and repeatedly failed at doing so.

We kept seeing a Peapod truck at the neighbor’s house each week. We quietly snickered and thought even though they are super frugal on everything else they had a hidden weakness.

My interest was piqued so we tried an experiment with this online grocery thing. We intentionally keep detailed records so it was easy to load a Peapod cart online and compare to last weeks grocery expenses.

Oh man was it easy to find stuff. They have a search engine! And it was certainly educational. For example, the two red peppers I buy each and every week have gone up from 50 cents in the summer to almost $4 in the winter.  Green peppers will do just fine and only cost a buck.

That kind of real-time-pricing-feedback adds up – in our case to $50 less than we normally spend (that would be $2,400 a year). So we went crazy and got the Peapod meal kits (all the ingredients in a box). And it was *still* $20 cheaper and we will waste less food as a result. Hmm.

A few months in we found we saved about $300 a month on groceries. And this probably points more to my ineffectiveness as a shopper and my susceptibility to “buy it now while supplies last” sales. Know thyself.

If you end up trying this or a similar service I would love to know how it works out for you – or if it doesn’t. And if you are inclined to do so please use my Peapod referral link and hook me up with free (Green) Bell Peppers for an upcoming stir fry. Woot!

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.

 

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