Paying for private school

Tips and tricks for sending your child to private school

Tag: private kindergarten

Seven Helpful Links For Private School Parents

Here are some helpful links to sites that provide guidance on how to  pay for private school.

  1. Budgets are sexy! (An entertaining how-to on financial management)
  2.  A Guide for Parents as They Look to Finance a Private School Education
  3. Can Middle-Class Parents Afford Private Schools For Their Kids?
  4. DC School Hub (Washington DC area resources for parents – find something like this in your area)
  5. Budgeting for private school (from an open and sincere parent)
  6. Attended private school – loved it.
  7. Attended private school – and didn’t love it (be open to many viewpoints before deciding what is best for your particular situation)
Old School House Sign - Source: Wiki Commons

Old School House Sign – Source: Wiki Commons

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.

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!

Vacations are for wimps

It is cold outside now but warm breezes and the faint scent of sun screen on everything are only four months away. Time for  summer vacations!

Have you ever wondered about the origin of a vacation?

Did farmers – the majority of people through much of recent human history – who had to milk the cows daily and couldn’t leave livestock unattended for more than a few hours – take a two week cruise? Did they take time off? Absolutely!  They called it Sunday (other terms across religions but a similar concept in many of them). And they had holidays.

A holiday is a special holy day that didn’t fall on a Sunday. We have since worked in various national holidays as well but it is the same idea.

And many resorts and retreats started with a religious focus – not an opportunity to imbibe, spend and be idle. Admittedly,  I am over extending this a bit but the main point is that there are different ways to take a break.

More recently there is pressure – and I mean that in the worst way – to to visit some exotic local, take photos and post them to Facebook. Look how much fun we are having!

Disney Springs

Disney Springs – Wikicommons Theme Park Tourist

A trip to Disney for four costs about $4000 and I know of a family who spent over $10,000 in a single week.

You know what is a lot less stressful? Stay home that week. Make a lovely dinner. Do some work  around the house you normally would have outsourced and you can easily handle. Go to a movie. Splurge for popcorn and drinks. After all, you are saving about $500 a day.

This turns a week off into a low stress even rather than a mad dash to somewhere and back again.

We have done this before and in sourced $1000 dollars of basic kitchen repair work *and* spent lots of quality time with family. And my kid learned how to paint a kitchen (Don’t worry – I just had him try it for a few minutes – it was low pressure) and was pretty pleased about it.  There was still plenty of pool time, time with extended family, games, day trips and eating out.

We experience the same warm breezes and relaxation and at the end of the week we are well rested and financially better off. Now *that* is what I call relaxing.

The simple life

One advantage of sending your child to private school is that much of your income goes along with them. As a result it limits the other available choices because you have much less discretionary income.

Fretting over a grand tour of Europe? Fret no more! You aren’t going!

This extreme financial constraints limit your choices and the resulting simplification actually leads to longer term happiness. It is known as the paradox of choice.

Have you always wanted to simplify your life? Now you can! And what better way than the assurance of a monthly tuition bill.  To be clear this isn’t about poverty – this is about voluntary simplicity. It is an interesting side effect we have noticed over years of sending the kiddo to a private school.

Read more about it in this outstanding book The Paradox of Choice (you are going to have a lot of time on your hands).

Oh, and for the trip? Easy, you are either staying home or going camping. Pick one.

 

Five scholarships for the 2017

Did you know financial aid and scholarships are available to help pay for private school tuition?

Income and frugality will be your core mechanism but financial aide can help.  Here are five scholarship sources  to get you thinking about it.

  1.  Your child’s school. Most private schools have financial aid and requests are typically assessed by an independent review board. You won’t know unless look into it.
  2.  The Louisiana School Choice program  had a number of rebates, tax deductions and school choice options. Research programs in your state and keep an eye out – this might expand with the new administrations education appointment.  Georgia has already handed out $117 million in tax credits in 2017.
  3. Or how about an academic achievement scholarship?
  4. Or maybe the better chance scholarship or the Jack Kent Cooke young scholars program is the scholarship for you.
  5. Not enough? Here are 50 more private school scholarship options.

While saving money  will be the driver a small scholarship can certainly help. Feel guilty about applying? Don’t – this isn’t for you.