Paying for private school in the DMV area

Tips and tricks for sending your child to private school for Washingtonians

Category: How to pay for it (page 1 of 5)

How to save 100% on any purchase

September is the start of the fall coupon season here in Washington DC. Coupons are mailed in mass to consumers across the region as we stock up for winter.

Many of these discounts , 20% of this week only as one example, are very compelling. And I used to fall for these, well, fall offers. What if I need one later? I sure would regret having to pay full price later on!

It took me years to understand a basic principal I first read about on the Frugalwoods Financial Independence Site. And that approach is to not purchase the item in question at all. This is the quickest and most effective way to save money. And you always save 100%. Do nothing. Say no. Recycle the coupon and go about your business.

Think about it. After all, even 50% off a $100 dollar you bank account balance is lower by $50 dollars.

I have become better (not perfect, but better) at resisting the mad dash of coupons falling from the sky into my mailbox and the internet into my inbox each fall. Brace yourself as more coupons are headed our way as we approach the holidays!

Five Ways You Save!

What I have learned is that by taking the risk of avoiding a sale and perhaps needing to buy that item later at full price is I actually save in five ways.

  1. First, I save the 100% purchase price of the item.a
  2. Second, I often don’t need the item. Ever. I just thought I did when I saw all the money I could “save”.
  3. Third, I save on the shipping, care, upkeep, storage and eventual replacement of items I never buy. This is roughly about 20% of the item for semi-durable goods .
  4. Fourth, I save the taxes I would have paid on the income I needed to earn to purchase the item.
  5. And finally, I save on the ecosystem “stuff” tends to have and all those related purchase for the ecosystem.

The secret life of stuff

I have now observed first hand that many items I purchase appears to have a secret life of it’s own. A laptop needs electricity, software, updates, my time to operate it and eventually replacement. Even a door mat needs water, electricity and detergent for the occasional wash.

The point here is not to do without – just to be ok with just enough. By doing nothing when handed an amazing limited time offer you will often save 120% of the purchase cost and have a simpler life. The funds saved can be redirected to tuition payments.

Five ways to cut college tuition costs by a third in the DC area

In the DMV we are lucky to have a number of education options available. Did you know there are also ways to reduce tuition costs? Here are five ways to cut college tuition costs by a third or more.

  1. Many people we know spend the first two years of school at community colleges and then transfer to their desired school for the final two years of study. For example, Montgomery College has a tuition of $5000 a year. The University of Maryland is $12,000 a year, ($20,000 if you live there). So you can either pay $80,000 for a four year degree from UMD… or $50,000, for the exact same degree by first completing your core credits at a local community college. That move save you $30,000 on tuition costs.
  2. And many companies in the DC area will pay for your tuition. The MITRE Corporate , with offices in McLean, Virginia, will cover $28,000 of your studies. Assuming your student picks up a graduate degree at night over three years at one of these employers that is another $84,000 in tuition assistance. And you get to apply what you learn right away.
  3. Also, DC residents should learn about the D.C. Tuition Assistance Grant program which grants up to $50,000 in benefits.
  4. Stay close to home. UVA’s in state tuition is around $20,000 a year. Out of state? Almost $50,000 a year. Save your family $120,000 by selecting avoiding a school that requires a trip on the beltway to get there.
  5. Finally, many colleges offer a discount to children of employees. For example, here is the 50% of tuition remission offered to University of Maryland Employees. That is $24,000 in tuition assistance right there.

Combining these steps can make tuition more affordable for both private and public colleges (and some high schools). These five options total $308,000 in tuition assistance with no scholarships. This will save you from having to earn almost $400,000 in income to pay for the stuff.

Education is a high priority in the DC area given the nature of the work here. Area institutions, governments and employers recognize and support this if you take the steps to apply for the benefits.

How to Budget for Private School (Hint: Normal Budgeting Techniques Don’t Work)

How To Budget:  A Typical Family

Most finance gurus recommend a detail zero based budget where every dollar gets a job as it comes in. That is brilliant and works to get you and keep you out of debt and to plan for longer term saving goals.

Paying for Private School French Country Kitchen

Paying for Private School French Country Kitchen

This didn’t work  for us to pay for a private school education because tuition is instant and  needed now, not in the distant future. As soon as your children go to school you have to pay right. You can’t benefit from compounded interest  over many decades or paying it down over time if you have private school as the goal for your child.

A more focused approach made sense for us!

How To Budget:  A Private School Family

A private school family must set a tuition payment away as soon as the paycheck comes in and live off the rest. This is similar to the pay yourself first  method  used for retirement accounts. In fact it’s the same thing.

Here is what a private school family budget looks like:

  • Pay your self first – Retirement
  • Pay first – Tuition
  • Pay first – Food, Shelter, Clothes
  • Build an emergency fund as you can
  • Pay for other stuff

When a pay check comes in, automatic transfers are set up at the bank to take the correct portion out and transfer it to a savings account. And the day before the tuition payment hits, the correct amount is taken out of that savings account and put into the checking account to pay the tuition amount.

We use a similar method for the housing payment and anything that remains is spending money.

Budget: A forecast of the future

US Currency - Source Wiki Commons

US Currency – Source Wiki Commons

The reason we take this approach is to enable us to pay for the tuition without fail. Planning a grocery budget, a vacation budget, a clothes budget and so forth is error prone. Some months you are going to be off and tuition (at least for us) is big expense that can’t be adjusted because we over spent somewhere else.  All that budgeting work is really difficult and stressful. You end up seeing a bunch of categories that you can’t afford and it makes you feel bad.

 

Make It Easy Instead

We take a simpler view.  We pay for tuition and basic expenses and find joy in simpler experiences. A walk in the park, a good meal or a week together as a family.  Vacations are for wimps and instead we  create a life you don’t need a vacation from  and instead focus spending on a few key things. For everything else, we are  ok with second place.

This focused style of budgeting is a bit easier to manage and a bit less time consuming. Walk through our budget:

Food: Lets keep it low but still eat well and go out.

New car fund: Zero

Cable category?

Zero.

Travel budget. Zero.

Home addition budget. Zero.

Vacation home budget. Zero.

Reality Check

Of course to do this you need enough income to be able to pay for your basic expenses and a tuition. Do that analysis first before signing up for a private school tuition. There should be ample wiggle room between your historic food/shelter/utilities expenses and what it would be with tuition. That wiggle room is the amount of tuition you can pay. Don’t count on future raises or “making it work”. Measure and then decide.

Change your perspective on what is awesome

It is time for a new stove in the paying for private school household.

Our 30 year GE Spectra Electric Oven is awesome – it cooks food inside the house without lighting it on fire with the push of the button. But it’s a smokey mess and a health hazard. We would probably be fine with it but we are inspired to replace it but not break the bank doing so.

Unlike many newer stoves this one has exposed coils on the bottom. The theory being that you use the self-cleaning option to blast all the particles and you would never need to clean the bottom by hand with anything other than a wet rag.

We tried this self-cleaning thing twice. The fumes and soot and smoke were overwhelming – even with the windows open and us out of the house. On the second run on it I thought that maybe sending soot and carbonized cleaning supplies that were into the air wasn’t good for anyone . And I could blast it out of the house where it would immediately harm anyone walking in the neighborhood.

Maybe I was doing it wrong? So I went to the internet and was appalled to find that the self-cleaning option will kill small pets, and reduce the life of the oven (and presumably the oven operator). Yeah I don’t want that – but what to do? Research of course!

In my search I found that the Maytag Company offers an awesome Aqualift technology that uses water and heat to get some of the grub off the sides. It doesn’t make the stove spotless but attacks the gunk at the bottom, which is what really smokes up. No chemicals, no fumes, lower energy use. To my way of thinking this appears to be the perfect stove.

Imagine my surprise when folks were posting notes about how it doesn’t clean the sides and is totally lame. So the manufacturer dutifully returned to the high energy approach and retailers discounted the AquaLift models.

We got ours, new I might add, for $537 instead of the original $899. Even with this small challenge I think this technology should be the most expensive, not the least, given the leap the company has made in a healthier and greener self-cleaning option. Go them.

100 years ago our ancestors cooked on wood stove or an open fire. Before that they cooked outside in the fire – if they were lucky. Many people, today, right now, are cooking with cow dung. Here is a handy instructional guide on how to do so.

And cow dung is major advance from earlier times when (Ezekiel 4:15) Then He said to me, “See, I will give you cow’s dung in place of human dung over which you will prepare your bread.”

But folks on the message boards are going nuts:

“The AquaLift cleaning feature does not work. I tried it twice in a row & still had crusted patches of grease to deal with.”(Home Depot Message boards)

And I don’t mean to pick on this particular person – I am sure I would react the same way and then need to catch myself. Here is the point; stop trying to optimize everything. A working stove is awesome.  All of them are modern engineering marvels of system engineering a the stove level and more broadly mining, materials engineering, electrical utility generation and input, financial management, shipping and logistics, regulation, insulation, retail and advertising.

A working stove that steam cleans itself is super -amazing – awesome.

To pay for private school you, retire early or do anything worthwhile you must be ok with second place in a lot of other areas so you can focus resources on something meaningful and worthwhile to both you and the broader community.

I am not saying you need to dry your own poop into cooking blocks and use it. Or even use cow dung (unless you have ready access to a free supply of pellets).

However, if you always seek to optimize on everything by purchasing the best means your income – essentially your life energy – will be frittered away in a thousand different directions and the optimized solution might actually be way worse for your health than a lower cost alternative.

By changing our perspectives on what is awesome ( a hot plate is way better than hot poo, for example) you can focus on what is important to over the longer term.

Free installation with any purchase!

We recently purchased a super fancy set of revolutionary Nest Protect smoke and carbon monoxide detector. These things talk to each other and alert us to the specific location of the room the problem is occurring in. Fantastic!

Nest Protect Advanced Wireless Smoke Detector Available on Amazon.

Nest Protect Advanced Wireless Smoke Detector Available on Amazon.

We replaced the existing 30 year old hard wired smoke detector alarms with the Nest Protects. These things will even contact you phone if something happens. I got an email from the first one when I shut down the power for the second installation. Well done Nest team! It is not clear are old ones would have even gone off (when removing them the tag noted they expired in 2003) in a fire situation. Will yours?

Do  it yourself to save money

This amazing technology combination is available for only $99 each. And an installer can be hired to connected wired ones for $80. We opted to pass on that and to save the money and the hassle (for all involved) of taking a day to have someone out. The first one took me about three hours of watching videos and carefully proceeding (mostly issues with removing the old one). The last one I installed took less than thirty minutes from opening the package to the final test.

Take your time

If conditions make sense, do the installation yourself. Watch the videos (as many times as you need). Follow all instructions and expect to run into snags that will require more research and take additional time. This isn’t a race and you aren’t being graded on efficiency.  If you are like us you will find the experience saves money which can be used for private school tuition and is more rewarding  than taking off work for an installer to arrive.

A tale of two colleges

A hard working young family member recently went off to college. Before doing so there was a choice to make. Should they go to the fancy college and stack up $300,000 in student loans. Or go another, excellent school – but with a less known name – and get a decent education  free and clear of debt?

They chose the lower cost school thus proving they were qualified for either place.

How wise were they?

Assuming a $300,000 loan and using this helpful loan estimator calculator and the lower end of current rates (5%) for student loans after graduation the monthly re-payment would $1980 a month.  For 20 years. Yikes. Hope  students at the fancy school really like the job they get as they will need to work at it for a really long time. That payment schedule is the original $300,000 paid back plus and additional $175,000.

So they saved a lot of future hassle by avoiding the massive loan to fill their head with fancy thoughts. So very wise!

But wait, there is more!

As a thought exercise lets pretend that upon graduation that same amount is contributed to a retirement account instead of repaying a loan. How would they be doing after 20 years?

According to this investment return calculator  the same $300,000 plus $175,000 is dumped in an account over 20 years. That is $475,000 in contributions. And that yields $328,000 in interest over the two post school decades. So by avoiding the large loan and investing the difference this student would end up with $803,492.

Want to be a millionaire? It’s easy.  Pretend like you took out a huge student loan and go to a lower cost college instead. Invest the different and then decide if you still want to keep working or retire at a fairly early age.

The actual decision

It is easy to imagine stacks of cash with some high paying job from the prestigious university. Well, if it works out. What is easy to forget about really large student loans is that they are loans and must be paid back. * And that money means other options (a car, a house, medical expenses investment) are already spoken for right out of the gate. And you might change your mind next year. Or ten year from now.

So the decision is not “should I take out a $300,000” loan. The decision is actually “Is this school’s tuition worth $803,492 and much of my future income”?

 

* The idea of planning on loan forgivness or defaulting on it, means a contract signed with no intention to pay it back. Maybe that appears clever. Another more way to look at it as proof that one either does not make and keep promises, lies or took extra risk  (or all three). Doesn’t seem worth trading one’s options and good will for bunch of lectures you can get at other places.

Use the innovation cycle to save stacks of cash

Life 100 years ago 

One hundred years ago most people worked 60 hours a week and there was one car for every 50 people.  And  then they came home to dark homes – many did not have electricity. And the first appliance just turned a hundred a few years ago.

There has been remarkable advancements in the past 100 years and you can use that to your advantage to save stacks of cash.

Freeze your standard of living

To save money with no effort, simply freeze your standard of living in time. Do you want a stainless steel fridge? Forget it – no one even had a refrigerator 100 years ago. Even better, the modern marvel of 50 years ago is now the economy version of today so your replacement cost is lower each time you need to replace an item.

Need that latest turbo, all wheel drive, leather interior badged car? No you don’t! You will be just fine with an economy car and still be better off than 49 out of 50 people 100 years ago.

So Many Horses!

Did you know the model T ford generated 20 horse power?

What amazing technology! 20 horses in one device! Wow!!!

The 2018 Ford Focus generates 160 horsepower and made the list of lowest cost cars! That is 8 times the power of the model T and 160 horses!  That is plenty of zoom and more power than most farmers had 100 years ago.  And it the Ford Focus of HorsePower Awesomeness can be owned new for a about $18000. And, amazingly, this is  still costs less than the slower (inflation adjusted) Model T Ford price of $22,000. And you can often (but not always) save more money purchasing a used car!

Public Domain, Link

The idea here to freeze your standard of living where it’s  at now. No upgrades, just replacement items.  You will be just fine keeping the things the same. You know this because you live exactly that way right now!

Add Even More Horsepower

 

In a pickle and want to save more money? Work 55 hours a week. 50 at work and  doing your own chores around the house you currently outsource.  You will save money and might get a raise.

By attempting to match your grandparents work ethic and freezing your standard of living your cash flow will almost immediately turn positive.  I look forward to seeing you soon in the private school parking lot  in your amazing  horseless carriage. Zoom zoom.

 

One day only special! Half-priced cars!

Want a tip for buying a great car at a discount?

Go contrarian – buy out of style cars

Here is what we did;  we purchased an older car but with relatively few miles for it’s age but was out of favor at the time we purchased it.

This has varied over time depending on the circumstances which makes our car history quite varied and has almost always caused raised eye brows on our choice (we take that as a good sign).

At the time we purchased our last car, during a late stage bull market,  luxury cars buyers certainly did not want an out of style luxury car that someone else drove in. The perception of “luxury” typically doesn’t pair well with “used”.

And economy buyers wanted the used cars rated highest for reliability.

This left few buyers in the used luxury cars market segment. And we really value safety features so  we watched the market for a really safe used luxury(ish) car.

And those conditions means we were able to get our current rig at a much lower cost than one would expect.

Behold the Battle Wagon

Our current rig in all it’s glory:

Volvo Wagon - New to us!

Volvo Wagon – New to us!

Swedish steel! Best in class safety. Row boat like styling. Squishy seats. Impossibly thick paint. Odd brown stains on the ceiling of questionable provenance. Vintage!! Did you know they don’t even make this model any more? It’s true! And butt warmers!

Buy older cars with low miles to get lots of trouble free service

The Battle Wagon was ten years old with only 75K on the odometer when we purchased it. Net, we bought this unloved ride for 80% off the original sale price. It was fairly low cost. Indeed, once we sold the our previous battle wagonette and accounted for the ten years without cable savings the car was effectively  free with years of pre-paid gas included. A brand new car would have absorbed all those savings and I would have been worried about scratching the fancy doors.

Right now electric cars are out of favor because of low gas prices

Right now non-Tesla electric cars are out a vogue and can be purchased for a song. With low gas prices they are really out of fashion. You can get one for a fraction of the cost of similar vehicles. Well, that is until gas prices go back up.

Want to be an environmentalist? Get a used electric car and reduce fossil fuel emissions *and* save a perfectly good car from going to the scrap heap. You are *so* green. More of a  outdoors person? Wait until gas prices go back up to the $4 and $5 a gallon price range and get one of those gigantic pick-em-up-truck for half price.

Please check the safety rating on the model year and proceed!

The true cost of watching a movie

What is the actual price of a movie? Consider these four costs before  you decide to hit  “play”.

 

Watching a movie has four major components. These are the fixed  cost,  the one time cost, the opportunity cost and the second order effect costs.  Let’s briefly visit each.  You of course cut cable a long time ago – or you are about to do that so lets use the streaming services as our example. 

Fixed Cost

Netflix offers a standard plan for $10.99 a month ,

Lets say you watch one show and three movies in an average month. That is $2.75 per show.

One Time Cost

By MrexcelOwn work, CC BY-SA 4.0, Link

And Amazon Prime offers lots of movies for a low a $2.99 each and sometimes over $10 but you are frugal so the one time cost in this example is about the same as Netflix.

Either way each movie you watch is around $3 bucks. And before you binge a show to get that cost per movie down lets consider the opportunity costs.

Opportunity Cost

More pressing than the movie cost is the opportunity cost of watching the big screen for two hours. For example, yesterday, we changed the headlamp bulbs in our car. This cost $30 in parts but according to online quotes  the service price is between between $100 and $214. I am not clear if that is per bulb or for both but lets assume it’s $150 to replace both bulbs, parts and labor. We saved $130 bucks on that expense in 20 minutes, got to chat while doing so and didn’t have to take off work to take the car to the shop.

Too tired for such efforts? No problem ! Spend 20 minutes praying or meditation. This is a bit lower energy and has numerous benefits.

In both examples you still have lots of left over time to wander around the house (more health benefits).

The Second Order Costs

 

The second order effects are the most expensive. Many movies are action packed thrillers which can use a lot of your emotional energy up. These dynamic natural scenes impact your brain chemistry

and in extremes might reduce both the quality and length of your life.  It’s fun stuff but for the most intense movies you might need a mental break afterwards and changing the bulbs after a movie might be too much – anyway you have so little time after using two hours of to someone else’s script. This time compression is the worst offender and might end up with a dinner out ($40) since there is no time or energy to cook. Plus the world just blew up on the big screen so what’s the big deal with ordering delivery?

 

The True Cost

Lets compare the numbers!

 

The movie abstainers saved $130 bucks and the movie watchers spent $3 on the movie and $40 on take out. That puts the active family ahead by $173 dollars *and* they have a free hour to themselves. Time and money in abundance.

 

The Take Away

I am not against movies –  and they can be made into wonderful family events or a mental break if you are feeling ill. With that said if you work hard during the week to pay for tuition it seems a shame to not know  the full price you are going to pay before you hit play as something to do.

 

“Time is your most important resource. You can do so much in ten minutes. Ten minutes; once gone is gone for good.”

– Ingvar Kamprad (IKEA Founder)

Skip the Tip! Take it to go and eat at home.

This took me many years to discover but it has served us well. Despite being on the frugal track we occasionally eat out (ok, more than occasionally). Sometime as a family sit down dinner or for a special occasion but most often because we go out because it would be fun to go out.

To save 15% at a restaurant, skip the tip by taking the food to go. That will save 15% (or 20%) on the bill because there is no tip. And, after a while, you realize you have drinks at home. And bread. And that is another few dollars saved.

Electrical candlelight!

Instead, set your home up to be a delightful place to eat with a fancy and clutter free table that include  forks that haven’t been in a million people’s mouths (a no cost bonus!). At the Café De Your Place there is never ever a wait. The table is always open, there are just enough seats and it’s the best table in the joint.

Plein Air!

In the summer we eat out on the ‘rustic’ wood table that came with the house. This year we added a coral maple to enhance the view at our fine dining establishment. How many restaurants do you visit have this kind of greenery? Get creative (but low cost) and set up your own ambiance.

G Ruga Coral Maple Tree Photo

Paying for Private School’s  Frizzy Coral Maple Tree of Awesomeness.

If you are like most families where eating out just overtook the grocery sales then you probably spend around $2625 on dining out.

Ha. I know the truth.  If you have the income to consider a private school tuition and live in metropolitan area that number is much higher. It is more like $6000 a year. Lets go with $6000. That is $900 a year in tips if frequent wait in line and then sit down establishments. Toss in another $100 on desserts and drinks over the course of a year and we will make it an even $1000.

Show em’ the sink!

I know some of you are secretly cringing because you spent way more than three or even six thousand on dining out last year. This is a judgement free zone. We are here to help. You just have more opportunity to save! Start with an immediate 15% discount on many (and soon to be rapidly declining) restaurant meals. And enjoy the further benefit from having your children rarely hearing  the phrase “I will be your server for this evening”. They need the gift of responsibility and can get up and get their own water when they need a refill.

This one slight change in behavior nets you $1000 a year and comes with a free side of humility for the entire family. A $1000 here and  there starts to look like a tuition payment and there are lots of easy ways to save big money.

Paying for Private School French Country Kitchen

Paying for Private School French Simulated Country Kitchen- comes with reading materials. How many restaurants do that? Don’t worry, we bought those chairs used.

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