Why I Regret Starting a 529 Plan for My Kids

why-not-to-save-in-a-529-plan

Let’s be clear: I don’t regret saving for the kids’ future. I regret limiting that fund for college.

Like many young parents, Mark and I were anxious to start saving for college. A 529 plan was the no-brainer option at the time. The fund grows tax-free and as long as the money is used for a “qualified education expense”, the interest is never taxed. There can also be state tax deductions for contributions.

So, here’s why I regret saving in a 529: There are so many valuable and practical ways to learn outside of college that can’t be funded by a 529 without paying taxes and penalties on the interest.

Nineteen years ago (the year Hannah was born), college appeared to be the only and best way to have a career and wasn’t nearly as expensive. In 1996, 52% of Bachelor’s degree recipients carried student loans averaging $12,000 (which is the same amount I graduated from college with in 1990). Today, at least 71% of college graduates have student loans averaging $37,000.

In contrast to the 1990s, high school students can begin to teach themselves skills that add value to a fast-paced, global economy. College is required for some professions (academia, law, medicine) but isn’t for many others.

Apprenticeship programs, gap years, online certification programs, fellowships, world travel and small business opportunities are all valuable and practical alternatives to college that can’t be paid for with 529 funds without penalty.

[tweetthis display_mode=”box”]529s are a subsidy for institutions that are overcharging and under-delivering.[/tweetthis]  They’re one form of university welfare. The other forms are private loans, grants and government-subsidized loans. Students aren’t really the beneficiaries of these forms of assistance when a degree doesn’t guarantee a job or skills that employers say are lacking in most college graduates. (Don’t believe me, read this book about the skills gap).

Hannah graduated from high school and has no plans to attend college. Instead, she’s participating in a program that matches highly motivated young people with a small business or startup willing to train them.

Praxis charges tuition but boasts a net-zero cost because the total payment is less than the guaranteed pay the participant receives from the business partner during the apprenticeship. In addition to skills training, Praxis offers one-on-one mentorship, weekly group discussions and guidance on personal and professional development projects. Every participant has a tangible body of work to show potential employers at the conclusion of the program. The Praxis model has been so effective that business partners now commit to a full-time offer with a minimum salary of $40,000 for participants. No college will guarantee that.

By the time her classmates graduate, Hannah will likely have saved as much or more than they have borrowed in the same time period. She’ll be earning as much or more and she’ll likely be living on her own. Compared to other 18-34-year-olds, who, for the first time ever, are living with parents more than any other living arrangement.

So, what to do with all that money we saved for college? We could transfer the 529 to one of Hannah’s siblings.  We put that money aside for Hannah, though, and frankly, I’d rather see it go to photo equipment (Hannah’s business), studio space, even a car, than an over-priced college.

Even though she’ll pay taxes (at her rate) and a 10% penalty on the interest, we’ve decided to use the money in Hannah’s 529 plan to pay the tuition for Praxis. The interest and penalty combined don’t compare to the interest that most students will end up paying for the lifetime of the loans they’re taking.

I’m not so put-off by the taxes owed because if we had it in any other type of fund, we would have been paying taxes on the interest all along. The penalty stings a little since she’s using the money for a program that has a guaranteed ROI and is tens of thousands less than college would have been.

Hopefully, 529 rules will expand with growing opportunities in our rapidly-changing world that make more sense than college. Any changes will likely come too slowly to help my children.

I’m not sure what will happen when the college bubble finally pops. Likely, even those who opt out will be stuck holding the bag. University Provosts everywhere will continue to receive their bloated salaries or maybe they’ll run for the hills taking their golden parachutes with them.

Rethink opening that 529. There are other ways to save in a high-growth fund for a minor. You can still use that money for college but you’ll have other options.

Opting Out of the Awful School Pictures

 

school-pictures

4th grade me with my Dorothy Hammill haircut

I’ve had it. I used to feel guilty that my kids didn’t have school pictures since they were homeschooled.

This year, I’m opting out.

I’ve purchased a “package” for each of the kids for each of the years that they have been in school. I never display them. I rarely share them. They sit in the cellophane window envelope in a drawer somewhere.

To be perfectly honest, none of them are any good. Not one school picture actually looks like the kid in it. Bad smile, pasty face, awkward angle. They are just bad.

The photo packages are too expensive and they’re purposely designed to NOT include the sizes you might want.

I thought Mark would be offended that I didn’t want to buy them this year but then forgot that he’s a boy and doesn’t care about stuff like that. I knew Kate wouldn’t care. The only year she let me buy photos, she wouldn’t let me see them. She wasn’t interested in doubling down on her humiliation by getting the “retake”.

 

 

 

 

 

In Sickness & In Health

wedding

So, Mark and I are celebrating our 23rd anniversary today. Just shy of 3 weeks after his physical catastrophe.

I’m not an overly emotional or sentimental person but I clearly remember my voice cracking only once during our vows…”in sickness and in health”. In an instant, I was overwhelmed by the thought of him being sick and vulnerable.

He’s had some minor surgeries (that dual hernia operation just before our 10th anniversary wasn’t too fun) but nothing as challenging as this.

The thing is, as challenging as this is physically, emotionally and probably financially, I know it isn’t even close to the worst that can happen to a couple. Not even close.

So I’m thankful that we work well together because just about everything he does, we do together. I’m thankful that we enjoy each other’s company (as long as he doesn’t try to tell jokes). I’m thankful that we trust each other to get through this. And yes, I’m thankful that we love and trust each other and even on our worst days, there still isn’t anyone I would rather spend time with (no offense to my children, who come second in that category).

I don’t feel all that much different than that day 23 years ago. Marrying Mark felt like the rightest, most natural thing. Helping him do just about everything feels just as right and natural (though, I have to keep reminding him the kids can fetch the this or the that when they’re here).

Happy Anniversary. Oh and Happy Birthday to Luke who was our 5th anniversary gift!

Crisis Mode

hospital-room

I WISH Mark’s room had a desk like that!

Mark blew out both knees last week. He’s a full-time tennis teaching pro. Yes, that’s his real job.

Truth be told, I can’t believe something like this hasn’t happened before this. He really wasn’t doing anything nutty or risky. He’s pretty conservative because his joints have always ached. He dislocated both shoulders before he graduated from college. Plus, teaching on a hard surface 8-10 hours a day for 30 years might lead to some wear-and-tear.

Here’s how I react to crisis:

My brain goes into hyper-efficiency lock-down. Do the bare minimum. Prune the unimportant, take care of only what’s necessary. The kids are at an age where they’re pretty self-sufficient and can help each other get where they need to go. I also have lots of family and good friends around who can help. (S/O to my brother John who took care of details at home when it happened).

The other thing my brain does which makes me hopeful and positive is to think about how much worse things could have been. In a weird, backwards way, it helps me be grateful even in what seems like a catastrophe.

Here’s what I’m talking about:

  1. Mark had just returned from taking Luke to a tournament in Boston. He easily could have been walking fast or running for a flight and this could have happened. I can’t imagine how traumatized Luke would have been on top of managing this type of crisis long distance.
  2. I’m glad it happened at work because…worker’s comp.
  3. I’m grateful I don’t have the stress of managing a job outside the house on top of this.
  4. I’m grateful I didn’t get the car crash call or the heart-attack-on-the-court call.
  5. My mom can care for my aunt at her house while we get our bearings again. That means Mark has a hospital bed and a bathroom on the first floor because he won’t be able to bear weight on either leg for a while. My brain hasn’t quite caught up to that concept but we’ll deal with it.
  6. Mark ran up to our cabin by himself the weekend before this happened to take care of some things. It’s remote and even if he remembers to take his phone with him, reception is sketchy. The nearest neighbor is not visible through the woods. Shudder.
  7. Most surgeons haven’t seen a bilateral rupture of this type but it is repairable and they’re confident that he will be better than he ever was.

So, that’s how my brain works. You might think it’s pathetic denial but I’m sticking with it. It has given me a better outlook on what’s ahead.

Creativity in an Uncreative Career

volkan-olmez-photo

Photo Credit: Volkan Olmez | Unsplash.com

I recently had a chat with a young neighbor (22) who just finished up a year-long internship toward her certification as a Registered Dietician. She still has to take an exam to be official.

When I heard that she moved to Memphis for an internship in a VA hospital (apparently, they’re hard to find), I remember being impressed that she was willing to get out of her comfort zone by moving away from the safety net of her family and a city that she loves. Now that it’s over, she told me the best part about the internship was realizing that she doesn’t want to be in a hospital setting. I see that as a win and extremely valuable.

What surprised me is that her supervisors and co-workers continued to steer her into a hospital setting even though she was sure she didn’t like it. “Gotta pay your dues.” “Maybe you can eventually get into an admin position.” “Anything else takes years of experience to qualify.”

In other words, the conventional, “safe” path is so narrow….even for an RD. From what my friend was saying, it looks something like this:

  1. Hospital planning gross institutional meals for sick people. (Did you want Sprite with that meatloaf?)
  2. Some other institutional situation when you get burned out from the first job.

Look around, people, we’re living in a society suffering from an epidemic of obesity, unhealth, and non-nutrition. It doesn’t take much creativity to apply an interest in health and nutrition, a passion for food and cooking (this young woman started her own cooking blog in high school) and a B.S. in Nutrition and Dietetics to a non-hospital setting.

Luckily my friend is creative and looked beyond the barriers that her colleagues were putting in front of her. During her last week in Memphis, she reached out to an entrepreneur in Birmingham who prepares and delivers ready-made meals (including Paleo, gluten-free and dairy-free) for clients ranging from families to young professionals to seniors. The subscription options include hot dinners, microwave-ready lunches, weekly breakfasts, snacks and drinks.

Business is booming in Birmingham and the owner wants my friend’s help to expand into Nashville. She’s moving to Birmingham next week to start. Although the job doesn’t require a degree, it won’t hurt when creating new menus for health-conscious customers with specific nutritional needs. Whether the business is something she’ll be passionate about a year from now, she’ll get a first-hand look at running a high-energy business in an unfamiliar city (cities). It’s what I call 3-D learning in real time. Plus she’ll have an outlet for her creative side.

I so admire this young person’s courage in creating a unique opportunity for herself that rejects narrow-minded conventions. Good Luck to her and I’ll keep you posted on other cool things that young people are doing to take life and work into their own hands.

My Theory About Why So Few People Truly Understand Caregiving

alone

photo credit: Todd Diemer | Unsplash.com

When I took on the responsibility of caring for my elderly aunt, the only thing I knew was that I really had no idea what to expect.

Although my closest family and friends worried for my well-being, they have been so supportive and really make it possible.

I have thought a lot about why the impact of caregiving on families is so underestimated and misunderstood. A 2009 report estimated that family caregivers save the U.S. health care system more than 450 BILLION dollars per year.

It should be a priority to study and support family care situations. At the very least we could try to educate people about how best to prepare to care for a loved one.

Frankly, I don’t have the energy to advocate for policies and services to support caregivers even though family caregivers save taxpayers hundreds of billions of dollars of year. I think the reason it’s not a higher priority is that you can’t relate to it if you haven’t done it.

It’s impossible to paint an accurate picture of caregiving without compromising the dignity or privacy of the person being cared for. There are some private support channels online where people feel safe to open up and discuss the ugly details. I think these are important resources for caregivers but I learned very quickly that I didn’t want to spend what little free time I had swimming in the soup of other caregivers’ situations.

I have contributed to a different kind of caregiver support site that tries to keep the focus on promoting the happiness and health of the caregiver. If you’re a caregiver, check it out. Elizabeth is positive and offers excellent strategies and practical solutions for making your well-being a priority. [Sorry for the digression. Back to my point].

When anyone other than my closest friends or family members ask how my aunt is, I have little choice but to say “fine”. I have no desire to get into the challenges of our days to outsiders and unsupportive people because I feel like I’m betraying my aunt or complaining. To describe the graphic details of her personal care or her declining cognition would compromise her dignity and I’m just not willing to do that. It’s hard and she’s sweet so that’s that.

I wish I could prepare people for the monumental task of caring for an elderly loved one. I may write about some unexpected challenges that have little to do with her personal care so as not to compromise her privacy. Maybe some day, I’ll have the energy to advocate for policy initiatives to support the millions of people who are caring for their elderly family members but not today.

 

 

 

Curing Heartburn Naturally

30-day-heartburn-solution-craig-fear

Kate has suffered from chronic, sometimes unbearable, heartburn for nearly 3 years. I’m guessing the sudden onset was hormonal and chemical. As my most adventurous eater, it’s been depressing for both of us.

I talked to her pediatrician about trying to alleviate symptoms with food. When I mentioned avoiding gluten as an experiment, she dismissed that with a speech about gluten-free being a popular fad and how gluten-free only helps people with Chron’s disease or IBS. And anyway, even a trace of gluten in the manufacturing process could trigger symptoms in the truly allergic. In short, the doc discouraged us from trying this. She rattled off the typical list of trigger foods (spicy, tomotoes, carbonated beverages-Kate doesn’t drink those, etc.) and suggested that Kate avoid those. Since Kate was down to eating eggs, potatoes and antacids and still was experiencing symptoms, the pediatrician agreed to order some tests.

Kate was scoped (no evidence of damage or distress), poked, prescribed Nexium, Zantac supplemented with Gaviscon and Tums and tried to manage as best she could for the next 2 years.

A friend told me that her teenage daughter noticed improvement in her heartburn symptoms after going gluten-free so it sparked my interest in that route again.

I turned to Amazon and found “The 30 Day Heartburn Solution” by Craig Fear. The reviews were encouraging. (I’ve never seen a book on Amazon with no 1 or 2 star reviews). Most reviews are from long-time heartburn and acid reflux sufferers who were pain-free after implementing the plan laid out in the book. Craig Fear wrote the book after curing his own chronic heartburn.

Fear designed an incremental plan to stop acid reflux through nutrition, basically avoiding the typical Western diet. It’s well-researched and explains why antacids (prescribed and OTC) contribute to the problem and are problematic long-term. The book is well-organized and thorough and lists all the foods you can eat under the plan. Approved foods include meats, dairy (if tolerated), eggs, nuts and seeds, vegetables and fruit and berries less frequently.

Kate noticed significant improvement just a couple of days into the plan. The first 2 weeks of the plan calls for eliminating all grains. Her willingness to try new foods in order to keep from feeling like a starved rabbit helped her get through the first couple of weeks.

After two weeks of grain-free, you can reintroduce non-gluten grains (corn, rice, oats, etc.). During this stage, you’re also encouraged to eat cultured and fermented foods to restore the natural acidity and health of the digestive system.

Cultured foods without added sugar are hard to find (sugar can be inflammatory and throw off the ph balance of the gut). Fermented foods in the grocery store (sauerkraut and pickled things) are packaged under high heat (which kills most of the beneficial bacteria). I found a simple recipe for sauerkraut that’s delicious and plan to try some other fermented vegetables. The cultured foods are a little trickier but we’ll track some down.

It’s hard to tell whether sticking to the plan 100% for a while would completely cure Kate (restore her digestive tract to allow her to enjoy any food any time~or even problematic foods occassionally without suffering). At her age, I feel like she’s old enough to decide whether to eat a certain food and suffer the consequences. Even when she eats a food that triggers symptoms, they are milder and short-lived.

One thing I learned is that we automatically blamed foods like spaghetti, pizza and tacos on the tomatoes or spice for Kate’s heartburn after eating them. There’s as good a chance that the culprit was the noodles or flour tortilla in those cases. Since some form of grain (usually gluten) is a part of nearly every meal, and in our mind, those foods are bland when served plain, I never considered that they were causing the problem.

One unexpected benefit that I noticed after Kate was on the plan for a couple of months was a decrease in the severity of PMS symptoms. When I pointed it out, she thought so too.

I highly recommend “The 30 Day Heartburn Solution” if you or someone you know suffers from chronic heartburn or acid reflux disease. It’s worth a try.

 

Notice: This post contains affiliate links. If you make a purchase through a link, I receive a small commission at no additional cost to you. Thanks for supporting the blog and I hope the book helps.

 

Summer Jobs and Boot Camp

Breakfast-in-PPG-Plaza

Photo credit: Kate Phillips

How’s your summer going? Mine has been SLOW so far and I love it.

I’m enjoying a much-needed respite from caregiving (s/o to my mom).

Hannah and Luke are both working. I thought that would be challenging with the car situation but it’s worked out for the most part and I can always borrow my mom’s car if I need to.

Mark and I almost bought a granny car (Toyota with 50,000 miles in pristine condition for $4,000-but didn’t scoop it up in time). I always wanted a granny car.

Kate signed up for a week-long acting boot camp. Five days, downtown from 9-4. She’s taking the bus every day so it’s like a job. She and I took a ride on the bus the day before her class started so I could show her where to catch it to get home.

As much as I would love Hannah to take a bus to the restaurant once in a while just to get familiar with it, so far she hasn’t had to. It’s a valuable skill but Kate will likely be the only one of my kids who regularly takes public transportation before she flies the coop. She has no interest in driving yet so she’ll need public transportation.

Sometimes I daydream about how autonomous cars would have been great for activities a few years ago. Shuttling for the better part of an afternoon has been my least favorite thing about parenting. Now that Hannah and Luke can drive themselves, I’ve been relieved of it a little but then you have the worry. I’m not an excessive worrier but am always grateful when everyone is home safe. That was a random aside, but this is my blog and nobody reads it, so whatever.

Back to Kate and the boot camp. I knew she would like it and learn a lot but I also knew that it would be tiring. She’s pretty wiped out at the end of the day. It’s just a little longer than school but I think being in summer mode has a little to do with it. It makes me wonder how she and Hannah survived the long days at the charter school. The commute was 3 hours round trip. They left the house before 7 and didn’t get home until after 5.

I know some kids love going to activity summer camps but they never appealed to me for my kids. I guess the break would have been nice but I couldn’t imagine the kids being anywhere all day long in the summer-even for a week. I just pictured them being sweaty and tired all day and exhausted when they got home so I never even asked whether they wanted to do it.

It’s different for Kate. She’s old enough to handle it and I completely left it up to her whether she wanted to do it. I think she’s glad she did and next week she can get back to being bored. She’s trying to get a job but so far no luck. I’m surprised that so many mall stores won’t hire kids younger than 18. When did that happen?

Hannah Graduated!

So, this happened last week…..

Hannah Phillips graduate

Here’s another because I love flying mortar boards………

carlynton-commencement-2016

Hannah has been ready to graduate forever. Senioritis kicked in somewhere in the middle of her junior year. She had a great senior year, though. She met some great kids and teachers and in the background created some super cool opportunities for herself.

By April she had 4 jobs in addition to her own business. Including teaching tennis to little kids, waiting tables at a local restaurant, working the desk at municipal tennis courts and got herself on the media team of the Pittsburgh Thunderbirds, a local semi-pro ultimate disc (frisbee) team. The kid just finds opportunities and goes after them.

Some cool opportunities find her, too. She helped a local podcaster video his interview of the mayor last week (the podcaster guy plays for the Thunderbirds-see how things happen?). She’s doing design work for another guy who started a snapchat geo filter business, she’s painting murals for other local businesses and she’ll be apprenticing the CEO at a marketing/ad agency in the city.

Funny, while she was in school and before she had 5 jobs, she would nap as soon as she walked in the door after school and as much as possible on weekends. When she had all those jobs (she’s not teaching tennis in the summer and she has limited her shifts at the tennis center) she hardly ever napped. Partly because she had less time but also because the work gave her energy. Now that she’s out of school and her work schedule is less hectic, she hardly ever naps. School drained her energy and not in that good, constructive way.

I thought I would feel a tiny bit sad or nostalgic that Hannah isn’t heading off to college in the fall, but truthfully, I’m relieved. I loved my college experience but things are so different now. The “college experience” is too expensive, course work isn’t leading to jobs and the higher risk of being assaulted on a college campus compared to working in the real world is pretty terrifying.

I’m actually looking forward to standing back and watching what Hannah makes happen in the next year. She’s anxious to live on her own and I have no doubt that she could do that sooner than later if she gets organized.

I had a few interesting conversations at a graduation party for my neighbor this weekend. Two young professionals I spoke to admit that they wish they had gone to community college for two years instead of a four year college because of the debt. The graduate’s sister just earned her bachelor’s in Marketing and can’t find a job. Funny, Hannah will be working at a marketing agency in September, apprenticing the CEO without a degree and the debt that comes with it. My point is, I couldn’t be more content with Hannah’s future plans and the opportunities she’s taking advantage of because she’s NOT committed to a college.

Why I Advocate College For the Few

taking gap time

Photo Credit: Sonja Guina: Unsplash.com

I can only think of a few scenarios in which a traditional 4 year (usually more) college is a good idea for most 18-year-olds.

Scenario #1: A student earns a full athletic or academic scholarship to attend for all 4 years.  Though, I think a person a few years out of high school is a better investment, for some reason, these type of scholarships are usually only awarded to kids right out of high school.

“What about a partial scholarship?” you ask.

ANSWER: Depends on how much the student has to pay or borrow.

Scenario #2: A student who has known her intended path from an early age and that path requires an undergraduate degree. I’m not going to argue with a kid who’s clearly destined to be a neurosurgeon, engineer, nurse, physical therapist, etc. Even in this case, I would encourage parents to help the student understand the impact of debt on her lifestyle (if she has to borrow) once the education is complete.

Scenario #3: Parent works at the university or college and tuition is free or insanely cheap. Even in this scenario, four years at a school could result in opportunity costs to the student depending on what he or she plans to do. But more likely, the kid has no idea what he wants to do, so this would be dumb to pass up.

Scenario #4: A 529 or other fund set aside for college will pay the tuition the student will owe. Even in this case, I believe the money is better spent when the student is more mature and experienced than most 18-year-olds but that’s just my opinion and I have no desire to tell other people what to do with their money.

Scenario #5: (I know, 5 is technically more than a “few”). Generally, there are some kids I know who are “this close” to figuring out what they want to do after high school, their parents desire and can afford to send them to college and they don’t have unique skills or interests that are marketable-yet. So, I would agree that college in this scenario is probably a better idea than bouncing around the minimum wage world. Though a gap-year plan or a Praxis year might be more productive in this situation.

FOR MY OWN CHILDREN, I can’t think of any other reason to TAKE ON CONSIDERABLE DEBT to go to college-especially right out of high school. Here are my reasons:

  1. An expensive college is not the place to “figure out” what you want to do. It’s like buying a Corvette to learn how to drive. Except the Corvette is cheaper and you’ll probably actually learn to drive, so the car is the better investment. This doesn’t mean my kids will be buying a car to learn how to drive, clearly that’s stupid. So is going to college to figure out what you want to do and borrowing to do it. Life and work experience will be a much better teacher.
  2. My children have had jobs but I still wouldn’t want them to choose a career with the limited experience they have had.In Hannah’s case, she’s had a variety of jobs and a variety of skills and interests. No way do I want to force her to “pick” which one of those to “major” in to fit into a box. Instead, I subscribe to the idea of developing many areas of interest (multipotentialities), cultivating a “Portfolio Lifestyle” (it worked for DaVinci) and agree that creating multiple streams of income is a better option than a job, which has the perception of offering security but really doesn’t.
  3. Most people aren’t happy with their career choice. Figures vary from 13% job satisfaction to around 20% among American workers, neither of which is very high.
    Anecdotally, this is also true for people in my age group. Many people my age tell me they can’t believe they wasted 25 years of their life doing what they do. Teachers, lawyers, accountants, mortgage brokers (well, that’s understandable) it doesn’t matter.
    My sample is small, to be sure, but the most professionally content people I know are my friends who didn’t go to college and either started their own business or worked predictable hours for a good company. Also, the doctors I know are pretty engaged and content with their career choice.
    This begs the question, why are we expecting 18-year-olds to choose then go into debt for a path that might make them miserable? Doesn’t it make more sense to explore options and opportunities outside the confines of an over-priced institution?
    I would advocate work, hate some jobs, love other jobs, learn about people, travel, be lazy, get tired of your lazy self and living with your parents and take action, whatever that action has to be. That makes more sense to me.
  4. There are so many legitimate, sensible alternatives to an expensive, traditional four-year degree that are just as likely, if not more, to lead to satisfying work. Vocational education, community college, online programs, college overseas, entrepreneurial and apprenticeship opportunities are just a few examples. These options simply didn’t exist when I graduated from high school and are attractive based on cost (low or none) and outcomes (experience and marketable skill procurement).

I know people think my views about college are weird and maybe they’ll prove me right if my kids still live with us when they’re 30. Thing is, I know plenty of college graduates approaching their 30s who still live with their parents.