Saturday, December 28, 2013
I Did It! I opened a Roth IRA! And College is looming!
When we were paying off student loans, paying for daycare and paying a mortgage we wanted the immediate tax savings of a 401k even though that wasn't logically our best move. My husband's 401k has a match for the first 8% but we actually contribute a much higher percentage%. We really need to revisit this decision too. It would be better to just contribute the 8% and funnel the rest to a Roth for him. I can't see tax rates going anywhere but up with the debt the USA is in, so I am thinking we should each be maxing out a Roth. It is just hard to give up the immediate tax benefits, but I guess that is being short sighted.
We also have college looming on the horizon for our 2 kids. I have one that will be a junior and one that will be a senior in high school next year. We have put $100 a month for each of them away since they were little and it will be barely enough to pay for one year each at a state school. We just recently upped it to $150 each. State schools run about $18,000/year here in PA. We will look at private schools as I know they offer great scholarships and incentives in order to be competitive. I sat on a scholarship committee for almost 10 years and know from looking at the applications that many students pay less for the more expensive private schools than state schools, so we will have quite a bit of research to do. We should be able to supplement this a great deal from our yearly budget as we are now debt free. My kids are only a year apart so that amount can go entirely to the oldest for his first year, will be split between the 2 of them the next 3 years and will go completely to the youngest the year after that. If they take longer than 4 years that will be completely at their own expense. The remainder will have to be supplemented by scholarships, jobs and student loans. That is the plan.