Speaker 1: Welcome to How the Money. I'm Joel and I'm at
Speaker 1: and today we're answering a listener's question, is saving for
Speaker 1: college worth it? Eduel? That's right, man, A listener wrote
Speaker 1: in and ask the questions should I say within a
Speaker 1: five plenty nine for my kids college? And yes, we're
Speaker 1: gonna talk about that. We're gonna talk about even if
Speaker 1: it makes sense as a parent, should we be saving
Speaker 1: for our children's college at all? And usually we like
Speaker 1: to reply to listener emails with the one word response, right,
Speaker 1: we just yes, no bye. I always just say maybe yeah.
Speaker 1: But we figured, you know, Mark sounds like a good
Speaker 1: guy in his email, and so we would dedicate probably
Speaker 1: what's going to be a lengthy discussion about this topic
Speaker 1: in order to hopefully bring up the nuances of what
Speaker 1: you should canto it or when you're thinking about, you know,
Speaker 1: if you have young kids, if you're thinking about having
Speaker 1: kids someday, if you've got kids that are in middle
Speaker 1: school or elementary school, like should you be saving for
Speaker 1: their college? And and we hope to shed some light
Speaker 1: on that today. Yeah, man, And this would be a
Speaker 1: good time to to say, if any of your listeners
Speaker 1: out there have questions. We're gonna hope to do more
Speaker 1: of these here in the future. Man, email us. You
Speaker 1: know you're You're welcome to comment and hit us up
Speaker 1: in the messages on the socials, but the best way though,
Speaker 1: email us. Yeah, and we're gonna read all those questions
Speaker 1: that come in and hopefully we'll be able to respond
Speaker 1: to some of those in an episode format. Most definitely.
Speaker 1: So actually, real quick, before we launched the question, I
Speaker 1: broke my phone. Have you seen my screen? Oh? Yeah,
Speaker 1: I saw that. You shouted your screen quickly after my
Speaker 1: wife shattered hers. Yeah, so you mentioned something. Have you
Speaker 1: seen any deals out there on Uh? You know I
Speaker 1: love the iPhone? Well, you know I'm a deal hunter,
Speaker 1: so I will say, should I put you to work?
Speaker 1: You should? I got really fortunate. My wife broke her
Speaker 1: phone on the exact same day that there was a
Speaker 1: twenty percent off coup on site wide on eBay. So
Speaker 1: it's like literally you could buy anything that's nice all
Speaker 1: over eBay, and eBay comes out with those coupons like
Speaker 1: once a month, once every two months. Um, so you
Speaker 1: know it doesn't look too bad. It looks Emily's. Emily
Speaker 1: was like literally getting charge of glass in her finger.
Speaker 1: It was pretty rough. It does keep the kids away now, though,
Speaker 1: like they're like, oh, I don't want touch Ddy's phone anymore. Yeah,
Speaker 1: I cut my fingers. But we ended up buying her
Speaker 1: a refurbished iPhone six S and I think it costs
Speaker 1: around hundred and seventy five dollars, not too shabby, but yeah,
Speaker 1: I'll be on the lookout. Yeah, be on the lookout man. Seriously,
Speaker 1: chunks of glass are also falling off mine a little bit,
Speaker 1: and I can for the first time see like inside
Speaker 1: the phone, which is like, oh, look at that. It's
Speaker 1: less solid than I thought. That brings up one thought
Speaker 1: for me for people who have smartphones out there, put
Speaker 1: a case on it. Put a case on it. That's
Speaker 1: actually the cheapest insurance that you can have. Uh. And
Speaker 1: then but don't buy the actual insurance through your phone
Speaker 1: carrier because it usually is very costly, between seven eleven
Speaker 1: maybe even more dollars a month for the insurance, and
Speaker 1: then you have a deductible on top of that. And
Speaker 1: then in addition, you're probably gonna get a refurbished phone
Speaker 1: when they replaced the phone that breaks, so it's usually
Speaker 1: not worth it. Just self insure and save up your
Speaker 1: money for wide Yeah, it does break, and then kind
Speaker 1: of consider buying cheaper phones. I personally don't put a
Speaker 1: case on my phone. I'm pretty careful with it, and
Speaker 1: I just I don't know, I think it kind of
Speaker 1: actually ruins it for me if you case on it
Speaker 1: and it's all bulky and hard to get out of
Speaker 1: your pocket. I kind of like rolling with a smartphone
Speaker 1: with no case. So I used to be that way,
Speaker 1: you know, like I was all about the form. I
Speaker 1: mean that's a huge part of specifically the iPhones, right,
Speaker 1: like the design and the lines and like the curves
Speaker 1: and stuff. Except that this current phone that I got
Speaker 1: it is like a little over. I think it's two
Speaker 1: years ago. Maybe no, actually it's coming up on three.
Speaker 1: I think literally the week I had it, I went
Speaker 1: to put it back in my pocket, uh and missed
Speaker 1: me and I was I was out for a walk
Speaker 1: at night, and I'm like no, And I checked the
Speaker 1: glass and it didn't break. But then when I got home,
Speaker 1: it had landed directly on the edge, like on the
Speaker 1: bezel and dented the metal like there's a huge, huge gash,
Speaker 1: but it did not crack the glass. But literally after
Speaker 1: that was like, seriously, I've had this for a week.
Speaker 1: I've got to get a case now, for the first
Speaker 1: time ever, I'm gonna put a case in my iPhone.
Speaker 1: And I had a case on here except that I've
Speaker 1: been running. You know, I've been running lately, and I
Speaker 1: use this arm band and I have to take the
Speaker 1: case off when I put the phone in the arm band.
Speaker 1: So when I took the phone out, as all was cool,
Speaker 1: you know, a cool down, and my hands are all
Speaker 1: sweaty and slippery because it's freaking thousand degrees in Atlanta.
Speaker 1: It's slipped out of my hand and freaking landed on
Speaker 1: the street. Then I've been meaning to ask you, what
Speaker 1: are you running from? By the way, like, are you tormented?
Speaker 1: Is there something my fears? Imaginary animals? Dude, I just
Speaker 1: you couldn't pay me to run like that. Biking, I'm
Speaker 1: all about it. Bike, It's fun. I don't know something
Speaker 1: about running, man, It's just so simple. So, I mean,
Speaker 1: I have my phone with me, but I use it
Speaker 1: to just track my speed right, to track my distance
Speaker 1: and all that kind of stuff. I don't like. I
Speaker 1: don't listen to stuff. I don't listen to music. I
Speaker 1: just like to zone out and just kind of clear
Speaker 1: my head and start my mornings off that way where
Speaker 1: I'm able to just get the it flowing. And well, specifically,
Speaker 1: I signed up for a race. I'm training for that.
Speaker 1: It's just my excuse to once a year start running
Speaker 1: a few months out of the year and to run
Speaker 1: in a hundred degree heat in July, massive humidity. The
Speaker 1: humidity is terrible. It doesn't get that hot that early,
Speaker 1: but I try to run early anyway, That's how I
Speaker 1: cracked my phone. Well, I will be looking around the
Speaker 1: interwebs because you know that is one of my gifts,
Speaker 1: finding a deal. So I'll see what I can do
Speaker 1: for you. Yeah, maybe you'll convert me over and see
Speaker 1: if you can try to get me on the Android.
Speaker 1: I've been trying. I've been trying. You know what, if
Speaker 1: the deal is good enough, you might make it happen.
Speaker 1: It's true, you know, because I because I haven't been
Speaker 1: self insuring and I don't have the money set aside already. Like, yeah,
Speaker 1: I could go buy a phone, you know, a decent phone. Now,
Speaker 1: maybe not the new one like the X or whatever.
Speaker 1: I don't want to drop a thousand freaking thousand bucks
Speaker 1: on a new phone, but it's got that kind of money. Also,
Speaker 1: don't lease a phone. That's a terrible paying monthly payments
Speaker 1: and then not keeping it at the end. That's like
Speaker 1: leasing a car. Don't leave a phone. Yeah, that's I
Speaker 1: guess the most expensive way to own a fancy new phone.
Speaker 1: That's gonna well, you need to put owning clothes to
Speaker 1: have a fusee utilized for a while. Um yeah, I
Speaker 1: wanted two matches. We're talking about saving for college tonight.
Speaker 1: I wanted to quickly, uh tell our tell listeners about
Speaker 1: our college experience. So how many keg stands did you
Speaker 1: do in college? Is my first question? Zero? Man? Oh good?
Speaker 1: Oh me too. Actually, yeah, we're both straight edges, so
Speaker 1: tame college. Yeah man, But even still, we had had
Speaker 1: an amazing time in college. I went to school Georgia
Speaker 1: u g A, which everyone knows is a fantastic school.
Speaker 1: I could probably name both the colleges I went to
Speaker 1: and no one would know the mascot. So our college
Speaker 1: experience is probably couldn't be any more different, I'm going
Speaker 1: to guess. So I went to a small private school
Speaker 1: for the first two years, and everybody knew everybody, and
Speaker 1: we would have like foot races, like like we just
Speaker 1: did the weirdest things for fun. We would uh we
Speaker 1: would like play poker or a lot of video games,
Speaker 1: you know, stuff like that. Yeah. Like, to be honest, dude,
Speaker 1: that was the majority of like what happened at Georgia
Speaker 1: from me as well. But but specifically I wanted to
Speaker 1: ask you too, like sort of what was your parents
Speaker 1: like expectation for you, like to go to college. Was
Speaker 1: it a big deal? You know, like was it expected?
Speaker 1: Did you come from like a long line of like
Speaker 1: college professors or graduates sort of thing where it was
Speaker 1: just like, oh, yeah, you better go to school, or
Speaker 1: was it sort of like, uh yeah, do your own thing, dude?
Speaker 1: You know, I think it was always assumed, but there
Speaker 1: was this never this overbearing expectation put on it either.
Speaker 1: I think if I had whatever I did, if it
Speaker 1: was if they thought that it was well thought out
Speaker 1: and then I really felt compelled to do something, I
Speaker 1: think they would have supported me. And so if that
Speaker 1: was to go be an underwater welder or whatever that
Speaker 1: might be, I think my parents would have said, go
Speaker 1: for it. That's great. I thought you're gonna say, like
Speaker 1: the classic underwater basket weaving. They might not have supported
Speaker 1: that because there's probably not much direction in that. But um,
Speaker 1: both of my parents graduated from college and education is
Speaker 1: important to us. Yeah, but also it wasn't this big
Speaker 1: built up thing where, um, you know you have to
Speaker 1: achieve this certain level of education or in our eyes
Speaker 1: you're a failure. There was there was no that, right. Yeah,
Speaker 1: I'm with you, dude. My parents are are very Yeah,
Speaker 1: we had we had similar parents. I guess in their regard,
Speaker 1: there's definitely an expectation and with that expectation came money
Speaker 1: as well, and so like there's a big chunk of
Speaker 1: money set aside for me to go to college, and
Speaker 1: like my mom and my like my dad. I remember
Speaker 1: my dad specifically like talking to me and just really, look,
Speaker 1: you don't have to go to college, but just know
Speaker 1: that this would probably make break your mom's heart because
Speaker 1: she's Korean, and I think the Asian sort of culture
Speaker 1: and and mindset of higher education. It's very esteemed, right,
Speaker 1: It's it's sort of like, well, that's what you do.
Speaker 1: There's like no questions asked. Certainly, I know she would
Speaker 1: have loved me like it had I not gone to
Speaker 1: college and taking that money and you know, maybe either
Speaker 1: invested or started a business. But fact is I didn't
Speaker 1: have any sort of direction. And you know, so I
Speaker 1: was like, Okay, college, that sounds great, let's do it. Well.
Speaker 1: I think that's actually probably one of the biggest things
Speaker 1: in the plus column for going to college is that
Speaker 1: you get that direction. You get that direction, and especially
Speaker 1: in this day age when you're you know, seventeen or
Speaker 1: eighteen and you're applying to go to college, most kids
Speaker 1: at that age have zero idea what they want to
Speaker 1: do and and really like don't have any of the
Speaker 1: life skills even in order to pursue something that they
Speaker 1: might even have an inkling they want to do. And
Speaker 1: I know that those are total genius like Elon Musk
Speaker 1: or something like that, and you just know exactly what
Speaker 1: you want to do, right or that Bill Gates type
Speaker 1: or Steve or whatever. But so I think that four
Speaker 1: years for me was really formative, like relationally, culturally, the
Speaker 1: things that I know you learned a lot the things
Speaker 1: that I learned just outside the classroom. I think we're
Speaker 1: equally as important, if not more important to me. But
Speaker 1: when I learned inside the classroom going to college, so
Speaker 1: that might not be what college is for. But that
Speaker 1: was so I mean, I just remember looking back, those
Speaker 1: are the things that were formative for me. No, no,
Speaker 1: I think it's good that we actually talk about that
Speaker 1: because we're gonna spend the rest of the podcast probably
Speaker 1: talking about why you shouldn't go together or not, maybe
Speaker 1: not why you shouldn't, but we're I mean, we're gonna
Speaker 1: have more or ultimately not why you shouldn't, but like
Speaker 1: why you shouldn't maybe not be saving for your kids college, right,
Speaker 1: So uh yeah, I feel like we're gonna highlight more
Speaker 1: of the reasons why, and just in general, we're kind
Speaker 1: of knocking it down a few spots on the tone
Speaker 1: and pole, right, Like, you know, it's not like this
Speaker 1: be all end all thing that you put all your
Speaker 1: money towards. I think that's kind of how we're gonna
Speaker 1: end up walking away from this episode. But they're, like
Speaker 1: you said, there's a lot of intangible things that you
Speaker 1: learn in college that that's really hard to quantify. The
Speaker 1: relationships the people that you meet, and all the sort
Speaker 1: of personal things that you mentioned too. But it's so
Speaker 1: funny how like we both love beer so much, but
Speaker 1: neither of us have these amazing kig stand beer stories.
Speaker 1: I know you think we would, right, feel kind of
Speaker 1: lame to be honest. Speaking of beer, though, let's pop
Speaker 1: this one. Uh. It's toime to make up for lost
Speaker 1: lost time all the last years, so we have to
Speaker 1: drink at least once a week on the podcast. Now
Speaker 1: I'll pop this beer right now from Firestone Walker. It's
Speaker 1: a wild ale fermented with strawberries. Yeah, as you could hear,
Speaker 1: this is another cork and cage. What do we what
Speaker 1: do we have? Last week? Is this two beers in
Speaker 1: a row, two weeks in a row that we've had
Speaker 1: fancy beers? It sure is. Yeah, the RuSHA River Consecration. Yeah,
Speaker 1: so this is to California beers back to back. Uh,
Speaker 1: two donated beers from friends back to back. So last
Speaker 1: week our friend Carl donated the beer and then this week.
Speaker 1: That's right, my friend Josh, who I don't think he
Speaker 1: has any Twitter handle or blog that he wants repped,
Speaker 1: but just a really good friend for a long time.
Speaker 1: And uh, he lives out in California and has access
Speaker 1: to these amazing beers. And he went to the Firestone
Speaker 1: Walker Brewery and this is a big name out West
Speaker 1: out in California right, well there, I think there are
Speaker 1: in a lot of states too overall. I mean I
Speaker 1: think they're probably more than half of the states distributing
Speaker 1: now and so, but he went to the actual brewery
Speaker 1: and got this beer. It is called schumps. The phrase
Speaker 1: I shouldn't even do it, I shouldn't even try it.
Speaker 1: So I mean I'm thinking of like in like in Paris,
Speaker 1: the sham, the sham sham shamps de liz is how
Speaker 1: I think. So, Josh, thank you for providing this beer.
Speaker 1: Super pumped to dip into it. Yeah, tell us about
Speaker 1: this beer, Joel. This is is so wild ale for
Speaker 1: a minute, was with strawberries. It's hung out in French
Speaker 1: choked barrels for fifteen months. So I think people that
Speaker 1: listen to the podcast, no, I think we're both kind
Speaker 1: of obsessed with sour beers with fruit in them, and
Speaker 1: this is one of those. Well, in fact is too man.
Speaker 1: It's summertime, and so you know we we can have
Speaker 1: an occasional stout here and there, but you know, these bright, tart,
Speaker 1: refreshing sours with a little bit of fruit added are
Speaker 1: especially delicious in the summer. But a sund like this, yeah,
Speaker 1: particularly refreshing. Dude, I just stuck my nose and crap,
Speaker 1: that is like it smells like beer concentrate. Man, I
Speaker 1: think this thing is about to knock us back. Cheers.
Speaker 1: Oh wow. That beer is like really tart in the
Speaker 1: perfect way. It's more tart than consecration. It's more tartly
Speaker 1: than most of the beers we've had. But on this podcast, man,
Speaker 1: that strawberry has almost like this nice sort of funky
Speaker 1: edge to it. The oak and the strawberries really come
Speaker 1: through nicely. Um, and then that really nice tart finish.
Speaker 1: That's delicious. That's really great. Thank you Josh for sending
Speaker 1: this over. I mean, my goodness, that's delicious. Thanks Josh.
Speaker 1: All right, enough about beer, onto our listener marks question.
Speaker 1: Here's what he said. He said, I was wondering about
Speaker 1: your thoughts on saving for a child's education. My wife
Speaker 1: and I both work at colleges. She's a professor, I'm
Speaker 1: a counselor, and we're actually not sure what college will
Speaker 1: look like in fifteen years and what the value proposition
Speaker 1: will be. Also, will our kids even want to go
Speaker 1: to college. We haven't made decisions on a nine or
Speaker 1: other account, but starting to have the discussion. Thanks fellas, Mark,
Speaker 1: awesome question. And I say that because this is a
Speaker 1: discussion that my wife and I started having several years
Speaker 1: ago too. Being self employed, we quickly realized that we
Speaker 1: didn't need to go to school to do what it
Speaker 1: was at the time. We were both working in the
Speaker 1: business and so we were both photographers and neither of
Speaker 1: us went to school for that, and neither of us
Speaker 1: have taken a formal class. But that being said, we
Speaker 1: both went to date college for four years and got
Speaker 1: our got our undergrads. So there's a period there where
Speaker 1: we're both like, God, sucks, Like, what's the point, you know,
Speaker 1: it's not practical at all. And he kind of went
Speaker 1: through this whole phase where we're like, nobody should ever
Speaker 1: go to school. Certainly that's advice that isn't for everyone, right, Like,
Speaker 1: if you want to be a doctor, you've got to
Speaker 1: be a science major. You have to those the stuff
Speaker 1: you know you need to take. But yeah, it's good
Speaker 1: to kind of revisit this, uh, this discussion and kind
Speaker 1: of cover some of these topics. Yeah, I think even
Speaker 1: from the beginning, Mark is kind of thinking about it properly.
Speaker 1: I like the way that even as a husband and
Speaker 1: wife that both work out of college. He's still saying, Yeah,
Speaker 1: I what is this? What's the value proposition? What are
Speaker 1: things gonna look like in fifteen years? Will our kids
Speaker 1: even want to go to college? Like? Those are the
Speaker 1: right questions, awesome questions, Mark, because usually people are like,
Speaker 1: how much should I be putting in? Yeah, the assumption is,
Speaker 1: of course we're gonna save, and this is just what
Speaker 1: you do. Of course, right, that's just the right thing
Speaker 1: to do, right, And so I like the questions that
Speaker 1: he's asking, and I think there are obviously a bunch
Speaker 1: of things to go into this. The first thing is
Speaker 1: it kind of depends on how your family views college.
Speaker 1: So you know, Matt and I were just talking about
Speaker 1: kind of the expectation for our families, and you know,
Speaker 1: they were similar but a little different. Mark, with both
Speaker 1: you and your wife working out of college, the likelihood
Speaker 1: of your children wanting to go to college is higher.
Speaker 1: I mean, the statistics will bear out too, that your
Speaker 1: parents go to college. It's assumed sort of basically, there's
Speaker 1: a there's a much greater chance that you will, and
Speaker 1: especially working in a college, so for them, a plan
Speaker 1: that's like one check in that in that box, there's
Speaker 1: just a greater likelihood that it's going to happen. And
Speaker 1: you know, I think we'll give you kind of a
Speaker 1: lot of unchecked boxes that you need to think through.
Speaker 1: But that's just kind of one thing. Okay, there's a
Speaker 1: good likelihood that your kids, all things being equal, based
Speaker 1: on statistics, are they're much more likely than a lot
Speaker 1: of other children tend up pursuing higher education. And so, Mark,
Speaker 1: you specifically asked about the five twenty nine and so
Speaker 1: for you, unless there's something that you didn't share, Like,
Speaker 1: I think there's a good chance that your your kids
Speaker 1: or your kid would be going to college, and in
Speaker 1: which case it might makes sense for you to to
Speaker 1: be setting aside money in a plan. You didn't mention
Speaker 1: whether or not you guys are you know, are are
Speaker 1: kind of maxing out your retirement savings. I think that's
Speaker 1: something that we would want to see in a in
Speaker 1: a particular order. But yeah, so let's talk about specifically.
Speaker 1: Let's a lot of your listeners out there probably have
Speaker 1: heard maybe the term plan, but you may not exactly
Speaker 1: know what that is. Let's dive into that right after
Speaker 1: this break. Yeah, I think Matt, like we talked about
Speaker 1: in our Investment Basics episodes, like there's like a lot
Speaker 1: of different numbers and letters and all these things put
Speaker 1: together for all these different retirement accounts, and most people
Speaker 1: probably have heard nine. But then you know, well what
Speaker 1: is it? Uh? And so it is an investment accounts
Speaker 1: specifically designed to help you save for college. Uh. And
Speaker 1: it's got great benefits. The investments are allowed to grow
Speaker 1: on a tax deferd basis, and your withdrawals will be
Speaker 1: a percent tax free no matter how much profit you've
Speaker 1: seen from those in vestments, as long as those proceeds
Speaker 1: are used for qualifying education expenses. Uh. And you can
Speaker 1: kind of look to see what those things are like
Speaker 1: that computers and room and board and things like that
Speaker 1: also count. You can use five pollion nine money for
Speaker 1: those things, not just for the tuition bill. But the
Speaker 1: other thing about five nine plans is that many states
Speaker 1: offer a tax deduction or credit on your contributions into
Speaker 1: a five plan. So a lot of people think, boom,
Speaker 1: I want to do this, so I can you know,
Speaker 1: avoid paying state taxes on that income. And so that
Speaker 1: can be you know, a really good way to to
Speaker 1: use a plan to kind of lessen your tax burden, um,
Speaker 1: and say for your kids college in the in the
Speaker 1: same way. Nice. Yeah, And another huge benefit to man
Speaker 1: is that it's transferable and so even And it's good
Speaker 1: to mention this too, because Markey's like the way you
Speaker 1: wrote kids in your question, you kind of put the
Speaker 1: s in parentheses, which tells me, I guess that you
Speaker 1: maybe have one child and that you might have multiple
Speaker 1: so down the road. And that's me that's a huge
Speaker 1: distinction to make there because with a single kid, it's like, well,
Speaker 1: we're gonna set all this money aside, and there's a
Speaker 1: chance that you know that that kid may not go
Speaker 1: to college. Well, if you have two or more, there's
Speaker 1: a much greater chance that one of those kids will
Speaker 1: go to college. Right, And so you know, say your
Speaker 1: first kid doesn't end up going to college, well you
Speaker 1: still have kid number two and maybe even kid number three,
Speaker 1: plus that you can transfer the benefits of the five
Speaker 1: to Yeah, and you can even transfer it to you
Speaker 1: or your wife or or a nephew or a niece
Speaker 1: or something like that. And so if you are just
Speaker 1: dead set against taking the tax hit, which we'll mention
Speaker 1: in a minute, uh, you can transfer it to a
Speaker 1: wide variety of people. You can go back to school
Speaker 1: yourself and use those funds, uh and still claim that
Speaker 1: tax benefit. So Angel, you could go back and do
Speaker 1: the underwater welding. You know, dude, I'd be so good
Speaker 1: at it. Some of such a good swimmer these days.
Speaker 1: I feel like I can see underwater holding your breath,
Speaker 1: that's true, getting the wells in real quick. My concentration
Speaker 1: level might be lacking in order to perform that job.
Speaker 1: But I think I heard it pays well, so I'll
Speaker 1: consider it. So, I mean, those are just a couple
Speaker 1: of the benefits of a five nine plan. This isn't
Speaker 1: necessarily gonna be an episode where we talked through all
Speaker 1: the pros and all the cons of all the different
Speaker 1: ways that you could potentially save for college, and of
Speaker 1: the college specific savings accounts out there, it's probably the
Speaker 1: most popular one, and so we definitely want to make
Speaker 1: sure we we hit this one. And then we're gonna
Speaker 1: spend the rest of the episode talking about some alternatives
Speaker 1: to that, uh and some maybe some more creative ways
Speaker 1: to think about not only saving but just thinking about
Speaker 1: higher education in general. Yeah, let's hit a few of
Speaker 1: the drawbacks of a five twenty nine playing real quick.
Speaker 1: The biggest drawback that it has that it has to
Speaker 1: be used for educational expenses. Otherwise we'll get hit with
Speaker 1: a ten percent penalty, UH, and that will be counted
Speaker 1: as federally taxed income plus the state rate if you
Speaker 1: receive that state deduction or credit. Another big drawback potential
Speaker 1: is high costs. Each state has their own five twenty
Speaker 1: nine program, and different states offer different investments inside of that.
Speaker 1: FIE then again is like the vehicle, and the the
Speaker 1: investments inside are like the passengers, and so you know,
Speaker 1: one fine plan could be great, low cost, widely diversified,
Speaker 1: and another five twenty nine plan UH could have investments
Speaker 1: that are high cost and not widely diversified. And so
Speaker 1: you don't want to enter into a plane like that.
Speaker 1: So definitely watch out for the high cost plans. And
Speaker 1: in general, I mean it could be underperforming as well, right,
Speaker 1: just aside from the costs, I mean, it depends on
Speaker 1: what they offer and allow you to invest UH within
Speaker 1: your five twenty nine. Right, Like, sometimes there's like basically
Speaker 1: like a limited menu of options, and if you're stuck
Speaker 1: with one of those five nine, you're probably going to
Speaker 1: see that account yeah, just underperform. Yeah, but there are
Speaker 1: great resources out there for you too, essentially review each
Speaker 1: state's five nine plan and see whether the state you
Speaker 1: live in offers one that you should consider participating in. So,
Speaker 1: in particular, there's a great resource at Clark dot com.
Speaker 1: That's the place where I work, by the way, for
Speaker 1: a full disclosure, and Clark Howard, my boss, has put
Speaker 1: together a really good list of the five nine plans
Speaker 1: you should consider and the ones that you should stay
Speaker 1: away from. And that's essentially based on what states offer
Speaker 1: a decent tax break for you for investing, and then
Speaker 1: on top of that, which states offer great funds at
Speaker 1: low costs so that your money is actually you know,
Speaker 1: working and growing hopefully for your kids as opposed to
Speaker 1: getting eaten up by fees by the plans administrator. Awesome. Yeah, man,
Speaker 1: So that's the five nine plan. And you know, we
Speaker 1: would recommend that if there's a high likelihood of your
Speaker 1: kids going to college, and if you have prioritized retirement savings. Yeah,
Speaker 1: that's right, Matt. There's a few reasons why we think
Speaker 1: it's way more important to be focused on saving for
Speaker 1: retirement than it is to be focused on saving for
Speaker 1: your child's college future. Kind of the main reason for
Speaker 1: that is there are lots of ways that you'll be
Speaker 1: able to pay for college, and there just aren't that
Speaker 1: many ways to pay for your own retirement. And we'll
Speaker 1: kind of give you some things to consider, you know,
Speaker 1: a little bit later in the podcast about how to
Speaker 1: pay for college other ways, but really, no one else
Speaker 1: is gonna help fund your retirement, and so making sure
Speaker 1: that you've got that buttoned up, make sure that you're
Speaker 1: contributing up to the match and hopefully more in your
Speaker 1: four oh one K. Making sure that if you meet
Speaker 1: the income limit eligibility, that you're fully funding a roth
Speaker 1: for you and if you're married, for you and your spouse,
Speaker 1: and if you exceed those income limits, then making sure
Speaker 1: that you are are putting a substantial amount into a
Speaker 1: traditional i RA. Essentially prioritizing your retirement over your kids
Speaker 1: college future is more important and actually ultimately better for
Speaker 1: them at the same time. Yeah, man, you know, one
Speaker 1: way I'm thinking about it too, is like when you're
Speaker 1: on the airplane and they always say that, like if
Speaker 1: the mask drops, uh, make sure you put on yourself
Speaker 1: before helping others around you, especially your kids, Right it's
Speaker 1: like the same that's the perfect It's like the same
Speaker 1: thing because often times you think, oh crap, my kid,
Speaker 1: you know, a good parents should say that. But you know,
Speaker 1: if you're thinking about it soundly, and if you think
Speaker 1: about ahead of time, which is why they have the
Speaker 1: videos that no one ever listens to, including myself. Um,
Speaker 1: but you want to get on yourself first. That way,
Speaker 1: you can't help others you. That way, you can't help
Speaker 1: your children and elderly whoever else around you get their
Speaker 1: masks on too so they don't pass out. I think
Speaker 1: the same thing applies applies with this, you know, like
Speaker 1: you kind of need to get your own footing to
Speaker 1: be solid before you're able to kind of start working on,
Speaker 1: you know, setting aside the funds to specifically to go
Speaker 1: towards children's college. Yeah, and I think it would be
Speaker 1: better for your kid to rack up some student loans
Speaker 1: and have to pay those off, you know, over the
Speaker 1: next ten, fifteen, twenty years than to find out that
Speaker 1: your destitute and retirement and not have student loans to
Speaker 1: deal with, but then have to figure out, you know,
Speaker 1: how to support you and and make that work in retirement.
Speaker 1: I think it makes a whole lot more sense to
Speaker 1: be saving for your retirement. The other thing, too, is
Speaker 1: that your your retirement accounts have longer to grow more
Speaker 1: compounding interest. To make nine account, even if you open
Speaker 1: it when your child is born, is going to have,
Speaker 1: you know, eighteen years to grow into compound. You're gonna
Speaker 1: have extra cycles of compounding interest on your retirement accounts
Speaker 1: that are gonna grow and grow and grow. And so
Speaker 1: if you, yeah, so what you're saying that they had
Speaker 1: you not contributed to that, you're going to be missing
Speaker 1: out on some massive final compounding interest years there in
Speaker 1: the end. Yep. Yeah, and so yeah, I think that's
Speaker 1: another another check in the box of saving for retirement
Speaker 1: as opposed to saving for your kids college. Yeah. I mean.
Speaker 1: The other thing is too, is kids are young, you know,
Speaker 1: like they're strong, They can figure out, figure things out
Speaker 1: while they're young and take on an extra job like
Speaker 1: when you're old. You don't want to have to deal
Speaker 1: with that, like you know, like you want to be
Speaker 1: taking on a second job, you know, taking on additional
Speaker 1: hours in order to make up some of those last
Speaker 1: years where you weren't contributing to your retirement. I mean, no,
Speaker 1: that's that's that's the answer. No, you want you want
Speaker 1: to be in a in a position to where that's
Speaker 1: that's already going for you, and hopefully from a position
Speaker 1: of financial strength, you can at that point look to
Speaker 1: maybe help your children out after the fact. I think
Speaker 1: that's maybe even a better approach than to sort of
Speaker 1: sacrifice on the front end for yourself. But then you're
Speaker 1: sort of in a much weaker position long term, and
Speaker 1: then they're almost having to kind of pull you up
Speaker 1: versus you being in a position of of financial strength. Yeah.
Speaker 1: I mean again, there's really a lot of ways to
Speaker 1: pay for college. There are a lot of options. There
Speaker 1: are grants, there are scholarships. But when it comes to
Speaker 1: paying for retirement, essentially, since pensions are super rare now,
Speaker 1: we have to foot more of the bill for our
Speaker 1: own retirement and so that's something that we have to
Speaker 1: plan for. There's no retirement scholarship right right, and all
Speaker 1: the lottery which you shouldn't be playing. And so yeah,
Speaker 1: saving now and saving well for your retirement is the
Speaker 1: biggest priority. I want to say too, in a perfect
Speaker 1: world like all the above, right like that, But I
Speaker 1: think what we're talking about here is kind of finite resources.
Speaker 1: You know, most of us can't afford to fully fund
Speaker 1: to four oh one K and a roth and save
Speaker 1: you know, a good chunk of change for our kids
Speaker 1: college and so well, where do you prioritize if you
Speaker 1: have limited funds? And so that's kind of where we're
Speaker 1: trying to hit. You know, Mark, I don't know exactly
Speaker 1: how much money you have going towards all of those things,
Speaker 1: but just kind of, you know, run through the list. Hey,
Speaker 1: how am I doing saving for retirement? Am I saving
Speaker 1: a good chunk? Am I at a good pace? And
Speaker 1: that's really the first question to ask before you consider
Speaker 1: are opening account? Just to clarify here, five twenty nine is,
Speaker 1: like we said, designed specifically for college savings. We're touching
Speaker 1: on retirement accounts right, so our favorite being a roth
Speaker 1: ira A. We're talking about how we want to prioritize
Speaker 1: that because that kind of comes first. You want to
Speaker 1: have a solid financial footing before you're you're looking to
Speaker 1: start saving for your kids college. But also to I
Speaker 1: mean with a rath, you're able to withdraw and a
Speaker 1: lot of people know this right, but you can withdraw
Speaker 1: any of your contributions to a wrath for anything, taxing,
Speaker 1: penalty free, tax exactly, tax and penalty free. So if
Speaker 1: you're looking for some extra cash for when your kids
Speaker 1: are are going off to school and you've been contributing,
Speaker 1: you know, you've been maxing out, and say maybe even
Speaker 1: you've got a spouse or a significant other as well
Speaker 1: that's also been contributing to a wrath. I mean, I
Speaker 1: mean right now, the the contributional limits year, I mean,
Speaker 1: that's a lot of money that you can sock away
Speaker 1: over not just eighteen years from from the time you
Speaker 1: have a kid, but potentially since you had your job,
Speaker 1: you know, since you were first employed, and if you
Speaker 1: started saving then that's I mean, that's potentially decades worth
Speaker 1: of of you know, years worth of savings that you
Speaker 1: can draw on. That's not something you necessarily want to
Speaker 1: count on, but it's worth noting that that's there as
Speaker 1: as an option. Yeah, and the tax break depending on
Speaker 1: what state you're in, it could be the exact same
Speaker 1: essentially as a wrath or it could be a little
Speaker 1: bit better. But there are a couple of risks involved,
Speaker 1: right that you have to use it for education expenses,
Speaker 1: and that if not, you're hit with a tax and
Speaker 1: penalty and so the wrath is just this. I know
Speaker 1: I'm retiring, right, I know I'm gonna need money at
Speaker 1: some point in the future for myself to live on.
Speaker 1: And so you're kind of skipping that gamble by putting
Speaker 1: money directly in a wrath as opposed to in account. Awesome.
Speaker 1: So the next what we want to talk about then,
Speaker 1: are sort of some true alternatives and things that you
Speaker 1: want to consider as you start thinking about college, as
Speaker 1: you start having these discussions with your children, you know,
Speaker 1: aside from Okay, how much should we save and where
Speaker 1: should I put the money, there's sort of some you know,
Speaker 1: let's like zoom out a little bit and even think
Speaker 1: about college from you know, hopefully even a different perspective. Yeah,
Speaker 1: so the first thing that can consider is kind of
Speaker 1: a cultural shift that's happening with how our society views work.
Speaker 1: And college is great for so many people, and I
Speaker 1: think Matt and I would both say that it's been
Speaker 1: worth it and good for us, but we also need
Speaker 1: to kind of think outside the box a little bit.
Speaker 1: There's lots of money to be made right now in
Speaker 1: blue collar careers and people that are skilled laborers, good
Speaker 1: with their hands, that have people skills, and so learning
Speaker 1: a trade is becoming more and more valuable. You know,
Speaker 1: I made a joke about underwater welding, but I mean, yeah,
Speaker 1: that's true though, right, but underwater welders make a heck
Speaker 1: of a lot more money than I do. And things
Speaker 1: are changing so much in the workforce with jobs and
Speaker 1: AI and computerization that there are a lot of jobs
Speaker 1: right now that you know, people go get an English degree,
Speaker 1: you get a master's degree, and the pay is so low.
Speaker 1: But then there are industries out there that are begging
Speaker 1: for workers that require you know, months or years of
Speaker 1: training and no college that off times can be paid
Speaker 1: for by that employer, and like while you're working, yeah, yeah,
Speaker 1: and then you're essentially set up to make a heck
Speaker 1: of a lot more money than someone with a history
Speaker 1: or an English degree or a master's degree in a
Speaker 1: lot of different areas. Yeah, So certainly those are jobs
Speaker 1: and careers where a four year undergrad degree or or
Speaker 1: additional schooling, yeah, wouldn't be necessary. And along those lines too, men,
Speaker 1: even like artists, you know, like I think back to
Speaker 1: like what Kate and I did when we started the
Speaker 1: photography company. Did we need to go to college for that. No,
Speaker 1: I mean we learned a ton. There's a lot of again,
Speaker 1: like we said earlier, like a lot of intangible things
Speaker 1: that we learned and in that period of time. But
Speaker 1: at the same time, we've had zero formal education in
Speaker 1: regards to what we actually do is as far as
Speaker 1: photography specific, we've had zero formal education and running our
Speaker 1: own business. We've learned all that through friends, through going
Speaker 1: to the just different workshops in the city, going through
Speaker 1: just researching online and with our world today. Man, there's
Speaker 1: a lot of resources out there. There's a lot of
Speaker 1: resource is online where you're able to learn the things
Speaker 1: that you want to learn if you know that there's
Speaker 1: something you want to pursue. And so yeah, I don't
Speaker 1: think this means that you should push your child who
Speaker 1: is super into history or English into underwater welding necessarily,
Speaker 1: but it's just something to consider right that there are
Speaker 1: a lot of high paying jobs plumbers, h fact technicians, contractors,
Speaker 1: those sorts of jobs are in high demand right now,
Speaker 1: and so you don't want to put a square peg
Speaker 1: in around hole. But it's just something to consider as
Speaker 1: uh as the shape of the workforce changes and the
Speaker 1: kind of jobs that are being lost as technology advances.
Speaker 1: It's just food for thought for when for when you're
Speaker 1: thinking about where to put your money to save for
Speaker 1: the future. Yeah, there's probably not gonna be a robot
Speaker 1: that like can lay down, crawl upunder your sink and
Speaker 1: you know, reconnect the pipe that your kid broke or
Speaker 1: something like that. Right makes me think of our friend, uh,
Speaker 1: our attorney friend that lives down the street from us,
Speaker 1: you know, you like always complains about how much the
Speaker 1: plumbers make. He's like, man, they're hourly rate is more
Speaker 1: than I may. You know, it's like plumbers are going
Speaker 1: to rule the world and they don't have all that
Speaker 1: college set exactly. I mean, like we joke about it,
Speaker 1: but you know, I mean there's a lot there's a
Speaker 1: lot of actual truth theory, which is why, you know,
Speaker 1: why we want to bring it up. So yeah, another
Speaker 1: thing is you should really consider spending the money that
Speaker 1: you would have saved in a five account right now
Speaker 1: on things that will enricher kids, so interesting books, memberships
Speaker 1: to museums, traveling. Man, I know that a lot of
Speaker 1: kids who are able to travel in their preteen teenage years,
Speaker 1: those sorts of experiences with their parents mean a lot
Speaker 1: developing that relationship with you as the parent, right like
Speaker 1: that father son, that mother, daughter or whatever. That family
Speaker 1: time that you have together. Traveling is so meaningful. And
Speaker 1: then on top of that, travel is such an eye
Speaker 1: opening experience for all of us, but especially for a
Speaker 1: kid to see another culture history, you know, going to
Speaker 1: Europe and seeing things that are so much older than
Speaker 1: we can even imagine here in the United States. Spending
Speaker 1: money on things like that for your kids experiences now
Speaker 1: as opposed to, uh, you know, basically lightening their college
Speaker 1: bill later on, those can be such meaningful experiences, and
Speaker 1: just consider whether your money is better spent now forming
Speaker 1: those cultural experiences as opposed to saving for their future education.
Speaker 1: That's great. I think what's important to note there too,
Speaker 1: is that it's not like these experiences are going to
Speaker 1: replace college, right. It's not like it's instead of setting
Speaker 1: aside the money for tuition, we're gonna do this instead,
Speaker 1: as if like that was able to be like a
Speaker 1: one for one sort of thing. I think a good
Speaker 1: way to look at it, too, is that it kind of,
Speaker 1: like you said earlier, like opens their minds, like opens
Speaker 1: their eyes a little bit, and I think it changes
Speaker 1: the way they learn as well. It's it's kind of
Speaker 1: opens their eyes to receiving knowledge in a different, more
Speaker 1: informal sort of way. And you know, again, this sort
Speaker 1: of points them in the direction of considers other things
Speaker 1: other than the standard four year degree, which is what
Speaker 1: Joel and I both did. But there's there's a lot
Speaker 1: of options. And when you're able to see the whole
Speaker 1: world for sort of what it is, I think it
Speaker 1: does leaning you to literally look at the world slightly
Speaker 1: differently than had you not have those experiences. It's sort
Speaker 1: of just shapes the way kids learn and perceive new
Speaker 1: information and sort of training them to learn more efficiently
Speaker 1: and differently, is is what's really valuable there? Yeah, so
Speaker 1: I completely agree. I mean, after after college, I got
Speaker 1: a job and I worked there for like six months,
Speaker 1: and then I quit and I went on a road
Speaker 1: trip around the country for three months. And that changed
Speaker 1: me in so many ways and just the way I
Speaker 1: perceived the world, the things that I take seriously or
Speaker 1: don't take seriously, the cultural norms that I assumed were
Speaker 1: correct or that I thought were important, and then they
Speaker 1: just didn't seem to hold as much wait for me
Speaker 1: after that, right, and so I think that can be
Speaker 1: the same for your kids. As you do those things
Speaker 1: and as you maybe maybe instead of you know, saving
Speaker 1: four account, you take them to a major musical that
Speaker 1: comes to town, or pay for music lessons. Right, Learning
Speaker 1: an instrument can train a child's brain in such an
Speaker 1: interesting way. But I guess just think outside the box.
Speaker 1: There are a lot of ways that you can put
Speaker 1: that money to use that can grow your relationship with
Speaker 1: your child or then also kind of grow their aptitude
Speaker 1: for learning in different and creative ways that can have
Speaker 1: a much longer lasting effect than essentially just lessening their
Speaker 1: college bill that they have to pay after the four
Speaker 1: years or up. After a quick break, we'll continue to
Speaker 1: talk about some more legit alternatives to saving in a plan.
Speaker 1: All right, Matt, we just kind of went high level
Speaker 1: grand scheme of things. Let's talk specifics. It turns out
Speaker 1: theft of kids get scholarship or grant money to go
Speaker 1: to college. Lots of states offer scholarships and tuition support,
Speaker 1: making college virtually free, and there are more that might
Speaker 1: follow suits. So if you live in certain states, either
Speaker 1: community college or state schools are essentially free in different
Speaker 1: spots around the country, if you maintain a certain g
Speaker 1: P A g P A s aren't even like that high. Man.
Speaker 1: I was looking at some of these, some of the
Speaker 1: different states, and like, I know, for the one that
Speaker 1: Georgia has, like the Hope Scholarship, like at least he
Speaker 1: used to be like you needed to maintain a three
Speaker 1: point oh, but some of them are there in the twos,
Speaker 1: you know. I was just like, man, this is free money, Like,
Speaker 1: it's not that difficult right to maintain a see average
Speaker 1: or above. But did you is that what you had?
Speaker 1: Did you have Hope? Yeah? So the first two years
Speaker 1: I went to an out of state school, a private school,
Speaker 1: and ended up racking up a little bit of student loans.
Speaker 1: But then I wiped up and I came back and
Speaker 1: took the free money for the last exactly. Yeah. And
Speaker 1: then in addition to like this big state scholarships like that,
Speaker 1: there's just other smaller scholarships and work study programs. Uh.
Speaker 1: I mean we kind of touched on that earlier, but
Speaker 1: you just need to know where to find them. Fast
Speaker 1: web dot com is a great site to to explore
Speaker 1: of kids get scholarships or grants for college. I mentioned
Speaker 1: that site so fast web. It's basically this site where
Speaker 1: you get to I mean, you register and they just
Speaker 1: have like this catalog of all the past scholarships and grants,
Speaker 1: basically all the free money out there that's out there
Speaker 1: for your education, and you kind of fill out like
Speaker 1: a profile and it matches you up kind of automatically
Speaker 1: for scholarships that you already qualify for, which sounds awesome, right,
Speaker 1: It's amazing, Yeah, it really does. It's just such an
Speaker 1: efficient smart way to to go about it. It kind
Speaker 1: of makes me want to do it just to see
Speaker 1: how much like how much uh, I mean scholarships could
Speaker 1: I get, like right now, even because I mean, dude,
Speaker 1: as a kid, I was terrible about that. I mean,
Speaker 1: I got my I got the Hope and that pay
Speaker 1: for all of my school, but I still had to
Speaker 1: pay for books and other school fees and stuff like that.
Speaker 1: And there's a lot of scholarships out there that can
Speaker 1: even apply to your room and board, you know, like
Speaker 1: these additional costs that you have that at least when
Speaker 1: I was eighteen and going into college, I just assumed
Speaker 1: that was just like, oh, that's just part of that's
Speaker 1: just part of school. That's just what you have to pay.
Speaker 1: But man, that's not the case. You know, had I
Speaker 1: gotten these scholarships and scored some of these sweet programs
Speaker 1: to pay for that, I would have been able to
Speaker 1: keep that money in my pocket. Yeah, I want to
Speaker 1: say to that when I was in school, I did
Speaker 1: a work study program on campus, and that essentially paid
Speaker 1: for a decent chunk of my education for those first
Speaker 1: two years when I was going to the private school.
Speaker 1: And man, it also helped me to take my education
Speaker 1: really seriously. Yeah, that I kind of had a stake
Speaker 1: in the game. Um that it wasn't just kind of
Speaker 1: being handed to me on a silver platter. But you
Speaker 1: know what, if I'm gonna go here, if I'm making
Speaker 1: this choice like I'm, I gotta work for it. And
Speaker 1: so I think that's like a worthwhile thing to ask
Speaker 1: your child to do. To you know, five or ten
Speaker 1: hours a week of work study on campus um or
Speaker 1: or even potentially an off campus job. You know, college
Speaker 1: is really fun. I remember being in college and thinking
Speaker 1: I was busy, And now, you know, with the kind
Speaker 1: of life I lead today, I can't imagine how I
Speaker 1: thought I was ever busy in college. But your kid
Speaker 1: can definitely handle taking you know, fifteen or sixteen or
Speaker 1: seventeen hour course load, and then on top of it,
Speaker 1: you know, working five to ten hours a week. I
Speaker 1: think that creates a sense of ownership over that college
Speaker 1: experience and can actually probably help them take their classes
Speaker 1: more seriously at the same time. Dude, yeah, I completely
Speaker 1: agree with that, Like having skin in the game, you know,
Speaker 1: where like there's like sweat equity, Like literally you're working
Speaker 1: and paying for your school. That is so valuable and
Speaker 1: and honestly, like a lot of parents can't pay for
Speaker 1: their or can't help contribute to their their children's education.
Speaker 1: Like it sucks for a kid to have to pay
Speaker 1: for their own college done, but it's way worse for
Speaker 1: the parents to not be prepared for retirement because they
Speaker 1: just don't have the time. You know, you don't have
Speaker 1: the time to catch up because you're older, and like
Speaker 1: kids are young and youth, you have the option to
Speaker 1: take on multiple jobs and and work really hard when
Speaker 1: you're younger to kind of dig your way out of
Speaker 1: that student loan, you know. But yeah, it's a lot
Speaker 1: tougher to be reaching the end of your working career
Speaker 1: where you're going to have fewer options to save for retirement.
Speaker 1: Another thing too, is uh. I think it's important to
Speaker 1: explain the costs of college to your child and encourage
Speaker 1: them to choose an affordable option. For instance, we mentioned
Speaker 1: the state scholarships, but let's say your state doesn't offer that.
Speaker 1: Community college is so much cheaper than going to a
Speaker 1: private school or even just an in state college. The
Speaker 1: average cost of in state community college is less than
Speaker 1: five thousand dollars a year. So even if you can
Speaker 1: convince your child to do their first two years at
Speaker 1: a community college and then move on to get their
Speaker 1: degree from another institution, just that one move alone could
Speaker 1: save them tens of thousands of dollars in student loan
Speaker 1: debt that they'll have to pay back over the next ten, fifteen,
Speaker 1: twenty years. Makes me think of a community like the
Speaker 1: TV show I love that show? Did you Yeah? Did
Speaker 1: you watch that back? And all? The other thing too,
Speaker 1: is that even if you can afford to pay for
Speaker 1: your your your kids college, you may decide that you
Speaker 1: don't want to, just depending on how you view the
Speaker 1: view the world and just sort of your outlook on
Speaker 1: finances and just what it is that you want your
Speaker 1: children to experience, you might even decide that that's not
Speaker 1: the best thing for you to do for them, you know,
Speaker 1: as for your children as individuals. And we want to
Speaker 1: encourage you guys to to not feel guilty, right, to
Speaker 1: not feel the sort of pressure of like, oh, I
Speaker 1: can't believe you're not saving for your your kids college.
Speaker 1: The way we spend time with our our children has
Speaker 1: a lot more bearing on on on the way that
Speaker 1: we love them than just how much money we were
Speaker 1: able to sock away and put towards their their school
Speaker 1: that they may or may not you know, go to
Speaker 1: down the road. So fight the urge to feel that guilt,
Speaker 1: because I think there's a lot of things that we
Speaker 1: do in regards from money, uh that's sort of guilt driven,
Speaker 1: and it needs to be out of love. If if
Speaker 1: in that's something that you want to do, then man,
Speaker 1: go for it. But don't at all feel guilty if
Speaker 1: that's either not a part of your financial plan because
Speaker 1: it's not able to be, or if you just decide
Speaker 1: that it's not going to be part of your financial plan. Yes,
Speaker 1: so I think ultimately it's a plan, isn't a huge priority.
Speaker 1: And if you do feel like your kids are definitely
Speaker 1: gonna get a higher education and that's important to you,
Speaker 1: and you really do want to say for their college education.
Speaker 1: I may plan is a great vehicle, but make sure
Speaker 1: that you're maxing out your retirement accounts first, because it's
Speaker 1: more important to get that step right and make sure
Speaker 1: that you're taking care of in retirement before you start
Speaker 1: saving for your kid's future. And then let's say, even
Speaker 1: if you're not sure if your kids are going to college, right,
Speaker 1: like it's just they're kind of on the fence or
Speaker 1: you think that they you know that they probably aren't
Speaker 1: going to go to college, Well, the same thing applies
Speaker 1: just continuing to invest like you normally would and if
Speaker 1: they do end up into college, well there's ways that
Speaker 1: you can sort of tap into some of that, like
Speaker 1: we talked about earlier with the rath, or you can
Speaker 1: just fund it out of your regular investments. You know,
Speaker 1: it's not is it going to be completely optimized with
Speaker 1: all the tax advantages that you would see in a
Speaker 1: five nine. No, I mean to be honest, like, it's
Speaker 1: not going to be like the five nine. There are advantages,
Speaker 1: uh when it comes to the taxation on that, But
Speaker 1: the fact is a lot of people just don't know
Speaker 1: if their kids are going to go to college and yeah,
Speaker 1: for them invest like you normally would. All right, Matt,
Speaker 1: that brings up the question that I want to know
Speaker 1: because I don't know whether you say for your kids
Speaker 1: college or not. So you've got three young girls, have
Speaker 1: you started saving for their college at all? Dude? That's
Speaker 1: a great question, And honestly, the short answer is no, Like,
Speaker 1: we haven't specifically, right, we haven't specifically set money aside
Speaker 1: for college in a college shavings account. Next question, why
Speaker 1: don't you love your children? But we have been smart
Speaker 1: and wise with the money, and we have lots of
Speaker 1: other investments, for instance real estate, you know, I mean
Speaker 1: how much college you know, where we just sell us
Speaker 1: single house and and take the proceeds from that. Shoot,
Speaker 1: you'd be able to fund three kids worth of college,
Speaker 1: you know, assuming they were in state and not going
Speaker 1: off to an ivy League school. So how we started
Speaker 1: saving specifically for that? No? But are we taking the
Speaker 1: steps that we've talked about in this episode as far
Speaker 1: as making sure that we have a solid foundation set
Speaker 1: up from all for Kate and I to where we
Speaker 1: have the option to contribute to their education down the road,
Speaker 1: and so that yes, you know, like we have taken
Speaker 1: those steps. It might be time soon, though, to to
Speaker 1: start maybe sitting aside money specifically towards a for us,
Speaker 1: because we've got three kids, you know, And that's one
Speaker 1: of the things we talked about is that that's one
Speaker 1: of the huge advantages of a five nine is to
Speaker 1: be able to transfer that, uh and and take that
Speaker 1: and necessarily have it maybe some for one kid, but
Speaker 1: then if they don't use all of it, to be
Speaker 1: able to you know, push that to to another. That's
Speaker 1: just a sweet thing to be able to do, you know. Um.
Speaker 1: And the likelihood that one of my three kids at
Speaker 1: least would go to college, I think it is pretty high.
Speaker 1: You've got two bright girls, though, what do yeah, what
Speaker 1: are you thinking? Man? Yeah, currently, I'm not saving for
Speaker 1: their college at all, and I just don't see it
Speaker 1: becoming a priority anytime soon for us. You know, there's
Speaker 1: a guy that I know who's a real estate investor,
Speaker 1: and he essentially, when his daughter was born, bought a
Speaker 1: quad quad plex and bought it on a fifteen year
Speaker 1: note and said, you know what, this essentially is her
Speaker 1: college education. Right here, I'm kind of more partial to
Speaker 1: real estate. It's something that I really enjoy and uh
Speaker 1: so I'd rather put my money there and kind of
Speaker 1: see what happens and maybe not have the most tax
Speaker 1: advantaged account possible saving for a kid's college, but hopefully
Speaker 1: I'll be pointing my girls in the direction of cheaper
Speaker 1: school or free school when it comes to you know,
Speaker 1: state scholarships and other scholarships and grants that exist, and
Speaker 1: so very little of my money will have to go
Speaker 1: towards our education, or maybe they'll choose another path altogether.
Speaker 1: Like we mentioned, you know, our society is changing when
Speaker 1: it comes to work, and I think like work could
Speaker 1: look a whole lot different by the time they are
Speaker 1: college age, and that will be in self driving cars
Speaker 1: and you know, AI all these different things. Man, I
Speaker 1: don't know what the world's gonna look like. And so
Speaker 1: I'd hate to be putting money in something like that
Speaker 1: as opposed to, you know, building my wealth for the
Speaker 1: future that they will certainly be able to partake of
Speaker 1: in other ways. I just hate to put my money,
Speaker 1: you know, in this one account that's reserved for one purpose,
Speaker 1: that and that alone. Yeah, as opposed to building my
Speaker 1: other assets. Yeah, do you think that would change if
Speaker 1: you had more than two kids? That's a good question.
Speaker 1: I don't think so if if you had five, though,
Speaker 1: you know, you're like, okay, certainly one of these five
Speaker 1: kids wouldn't like when you want to get like the
Speaker 1: sweet tax benefits of of of the five. Even I'm
Speaker 1: not saying that you would want to like completely dump
Speaker 1: tons of money in there, because that's the other thing
Speaker 1: you gonna be careful of. Two is it's not over
Speaker 1: fun to five because yeah, you're earmarking that money, and
Speaker 1: that's the only thing that you can do with that money.
Speaker 1: I'll say, I think if I had more kids and
Speaker 1: had a higher income, it would change things, like if
Speaker 1: the essentially the tax benefit was greater. But where I'm
Speaker 1: at income level wives, it makes more sense for me
Speaker 1: to do to a roth as opposed to trying to
Speaker 1: limit my tax exposure. And so I'd rather take the
Speaker 1: tax hit now, uh and not take it later. And
Speaker 1: that's why I do a wrath. But you know, people
Speaker 1: that are making a lot higher income. Let's say you're
Speaker 1: making you know, two fifty thousand dollars a year, you know,
Speaker 1: I think a five account makes more sense for you
Speaker 1: if you're a higher income earner because deferring those taxes
Speaker 1: now actually makes a lot more sense. And so if
Speaker 1: I was in a higher tax bracket, I would completely
Speaker 1: consider a five account a lot more seriously. Be where
Speaker 1: I'm at now, I just it just really doesn't make
Speaker 1: that much sense. Yeah, man, Once Port and Port starts
Speaker 1: making bank, you're gonna have to want to get that
Speaker 1: tax deferred growth. That's a good point. Um, Well, Mark,
Speaker 1: thanks again for the question. Man. We talked a lot
Speaker 1: about the five twenty nine and saving for college and
Speaker 1: just alternatives to that, and hopefully we give you plenty
Speaker 1: to think about. It's not a you know, it's not
Speaker 1: a clear cut, straight yes or no answer. There's a
Speaker 1: lot of Again with a personal finance man, there's just
Speaker 1: so much personal preference that kind of goes into this
Speaker 1: and things to consider for you and your own family
Speaker 1: and your children. Hopefully, though, this did give you more
Speaker 1: information and you feel a little more confident in whatever
Speaker 1: decision you and your wife decide to move forward with.
Speaker 1: And if I could boil it down to two things,
Speaker 1: I would say, prioritize your own retirement savings very highly
Speaker 1: number one, And then you know what, spend your money
Speaker 1: now on things that will enrich your kids and enrich
Speaker 1: your family. Even if your kids end up racking up
Speaker 1: some student loan debt because you didn't prioritize saving for
Speaker 1: their college education. If you prioritize those first two things,
Speaker 1: you know what, you'll be leading a rich life. And
Speaker 1: that's what we care about. Yeah, we try to maintain
Speaker 1: that balance, man, like we want to live life now. Yeah,
Speaker 1: like you said, but at the same time, also be
Speaker 1: smart with our money. So it's it's it's tough to
Speaker 1: find that balance as an individual and for your family.
Speaker 1: But hopefully this helps. All right, Quickly back to the beer,
Speaker 1: Matt the Firestone Walker. I'm not even gonna pronounce it
Speaker 1: while they all with strawberries from our friend, uh Josh,
Speaker 1: thank you for this beer, like absolutely delicious. One of us,
Speaker 1: one of us should have taken French and in college,
Speaker 1: but we didn't want to waste the time. But man
Speaker 1: mouth puckering lye tart, delicious strawberry, like robust strawberry, you know,
Speaker 1: like it was not like this just little strawberry fragrance.
Speaker 1: It's like this full on. It's like I was chewing
Speaker 1: a strawberry, but not like in a bad way. It's
Speaker 1: not like this was a chewy beer. It just had
Speaker 1: lots of flavor. Awesome for the summer with this heat
Speaker 1: and having a refreshing beer. I love this man. This
Speaker 1: is great. Yeah, thanks everyone for listening. Our home on
Speaker 1: the web is how to money dot com. We will
Speaker 1: have show notes up for this episode and uh, if
Speaker 1: you like what you hear, be sure to let us know.
Speaker 1: We would really appreciate it if you would review and
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Speaker 1: So until next time, Man, best Friends Out, Best Friends Out.
Speaker 1: M