<p>X 2 kids in college = half a million dollars net of taxes</p>
<p>Most people say that one should fund retirement before college. This is true to a point. IMO, fund both. There was a thread recently about strategizing to save inheritance money and let the wealthy parent end up on Medicaid. This feels like the people (not here in this thread, but elsewhere on cc) who almost brag about sheltering $ and getting large need based aid from schools. Turns my stomach.</p>
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<p>This is what we did and it worked. We didn’t always make $200,000 - in fact, we now live on 1/3 that much - but the practice of saving money, of living below our means and banking the difference, really worked over the long haul. That money was a real lifesaver when our income dropped precipitously during my D’s junior year of high school; as unnerving as that job loss (and income loss) was, we never worried about funding D’s college because we had been saving for it for 18 years.</p>
<p>I say this not to be holier-than-thou about saving money. I’m just a saver. And yes, it did help that we have only one child.</p>
<p>Agreed, scout. Its not a holier than thou lecture. Its a lifestyle. Like the 3 little pigs, build ones house out of bricks and save for that rainy day. DH was a casualty of the economy for a while when DS 2 was in college. thank heavens for careful savings and college planning. Do some people really just think about college costs when their kids are in middle/HS? Hard to understand.</p>
<p>@jym626 - maybe this will answer your question - see this thread and @janniegirl 's first post:</p>
<p><a href=“EFC and the realities of living - Parents Forum - College Confidential Forums”>http://talk.collegeconfidential.com/parents-forum/1680171-efc-and-the-realities-of-living-p1.html</a></p>
<p>Been watching these laments for 10 years. Its not a “penalty” if one can afford to pay for college. Its a luxury. If one is in that bubble where they make too much, have saved a fair amount but still can’t swing the cost of the high priced schools, then yes, they look for schools that offer merit aid for their child, and/or look at affordable schools. And explain extenuating circumstances on the CSS profile app. or directly to the school Maybe not “fair”, but understandable.</p>
<p>Before the kids go to college, parents have lots of opportunities to plan. They could have put money in college funds, retirement funds, bought a house and paid off the mortgage,… The situation presented by the op is not the norm.</p>
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<p>Hmmm… guessing at the rest of that sentence…
lots of possible expenses
lots of posh vacation plans
lots of port wine to drink
lots of poached eggs to eat
lots of pooches to take care of
…</p>
<p>oh, you edited it… Nevermind :)</p>
<p>You read my mind very well.</p>
<p>Like @halfemptypockets, our healthcare costs taken out of paycheck are high, but well worth it. These healthcare costs need to be seriously considered and put in as a line item in the budget in this discussion.</p>
<p>I know that on many, many other threads there are conversations about saving for college and being frugal. This seems to be a recurring discussion.</p>
<p>It is hard to determine that “sweet spot” of savings and spending for the children’s education K-12. For instance, one of the budgeted line items for all the BusyKids is music lessons, and all the associated music fees. There are also several other things that we consider part of their education that we have budgeted for that can consume weekly salary. Honestly some of these things, academic and extracurricular, can be very expensive.</p>
<p>We have been frugal for all our years, and have saved, yet I will spend money on academic or extracurricular things that I feel are really important for their education to be a “full person.”</p>
<p>I know that this would be called a “lifestyle” choice, but sometimes these discussions, IMO, tend to oversimplify budgeting/saving versus what happens in actual “living.” Could we come up with a number to add to @oldfort’s list of budget line items for extracurricular items (music lessons, sports fees, etc)?</p>
<p>I also think the numbers would vary for families with one, two or several children. </p>
<p>Perhaps people making more money do not feel the need to put away certain amount for future needs. I did start saving for my kids education when they were 4yr and new born. I make a lot less than $200k, but I would have around 50% of the total EFC by the time they go to college in their 529s alone by putting 2-3% monthly income there. The rest would be paid from other saving. Of course, there are plenty of schools would not be affordable to us, but at least we have a lot of good schools to choose from.</p>
<p>Haha…agree. $6000 a year for “entertainment”? I assume that includes travel, but that is still more than a lot of us spend.</p>
<p>Also, the assumption that home ownership is a financially prudent decision is one I think more and more people are challenging. Yes, having that asset can help when retirement approaches, or a family could borrow against it for college. But people who have not seen great appreciation in their home values may be wishing they had just rented and put some of the money saved (from taxes, repair expenses, etc.) aside for their kids’ college.</p>
<p>And I know I, am probably in the minority on this - but I never understood the concept that people are penalized for working hard and saving money. Isn’t the EFC based primarily on earnings, not on savings? I’m a little neurotic about saving money, I guess, but to me it brings peace of mind and a little more freedom of choice. I didn’t begrudge colleges “asking/telling” me to use that savings for tuition - I was just happy to have that option.</p>
<p>Jym is right - it’s not a penalty, it’s a luxury, and different people value different luxuries.</p>
<p>EFC is based on earnings and savings.</p>
<p>Only 5.6% of savings. The dominant driver for EFC is income.</p>
<p>I think - for families with household income of 200k+, without much saved (could be due to individual circumstances other than having a luxurious lifestyle), the 60K+ tuition is affordable but not with ease. For most people, these years are critical for retirement saving as well, making paying for college a “competing priority”. And families of this income level don’t get any tax break for money spent on college. So indeed, in certain cases, a family earning 200K might not be better off than one earning 150K in these years. Geographic area you are in could make a big difference. If you are in Manhattan or San Francisco, unless you bought a house many years ago, even 300K is not a lot living there. </p>
<p>^ It is hard to say if the income or asset is the dominant driver of EFC. Although it only counts 5.6% of assets (in FAFSA), but the total amount of asset could be several times of the annual income for some people with good saving habit or successful in investment. The asset will become even more dominant in CSS profile calculation as equity value is considered. So a significant portion of EFC may derive from assets.</p>
<p>Scout,
We are cut from the same cloth. Savings comes first. Expenses second. DH could have his savings pulled from his paycheck. Being self employed, I had to allocated it to a SEP.</p>
<p>Both my s’s now live in the SF/Silicon valley area, and one (the older/engaged one) is thinking about the possibility of trying to purchase something. He’s been saving since HS or earlier, and has a nice nest egg. He and fiancee make decent $, but not the numbers thrown around here. Whether they will be able to buy a home remains to be seen, but they can certainly continue to sock away $ into savings.</p>
<p>Mortage, rent, medical expenses, and some specicial circumstance expenses are deducted from asset in CSS profile.
Also, some colleges only count real estate assets after some threshold (ex: higher than twice the amount of income).</p>
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<p>Hard to imagine $300,000 as “not a lot” even in those places. Median household income in San Francisco is $73,802. Median household income in New York County (Manhattan) is $68,370. Obviously, most people manage to live on much less than $300,000.</p>
<p><a href=“http://quickfacts.census.gov/qfd/states/06/06075.html”>http://quickfacts.census.gov/qfd/states/06/06075.html</a>
<a href=“http://quickfacts.census.gov/qfd/states/36/36061.html”>http://quickfacts.census.gov/qfd/states/36/36061.html</a></p>