<p>*On average, I tend to think our good fortune (or bad) tends to be a 50-50 mix of luck and application. For some individuals, the mix may be a bit more skewed to one or the other.</p>
<p>*</p>
<p>this is probably very true. </p>
<p>Even when you’re investing - say in stock or real estate - you can “do your homework” but still it can come down to some luck when making final decisions as to how/where to invest when 2 or 3 options appear to be about equal risk. Should I invest in A, B, and C …OR…should I invest in A, C, and B…OR…should I invest in B, C, and D…and then you choose…and one set of choices may end up to be better than the other…even if you diversify. </p>
<p>Not to mention…a family can have a great savings/investment plan, but then illness or long-term job loss cause a family to go thru its savings. </p>
<p>Luck - and perhaps a bit of greed or wishful thinking comes into play. I know some people have had their college fund hit with the market downturn yet I think most financial advisors would suggest that the closer to the time when one needs to draw the funds, whwther for a college fund or a retirement fund, the safer and less volotile investment vehicle should be used. I know a lot of people kept their college funds invested in the more aggressive stock market funds right up to the very time they’d need to draw the funds or at least close to it. Most of them were probably trying to capitalize on the (then) ever escalating market but common sense and sound investment practice would suggest there’d eventually be a peak or even a bubble burst to jeopardize their nest egg. </p>
<p>Some people in this situation would call it ‘bad luck’ in their investment yet others would call it simply a not very sound nvestment practice in the first place.</p>
<p>I’m not sure what to call it, but here is what is helping our daughters: My husband and I had no debt when our first child started college. We have no debt because, in my case, my extremely generous parents paid for my undergraduate and graduate school (with help from me working throughout college and much of grad school) and, in my husband’s case, parents and loans, long-since paid off, covered the cost. Both sets of grandparents, along with being generous, instilled in us the virtues of being debt-free. So we paid off our mortgage in record time and have never run credit card balances. Husband and I squirreled away money, much but not all in retirement accounts. It’s fortunate that it’s not all in retirement accounts, because our income now has dropped precipitously. So, some thinking was required on our part, I guess. In addition, our children are hard workers, in school and out, and thus have earned financial aid and income that will help pay for college.</p>
<p>Re: post #16 (D21)… sorry, I was just posting on another forum (not CC) where the standard is to put the kid’s age after the D or S So here she is D1, and I have only 2 to put through college. Whew!</p>
<p>Agreed! At the end of junior year of high school, we moved two years of college costs into a cash account. At the end of sophomore year of college, we moved the remaining two years of college costs into the cash account. That way, I could always sleep at night…</p>
<p>Investing conservatively when your child is nearing college age doesn’t necessarily protect you from losses. Our D’s conservative (one year from college) 529 fund lost 1/3 of its value. Apparently their financial wizards believed mortgage derivatives to be low risk.</p>
<p>AIS, we had that issue with D1’s 529 investment as well. It was dismaying. I learned my lesson about those “age bands”. Our 529 plan has some more conservative “fixed income” option, we will be moving D2’s investments mostly into that soon rather than counting on their version of “conservative”.</p>
<p>We had ds UTMA in balanced and big company funds and big bank.
Any one to guess what conservative investments that the balance and big company funds invested in? And what Big Bank equity DS’s UTMA had? </p>
<p>On the flipside, What financial investment saved DS UTMA but destroyed USA’s balance sheet?</p>
The problem is that the closer one gets to the ‘draw time’ the less tolerant the investment is of a downturn since there’s not enough time for it to recover before the needed draw. It seems to me that one year is too close to tolerate even routine downturns and of course, not this non-routine downturn that hit us recently. It’s compounded (pun intended?) by the hard stop of needing to draw it when the kid enters college as opposed to a retirement fund that might have a soft stop - i.e. if in the midst of a downturn before moving the investments one might have the option of just retiring a year or two later to give it a chance to recover. These funds only have tangible value at the time of the investment (cost) and draw - everything else, supposed gains and losses, is just a number on a balance sheet.</p>
<p>We didn’t have to worry about FA, but if you are going to sell investments for college, you should sell them before January 1 of junior year. Otherwise the bump in income will show up in your adjusted gross income and distort it for FAFSA purposes.</p>
<p>Sad. In our State, Oregon, the mortgage fraud was not pursued because the State Bus. & Finance saw it as a federal issue. Only the state chartered banks were investigated and then only if the mortgages were held on their books. </p>
<p>what Is also sad, is that I didn’t know how BIG the problem was, even though I knew of the local problems. One didn’t need too much information to see and extrapolate to the conclusion, but I didn’t.</p>
<p>Both my husband and I were born into families with very modest means. My father worked in an industry that started moving overseas just as he reached his prime earning years. Textile plant after textile plant closed, and ultimately Dad finished his career on the night shift earning only minimum wage. Where I saw a financial demarcation between my middle class friends and us, was that every single one of my closest friends received large monetary gifts from their parents for use as a down payment on their first home. It was typical to hear that the wife’s parents and the husband’s parents each contributed $15-$20,000, and voila. My parents could not help us, and neither could H’s folks, as his dad was a minister back when pastors lived like paupers. So we had a very difficult time coming up with a downpayment, wasted years in an apartment, and finally took advantage of a first-time home buyer’s program which did not require the typical downpayment. However, we still owe a lot on our starter home, whereas all of our friends are now paying off their mortgages on their upgrade home and have much greater financial flexibility than we do. A contributing factor to the downpayment problem was that our first child required 4 surgeries before the age of 3, for which we had to pay a percentage. My third child was born with disabilities, and that made it nearly impossible for me to work outside the home. </p>
<p>So sure, there were choices involved, like dating a middle class pastor’s kid, but much of the other things were outside my control and have impacted my children financially. No doubt H and I could have worked harder and been more ambitious, so I won’t say it was all “luck.” But we provided a calm and secure home environment which afforded the kids other emotional benefits. But I just hate it when people with money act like it’s all because they were so smart and responsible.</p>
<p>Most honest people will agree that there is SOME luck and SOME hard work that has played roles in their lives. We all just do the best we can. Some of us have more opportunities, due to birth and circumstances. Life has never been “fair,” but most folks in the US have a leg up on a lot of folks born in other countries, so most of us have SOME blessings to count. I know I have many, though hardly anyone knows the challenges that anyone else has faced and overcome.</p>
<p>We can all just do the best we can with what we have, trying to plan, save, and prepare our best rather than bemoaning how tough life is. Yes, it is good to be grateful for luck that comes our way.</p>
<p>Most of us are doing watchful waiting. We have called the cousin who lives up the hill, so we can evacuate & hang out just outside his home without jamming roads. We will learn more with what happens at Midway and one other island between us & Japan.</p>
<p>Hard work: starting to save some every year for D1/D2 college thirty years ago, 7-10 years before they were even born. We lived frugally & saved–that ain’t luck. Also, investment-wise, employing the buy & hold strategy. And as the little buggers got older, they tended to cost more money–esp. in HS–and we couldn’t fund their college fund much at all. Fortunately, the market was in our favor for the most part during those years.</p>
<p>Combo luck/hard work/cojones: NOT bailing out when their funds took a 40% haircut by March '09. It was tempting, but I hoped & I read & stood my ground. Fortunately, it’s about all come back, and now I’ve shifted to more conservative vehicles somewhat. I feel like an anvil has fallen just behind me on the street.</p>
<p>We still have plenty of PLUS loans but it’s a much more manageable situation than two years ago.</p>
<p>We have always lived well below our means and stayed married to original spouses. These are really great money-saving tips, as divorce is one of the hugest money drains for everyone involved. Living below one’s means (whatever the means are), is well described in “The Cheapskate Next Door,” which really resonates with us.</p>
<p>H has been fortunate to remain employed in stable jobs over the decades of his career. He has kept his skills sharp with on-the-job training and employer-sponsored continuing education.</p>
<p>We put maximum funds into our kids Coverdell account. We were fortunate that we did not immediately need to liquidate the account when the market tanked. Our S has always tested extremely well and was able to become a NMF and get several generous merit aid offers to choose among. If he DID NOT have these options, we may not have been able to send him to an expensive OOS U, as we did but would have sent him to flagship U instead. We live very modestly, which allowed us to invest in interest-free zero coupon bonds for the kids’ education shortly after our marriage decades back.</p>
<p>D was forced to leave her HS after junior year and elected to get her GED & start CC (turning lemons into lemonade). This ended up saving us significant $$ (no longer had to pay tuition to her private HS & got her credits toward her U), so we were able to fund her to transfer to her dream U.</p>
<p>H’s mom unfortunately did not attend college, but did graduate from HS, as did his dad. My folks both graduated from college & got graduate degrees as well–mom earned hers when I was in middle school, while I helped run the household. Our families both highly valued education.</p>
<p>We have also had significant medical expenses but have been fortunate that H has an excellent family plan that covered much of it.</p>
<p>There are something you can plan for and something you can’t plan for. Born with silver spoon in one’s mouth is one you can’t plan for. There is another one: Accidental windfall in real estate.</p>
<p>Moved to Northern CA in 1999 and bought a house worth about $350K, with a jumbo loan (over $250K). Sold in 2005 at $760K. How can you plan for that? There were several of my friends who are “accidental millionaires” due to the windfall in real estate. I guess you can afford to cash out when the money is needed for college and move to some place where the weather is just as good and housing less pricy. </p>
<p>In this case, I would agree that, you have to be good, in knowing how to save and invest, and have to be lucky in order to invest at the right place at the right time.</p>
<p>D will graduate from Virginia public this May, tuition having been covered by our purchase of the prepaid tuition plan the first year it was offered. I had gone back to work for a few years after having retired early, so we were able to make a single payment. Given tuition increases since the purchase, and what the stock market did in the middle of her college years, we figure we got 50% interest on that investment. Very lucky.</p>
So here she is D1, and I have only 2 to put through college. Whew!</p>