College savings versus vacation?

[LivingAlmostLarge]

http://www.nytimes.com/2008/01/12/bu...=1&oref=slogin

Here's where she puts $7k on vacations.

[disneysteve]

Originally Posted by LivingAlmostLarge

http://www.nytimes.com/2008/01/12/bu...=1&oref=slogin

Here's where she puts $7k on vacations.

Kind of a vague reference there. No info on what kind of trip she had in mind or why it would cost that much.

We could do a 7-day Caribbean cruise for the 3 of us for under $3,000. I consider that fairly extravagant by my standards. I can't imagine spending $7,000 for a week.

[Scanner]

I can't imagine spending $7,000 for a week.

I'm sure you can - that's about what a Disney Cruise costs, DisneySteve

I think people used an unfair "Avoiding the Question" Card when people said take a 2K vacation and pocket the 5K.

How about this choice that many Americans face?

At the end of the year, after maxing their Roths and 401(k)'s, your family has $2000 left over.

Do you vacation or earmark it for college?

Again, a very real scenario. I mean. . .I take $0 vacations all the time. It's called taking a week off from work, going to the NJ beach a couple times (free ones, LOL) and puttering around the house.

I say go for college. . .on this website the other day you saw students apparently protesting rising tuition (I wonder if this was Canada). To think that a student is going to be able to fully fund a $125,000 education on part-time work, scholarships and loans I think is burying your head in the sand.

I guess I just don't have the Travel Bug that most people have, much to my DW's chagrin.

How about this - I ship them off to Disney for a week, save on 1 plane ticket, disney tickets, and meals and I get to lay around the house in boxer shorts, eating buffalo wings and drinking beer - now that's a vacation!!!

[disneysteve]

Originally Posted by Scanner

How about this choice that many Americans face?

At the end of the year, after maxing their Roths and 401(k)'s, your family has $2000 left over.

Do you vacation or earmark it for college?

I think you do a little of both. Invest $1,500 for college and take $500 for a family trip. Maybe a long weekend to a nearby state park or tourist attraction. We just did a weekend in Lancaster, PA. Not counting shopping, the hotel was $180 for 2 nights. Meals were about another $120 or so (and certainly could have been cheaper - we splurged a bit). That would still leave at least a couple hundred for some entertainment stuff. And there are cheaper hotel options, too. I'm sure I could do a perfectly nice 3-4 day stay in Lancaster for $500. I would think that most everyone lives within a reasonable drive of a nice place to take the family that isn't terribly expensive.

[LivingAlmostLarge]

Um, her idea of vacation is a week to Spain. And yep it can cost $7k easily. How? Well airfare, 4 star hotels, etc.

Scanner what would I do if I had $2k leftover? I think like Disneysteve, most for college and a little for a family vacation. It could be a camping trip nearby which is mostly food/camping fees.

If you have less money then cheaper vacations. But MP Dunleavy likes the finer things in life and she's not alone. People on this board aren't the norm.

So that being said, most here would not spend $7k on vacation, but for many it's probably easily spent.

[atomicrc11]

Honestly, I wouldn't give up the family vacations I had as a kid for payments going to college. My parents did help out, but having the loans has made me more responsible and I wanted to do better since I was paying for part of it. I would also rather my parents have a comfortable retirement than depending on me to provide one for them while trying to provide for my family as well.

As for savings, if you started a 529, and in my state you can start by investing $50/month, after 18 years you would have about $20,000 assuming you earn about 6% per year. When your children get a job, make them put half their money into the account so they may use it for school. It would be a good foundation for their education.

Also, never do a UGMA (Uniform Gift to Minors Act) account because I believe it considered an asset of the child, not the parent and will prevent them from getting any good financial aid. A 529 plan is considered an asset of the parent, which is less likely to affect how financial aid is given out.

[disneysteve]

Originally Posted by LivingAlmostLarge

But MP Dunleavy likes the finer things in life and she's not alone. People on this board aren't the norm.

So that being said, most would not spend $7k on vacation, but for many it's probably easily spent.

I like the finer things in life. I'm just to cheap to pay for them.

The most expensive vacation we've taken was our trip to California in 2005. We spent $5,500 total. That was a 2-week long trip. We flew to LA and rented a car. Drove to Anaheim and spent 5 days at Disneyland. Then drove up the coast and spent 4 days in San Francisco. Then 2 days in Sequoia National Park and then 4 days in Las Vegas and flew home from there. We did get the San Fran hotel free with Marriott points or the trip would have been a few hundred more.

We'd generally rather take 3 $2,000 trips than 1 $6,000 trip. Others prefer the less often but higher level trip. We prefer to travel more often on a budget.

[pearlieq]

Originally Posted by Scanner

Do you vacation or earmark it for college?

I say go for college. . .To think that a student is going to be able to fully fund a $125,000 education on part-time work, scholarships and loans I think is burying your head in the sand.

Like most others, I would divide it. If we had one kid it would probably be half and half between vacation and college, and more like 75/25 if we had 2 kids.

I believe in helping kids with college costs whenever possible, but I don't think it's an entitlement. I don't think all luxuries should be foregone in lieu of college savings.

Also, I'm not promising anyone a $125,000 college education. If we had a college aged kid now, they could get a 4 year degree for less than $30,000 (2 years of community college, 2 years of state school while living at home). It might not be a "luxury" college experience, but it's more than adequate and more than many kids get.

Assuming our finances progress about how we expect, with no major windfalls or pitfalls, we're willing to provide the equivalent of 8 semesters of tuition/room & board at Universtiy of Illinois, which is a great school. If they want to go to a different school, we'll happily provide the money, but they'll need to make up any shortfall. There are plenty of ways to do this if a student is driven.

If we wind up having money to burn, sure, I'll pop for Northwestern. But I'm not going to live on Top Ramen and never see the light of day to provide a lavish college experience for my kids. There needs to be a responsible balance.

[Like2Plan]

Originally Posted by disneysteve

I didn't address this part of the question. I'm not in that situation, so I can only be hypothetical, but I don't think I'd give up vacations. I would make vacation as inexpensive as possible while still being enjoyable, but I wouldn't cut them out.
There are always ways to pay for college - jobs, loans, scholarships - but you can never replace those family vacations and experiences.

However, when your child is an infant or even a toddler, they are not going to notice or even remember where you took them.

DH and I were married for 4 yrs before DS came along. When it was just DH and I--we saved money for a down payment on our house. We mainly visited family or stayed in some really cheap accommodation's (camping) or just took day trips in the car when it was just to two of us.

But, to be honest neither one of us took expensive resort type vacations when we were growing up, so we didn't know what we were missing.

We didn't take our first real family vacation until DS was about 2 (still kind of young to remember) because that is when we felt we could afford it and we saved up for it for a year in advance. I agree that taking your children around to see things is important and believe me DS has done more traveling than most--he earned his first free frequent flyer ticket before he was 5.

If all we had in our budget was to visit the nearest National Park (of which there are quite a few near where we live), then that is what we would have done. But, the college funding has always been first in our priorities.

I don't think I could enjoy a vacation if I knew it was at the expense of DS's college. (And my way of thinking, it would be a pretty expensive vacation if you end up financing college and paying interest on it as a result...)

[vsjhoc]

Originally Posted by disneysteve

The most expensive vacation we've taken was our trip to California in 2005. We spent $5,500 total. That was a 2-week long trip. We flew to LA and rented a car. Drove to Anaheim and spent 5 days at Disneyland. Then drove up the coast and spent 4 days in San Francisco. Then 2 days in Sequoia National Park and then 4 days in Las Vegas and flew home from there. We did get the San Fran hotel free with Marriott points or the trip would have been a few hundred more.

No, it was all the money you blew in Vegas that made it so expensive. JK

[disneysteve]

Originally Posted by Like2Plan

I don't think I could enjoy a vacation if I knew it was at the expense of DS's college.

I'm not sure how I feel about that. One could easily say our vacations are at the expense of DD's college. Even though we do fund a 529, we could put even more in if not for vacation spending. We could also invest more for retirement if we didn't take vacations. So you could say the vacation money is at the expense of money for other things that some may feel are more important. As usual, I guess it all comes down to priorities and we consider travel to be a priority in our lives.

Again, my answers are all hypothetical because we are fortunate and don't have to choose one or the other. If I was actually in that situation, I might feel differently.

[disneysteve]

Originally Posted by vsjhoc

No, it was all the money you blew in Vegas that made it so expensive. JK

Actually, I won enough in Vegas to cover the hotel bill for 4 nights at Excalibur, so that helped the budget.

[DebbieL]

Well, I'm all about saving for the future, etc. I do however like to do occasional things for "today" that are what make life fun. If I didn't have that vacation to look forward to (about every 2 years we do a big one) I would get awfully bored. I think college is very important, but I feel that she's only a kid once and I'd like to have lots of fun memories of her childhood, not just everything being about saving. I know this is a bit morbid, but what if I (or God forbid her) die tomorrow? You can't take it with you. I in no way use that as an excuse not to save/plan for the future, but it is more of a reminder to do some living today too. I lost 2 siblings way too young (20 and 46). I know how quickly and unexpectedly it can all be over and I intend to enjoy myself as well as plan for the future I hope to have.

[disneysteve]

Originally Posted by DebbieL

Well, I'm all about saving for the future, etc. I do however like to do occasional things for "today" that are what make life fun. If I didn't have that vacation to look forward to (about every 2 years we do a big one) I would get awfully bored. I think college is very important, but I feel that she's only a kid once and I'd like to have lots of fun memories of her childhood, not just everything being about saving. I know this is a bit morbid, but what if I (or God forbid her) die tomorrow? You can't take it with you. I in no way use that as an excuse not to save/plan for the future, but it is more of a reminder to do some living today too. I lost 2 siblings way too young (20 and 46). I know how quickly and unexpectedly it can all be over and I intend to enjoy myself as well as plan for the future I hope to have.

Well said, Debbie. Citibank had an ad slogan a few years back. I don't remember the exact wording but it was something like, "Build a nest egg but don't forget to have a few omelettes along the way."

[LivingAlmostLarge]

That's a nice saying. But many people here don't seem to be having $7k/year vacations. Most are getting by on less.

And most here seem to think vacations are good, but no one seems to think $7k good. So I guess the situation is not necessarily normal HERE, but in the real world?

I would bet we all know many people who can easily blow $7k/year on vacations. And the question is then is it worth a college education?

[disneysteve]

Originally Posted by LivingAlmostLarge

I would bet we all know many people who can easily blow $7k/year on vacations. And the question is then is it worth a college education?

I don't think I know anyone who spends that much on vacation but isn't also saving for retirement, their kids' education and other goals so I really can't say what is "normal" out there. I do absolutely know people who spend that much on vacations, though, so I know that isn't so unusual.

[Snowgirl]

In the "real" world, I still don't know many people who have 7k$ vacations every year. I'm talking about young middle class families with 2 working parents (some DINKS as well). Most of them don't save aggressively for retirement, or whatever, and they could not afford that 7k$ every year with how they currently manage their finances. Sure, if they were as frugal as some people here they could, but then they'd put it away .

College saving is less an issue, since schools are public, and very affordable relatively: 13k$ for 4 year engineering degree, tuitions and books, living at home. Most people would then not put that a priority over vacation, even if we have a government program that match your contribution at a 20% ratio, up to 2K/400$ a year till the kid is 17.

Personnaly, when we have kids (currently DINKS), I intend to put away a small bit for their college each year to get the most out of my taxes (government grant), but won't make big sacrifices for that. When they get to the college part, I will help out if possible then.

Vacation is indeed important for me, as a person, a couple, and later a family. I will bring my kids to places, I missed not having that when I was young. Even if they're very little and won't remember it, to me it is not a choice of the kid getting something out of a vacation, but our family getting something out of it. The baby may not remember or care, but his parents will. Right now my budget is between 3-5k$ a year, but for 2 trips: last year was a week in the Caribean, and 2 weeks in Disney. I'm way too cheap to spend 7k$ for a week... I can get 3 trips out of that money!

Originally Posted by DebbieL

Well, I'm all about saving for the future, etc. I do however like to do occasional things for "today" that are what make life fun. If I didn't have that vacation to look forward to (about every 2 years we do a big one) I would get awfully bored. I think college is very important, but I feel that she's only a kid once and I'd like to have lots of fun memories of her childhood, not just everything being about saving. I know this is a bit morbid, but what if I (or God forbid her) die tomorrow? You can't take it with you. I in no way use that as an excuse not to save/plan for the future, but it is more of a reminder to do some living today too. I lost 2 siblings way too young (20 and 46). I know how quickly and unexpectedly it can all be over and I intend to enjoy myself as well as plan for the future I hope to have.

I also love what DebbieL says, what good to have lots of money when I'm old if I haven't enjoyed life getting there. I'll have forgotten how to spend it by then, and die rich.

[LivingAlmostLarge]

LOL, Steve I know many who spend $7k but yes some are saving. More are using retirement savings to fund those $7k trips.

[pearlieq]

Originally Posted by LivingAlmostLarge

And most here seem to think vacations are good, but no one seems to think $7k good. So I guess the situation is not necessarily normal HERE, but in the real world?

$7k/year for vacation is probably pretty close to accurate for DH and I (DINKs). Sometimes that's 2 trips in a year, sometimes 4 or 5. It just depends on what we want to do and where we're going.

I don't see anything wrong with it as long as I'm addressing other priorities first. I certainly don't regret it.

Maybe my perspective would change if I had kids, but I think their needs have to be balanced with mine and DH's. I suppose we could stop vacationing or take super cheap trips to save enough to fund ivy league doctorates. But I don't think that's fair to DH or I--we have the right to enjoy ourselves and our lives as well.

As I said before, assuming we can afford it, DH and I are good for 4 years of state school. If we had to cut back on vacation spending to accomplish that, fine. I'm willing to do that. I'm not, however, willing to forego traveling in order to provide a luxury college experience.