Having a baby!

[witchkizzle]

My wife and I are going to be having our first baby in November ! It is still relatively early right now, but I was thinking about opening a 529 with Vanguard. I have mine and my wife's Roth IRAs with them as well as a portion of our emergency fund stashed in a conservative mutual fund.

When did all y'all start thinking about college expenses? Am I thinking about this too soon and should wait until the baby is born?

I'm just excited and want to get this stuff rolling.

[Thrif-t]

Congratulations!!! And that's great that you're thinking about the college fund now, the earlier the better. I wish we'd of done it when the kids were born but with daycare we just didn't have the extra funds. We didn't get started on our kids 529's until they were 6,8 &10. It's never to early to start saving and getting the benefit of compounding. Good Luck!!

[snafu]

Congratulations to you & DW! Your excitement and delight is wonderful. It's a bit early to fret about college. Until baby arrives, you can put extra funds into a 'baby box' and it can start off baby's bank account in company of gifts of money to celebrate arrival.

[Wino]

I think you should look beyond the 529 to what you'll be teaching the child-cum-adult. That's what you should be thinking.

So, you put $500K into a 529, and baby kizzle gets to go to University of Haryalebrown without paying a penny out of pocket, gets drunk every night, and drops out as a sophomore after four years with a major in "hangover and porcelain."

OR... you could start to decide how to show baby kizzle the value of money and hard work. I think one way to do this would be to let 8 or 9 year old BK know that (s)he's paying for 50% of anything (s)he wants, including x-box, bicycles, and tuition. It sounds harsh, but money earned has value. Money given is nothing.

Note that you still have gifts to give at Christmas, birthdays, Groundhog Day, Secretary's Day... Hallmark makes it easy to find a reason to go over the 50% mark, but the point is that giving a fully-paid college education to a child who cannot handle it is no gift at all.

Yes, start saving for college now. I'm not a fan of 529's, but as long as you're saving, save as much as you can. A good index fund should make enough that you can absorb the tax hit and you don't have to worry about HOW you use YOUR money when you need it.

[swapnil]

Congratulations bro its a good news for you, and yes no need to say anything about savings as I feel you might have decided well in advance the future plans for your life with kid. wish you a happy and cheerful life with your child.

[MonkeyMama]

Congrats!!

Saving now is GREAT.

I am also not a big fan of 529s. Just consider all options. 529 can be a good tax shelter, but comes with huge trade-offs and limitations. Check that you actually have high income to tax shelter. Makes more sense if you are planning to save a large sum over a larger period AND are of high net worth. You may fare infinitely better in a "taxable account" if spouse ends up at home with child. (With my spouse at home, our investment tax rate is 0% - which means no taxes plus absolutely no limitations). Check other options like ESAs. Check into financial aid considerations. Consider odds that you need all the savings for college (529 is penalized if not used for college).

[witchkizzle]

Thanks everyone!! The suggestions were great! I will start looking into our options.

MonkeyMama, you're a CPA aren't you? I am too. Do you work in Tax mostly, like I do? I see your response was focused more on that aspect and as a fellow tax CPA it made me think that must be what you do.

To WIno,

I appreciate the concern. The mindset is great and I agree with it 100%. I will say that I have my finances together and if it eases your concern, was not planning on silver-spooning any of my kids. I had my college paid for and so did my wife. Neither one of us abused that very generous gift and stayed around our cities and went to local colleges. We turned out great and we have already decided our kid is not going off to a big expensive university unless there are some solid indicators they can handle it.

Too many people feel like the "college experience" is important and I can say from recent experience (since I am only 26) it does not matter. I did not have it and am a successful accountant and my wife is a successful nurse. We have a happy life, live below our means and are very excited about starting our family!

I'll pull a partying kid out of a big university at first sign of them wasting our time or money. They can go to the community college and then transfer to a local university like my wife and I did. If they don't like it, tough... they caused it.

[Redraidernurse]

We opened our first child's when he was 12 months old and the second child's the first month he was born. We have them both set up to automatically deposit $300/month each into their accounts so that way it's a no brainer. I think you'd have to open one in your name right now until you know your child's name and SSN?

[elessar78]

In response to Wino,

I attended college with a broad cross section of people—My mom basically paid for everything, although I do have student loans now, it wasn't a concern when I was in school (it wasn't a primary motivator). I went to school with guys that paid their way and worked PT jobs and summers to earn tuition and living expenses, guys with full scholarships, guys with partials, guys whose parents footed the whole bill outright. My wife's parents paid for half and she worked hard jobs for the rest (landscaping and farm work) and she's pretty indifferent about our financial landscape.

If a person is a conscientious student he will study and get grades regardless of the source of his tuition money. From my experience, I think it's a myth that a person will appreciate their education more if they work for it.

FWIW, I probably partied the least because I was drawn to my coursework (up at 7am, in bed at 3:30 am 5 days a week and spent another 16 hours in the lab on the weekends for 5 years). My friends drank and partied a lot but still got good grades and graduated to great jobs in all kinds of fields.

We knew people who were flunkies but that was in their nature—regardless of how their bill was paid.

[MonkeyMama]

Thanks everyone!! The suggestions were great! I will start looking into our options.

MonkeyMama, you're a CPA aren't you? I am too. Do you work in Tax mostly, like I do? I see your response was focused more on that aspect and as a fellow tax CPA it made me think that must be what you do.

Yes, am a CPA and do some taxes. Sounds like is probably not an area you need advice about, then.

[witchkizzle]

Yes, am a CPA and do some taxes. Sounds like is probably not an area you need advice about, then.

If there is one thing I've learned in this field, it's that I ALWAYS need advice.

I really do appreciate everyone's input!

[feh]

Our son was approximately 3 years old when we started funding his 529. The sooner you start, the longer it can compound.