#28 & #56: Completed
In fear that the first item I would complete off my list would be brushing my dog’s teeth everyday for a week…I quickly opened Mary Rene’s college education account. Well…sort-of. #28 was: Start a 529 savings account for Mary Rene. Last week I started doing my research and stumbled upon the Coverdell ESA. The Coverdell ESA allows you to use the money for private primary and secondary education. Sending Mary Rene to private school is very important to us. Paying for grade school shouldn’t be a problem. And we both agreed that we didn’t want to send her to the cheap local private high school, Holy Trinity. I personally don’t believe that she would get a quality education at that school and it would limit her opportunities. But with me working part-time, there doesn’t seem to be a way to pay for private education.
I was ready to open the Coverdell ESA and had the form to complete and send to Scottrade. But then the gal at work mentioned that she wanted to talk to a financial advisor and a light bulb went off in my head…Call MYfinanicial advisor about the education fund. So I gave my wonderful financial advisor, Jonathan Devers a call and he talked to me about all of the advantages and disadvantages to the 529 and Coverdell ESA. But then he asked the important question, “Is paying for private high school more important or paying for college?” Many people may not agree with this but Frank and I both believe that paying for private high school is more important. There is a chance that Frank could still be working at St. Louis University Hospital and our children would get a discount at certain Catholic universities. Plus if our children had to get student loans to cover college we both agreed that we wanted to pay for those loans. There was a recent study done (can’t find it to link here) and it showed that many couples are delaying starting a family because they were in debt. from student loans, etc. We don’t want our children to be in that group. Plus, you never know our children might be smart and get scholarships to college!
So we put private school at the top of the list which you would think would make sense to open the Coverdell ESA. But Devers gave me a better option: contribute more to my ROTH IRA for Mary Rene’s education. Although it is not tax deductible, the ROTH IRA is tax-free. Plus when it is withdrawn from before retirement, you are only taxed on the income you earned and not what you contributed. The Coverdell ESA has a $2,000 year limit where my ROTH IRA has a $5,000 limit. Even though the 529 has a much higher limit, $13,000, it doesn’t allow us to withdraw the funds for secondary education.
So I signed up to contribute more to my ROTH IRA and use it for Mary Rene’s education. Devers set up a special mutual account (he is calling it the 2023 plan since that is when we will need the money) just for her education. I feel so much better now knowing that I am preparing for her future.
By the way, if any of you moms want to set up a education fund for your child and need a financial advisor let me know! Devers is great and very wise.
As for item #56: Brush Sophie’s teeth every day for one week-that task is completed as well. I’ll try and get a picture of those pearly whites.
June 10th, 2009 at 8:19 pm
That’s great info, Trena! I’ve been thinking about these same things as far as Ella’s education. You’re so on top of things. Thanks for doing the homework for us!
June 10th, 2009 at 11:24 pm
Great post. We send our son to private school and our daughter is starting in the fall. It is going to be almost $400 a month cheaper having them both in private school then in daycare and preschool! The private high school is very expensive here, but if we saved even part of the difference in the daycare now, it could be possible. Thanks for the information. I am going to look into it here.