Retirement or College Funds or Mortgage prepayment?

[catherine]

The thing that got me is that our "family-owned business" is our investments - stocks, bonds, loans we provide, real estate. The financial aid community viewed this as "cash to be looted" instead of "business".

So the Simple Living/Your Money Or Your Life approach, which we followed to retire in our mid-30s, failed us here.

I'm going to invoke flowerseverywhere (hope she doesn't mind), who wrote this in another thread:

Now that I have grandkids instead of buying them clothes and toys manufactured abroad with cheap labor we are building up their 529's. People tell us we should not do that as it will hurt their financial aid chances. What are you talking about? Isn't the purpose of money to use it on what you feel is important, not to game the system? If there is financial aid it should go to people who really need it.

Yeah, that's the rub, right? My grandson's birthday is coming up and I told DH I thought it would be a good idea to start a 529, and he said, but that might bite our kids in the butt later on by reducing their aid. I agree with flowerseverywhere that hiding your money IS gaming the system, and is unethical, so bae, you may be poorer because of how the system works, but at least your integrity is intact.

I would have put the money toward the mortgage, too, TVR.

[TVRodriguez]

Yeah, that's the rub, right? My grandson's birthday is coming up and I told DH I thought it would be a good idea to start a 529, and he said, but that might bite our kids in the butt later on by reducing their aid. I agree with flowerseverywhere that hiding your money IS gaming the system, and is unethical, so bae, you may be poorer because of how the system works, but at least your integrity is intact.

I would have put the money toward the mortgage, too, TVR.

Thanks! Feeling good about it. Actually motivates me to look for more money to throw at it.

But on the other point, the 529 point, I think that only 529s that are owned by the student or the parents count towards the ECF and therefore should not hurt aid chances. Although it's possible that any 529 money received in one year might count against the next year's aid, so maybe grandparents should hold their cards till the last year of school and spend it then! Not 100% sure of that, as I wasn't reading for that yesterday, but the website I linked to earlier might have that info, or some of it at least.

[flowerseverywhere]

Catherine, no problem. Every day I feel so lucky for everything I have. Eating out, fancy clothes and cars and other luxuries mean nothing to me next to spending money on education and enriching experiences.

But we all are shaped by our experiences and I know many people have different opinions about these issues. I have so much respect for Bae, with what he has accomplished and the wonderful things he does for his community. We just think differently on a few things. for the OP, what a tremendous accomplishment to be able to actually have to figure out where to best save money when so much of the world is struggling with poverty, war, oppression and no future. We are indeed fortunate.

[TVRodriguez]

Every day I feel so lucky for everything I have.

... to be able to actually have to figure out where to best save money when so much of the world is struggling with poverty, war, oppression and no future. We are indeed fortunate.

YES!!

[LDAHL]

Having known a number of families in bae's situation, and since we'll be old enough to tap tax-deferred accounts at college time, we have established the following priority order:

1) Keep the emergency fund topped off.
2) Maximize the available space in deferred compensation plans, Roths, HSAs, and pension accounts.
3) Mortgage prepayments.
4) 529 plans.

Hopefully whatever credits are available at the time will at least partly offset taxes due on retirement plan draws.

[flowerseverywhere]

I was thinking about this thread and I was thinking, just because I think the way I do, someone more bright or experienced might be able to manipulate their finances for the greater good.

Say you could figure out how to save money on taxes and college tuition and with that saved money did something for your community. Like opened a small business, fund a fire department employee, send a kid to tech school. There are many ways to use money for the greater good.

Money is is just so difficult to manage. It can be toxic or the greatest gift.

[TVRodriguez]

we have established the following priority order:

1) Keep the emergency fund topped off.
2) Maximize the available space in deferred compensation plans, Roths, HSAs, and pension accounts.
3) Mortgage prepayments.
4) 529 plans.

So, as an update, this is what we're continuing to do. I've been having a good year at work this year (self-employed, so income fluctuates) and have been able to send additional amounts to the mortgage after accounting for income taxes and after putting into Retirement accounts. I'm motivated again to get rid of the mortgage. Got it down to less than $58,000.

Wow, in looking over this thread, that tells me that it's gone down by $30,000 since I started this thread in February. Makes me so grateful that I'm able to do that. And grateful for having a DH who is in agreement with me doing that instead of wanting to buy a new car (ours are 7-16 years old) or something else.

I am indeed fortunate.

[TVRodriguez]

The thing that got me is that our "family-owned business" is our investments - stocks, bonds, loans we provide, real estate. The financial aid community viewed this as "cash to be looted" instead of "business".

So the Simple Living/Your Money Or Your Life approach, which we followed to retire in our mid-30s, failed us here.

bae, I've thought about your comments about college aid requirements quite often, and I've been considering what to do if we are able to put more away than we can in qualified retirement vehicles. I've been looking into tax-deferred annuities for that particular reason--college aid applications. But first, the mortgage, regular retirement vehicles, and 529 plans...

[TVRodriguez]

At the risk of crowing, I'm updating this to say that our mortgage is down to $35,000 as of today! My business is having its best year ever, and I'm putting my good fortune to work in reducing our debt while I have the chance.

Since I'm not sharing this in real life with anyone, I like to be able to post it here.

[razz]

At the risk of crowing, I'm updating this to say that our mortgage is down to $35,000 as of today! My business is having its best year ever, and I'm putting my good fortune to work in reducing our debt while I have the chance.

Since I'm not sharing this in real life with anyone, I like to be able to post it here.

Well done! It is hard to want to share in one's excitement but RL isn't a good place to do that so post away and we can be pleased for you and with you.