(UPDATE) Abby’s College Fund

This may be a long post, but I think it’s definitely worth your time…

Waaaaaaaaay back in October of 2010 (which was approximately half way through my pregnancy), I touched on the topic of saving for college {Refresh your memory here: Abby’s College Fund}.  As we all know, college is EXPENSIVE.  And as Travis and I learned at a college savings seminar we attended through Bank of America and Merrill Lynch, college is only going to become MORE expensive (like, makes-you-sick-to-your-stomach expensive).

For example…

Abigail is 5 months old now.  Assuming…

  1. she currently has $0 in college savings
  2. she plans to attend a college that currently costs $45,000 a year (which would be somewhere between a state school and a private school)
  3. she attends a 4 year college on a full time basis
  4. college costs increase 6% per year
  5. that the college savings fund we set up earns 7% per year
  6. that we’d (in a perfect world) like to pay for 100% of her college costs

Are you ready for the results???

100% of her total college costs will be $561,899. We would need to make monthly contributions of $1,084 to meet this cost.

She’s 5 MONTHS OLD!!!

Don’t believe me?  Have different assumptions you’d like to make?  Do the math here: World’s Simplest College Cost Calculator

How many kids do you plan on having now??? (and yes, I’m using the color red here for a reason)

OK, so now that you’re just as frightened as I was when I first did the numbers, let’s continue.

What’s the takeaway here?  Don’t wait around. Don’t procrastinate. Just START SAVING NOW. Every dollar counts.  So does every penny (hence the reason we have a piggy bank in Abby’s room where we put any spare change we have…each time we empty it, the money will go directly to Abby’s college fund).

Which begs the question…have I set up Abigail’s college savings account?  Did I finally sift through all the info I needed/wanted to in order to make the best decision for our family?

YES (and I’m so happy about it)!!!  Abby officially has a College Savings Account.  Here’s the proof…

And while there’s no way on earth we’ll be making contributions of $1,084 per month at this point, we have set up a monthly amount that will go directly from our bank account to her savings account (automaticallyremember when I taught you about saving automatically?).

Just one last important note (which I read EVERYWHERE): Before you open up a college savings account for your kids or someday-kids, make sure you’re maxing out your retirement accounts…as they say, “College can be paid for with grants, loans, scholarships and work. Retirement happens only if you have saved the dough.”

Here are some links I found very helpful in making my final decision on which 529 plan to select:

If you can’t tell, I find this stuff very interesting (and extremely important!!!) – if you have any questions, I’ll do my best to help out!

7x7xMommy

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8 Responses

  1. Chris says:

    Awesome and a very important blog 7x7xmommy!
    What’s awesome, too, is that the Utah Educational Savings Plan (probably others, too) make it super easy for family and friends, looking for gift ideas (birthdays, Christmas, ‘just because’), to gift a contribution directly into your child’s college fund…no matter what amount! Talk about a real gift! Education!

    • I think I just had a minor panic attack.
      I will forward this blog post on to the husband, so he too, can feel overwhelmed and poor, like I do now. 🙂
      Can I just insist that my child enters the military?? 🙂

  2. Chris says:

    haha Megan 🙂

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