529 plans and astonishment at compounding

Club thrifty had a post recently about funding her kids’ college education, which caused me to take a look at how my kids’ 529 plans are doing.  We’ve been putting in $500/mo since each of them was born.  At the time of writing this (though not the time of posting), DC1 is 7.5 years old.

So if we’d just put $500/mo away in our mattress, we’d have $45,000.  That’s a lot of money, and would currently fund in-state tuition for four years at many state schools without any aid.

That’s not how much my 7.5 year old has in hir 529.  How much is in there, do you ask?  $69,874.56.

Let me say that again.

$69,874.56

That means the stock market and compounding has added something like $25,000!

~$25,000 just because we put $500/mo in the stock market instead of in a mattress (or instead of spending it!)

Doing this exercise has given me a few scattered thoughts.

1.  Compound interest from stocks over a long period of time is AMAZING. It’s just in one of the Vanguard target date funds from the Utah system, so we’re really just matching the market with a little bit of adjusting to bonds as ze gets older.

2.  This kind of thing is how the rich get richer.  The best truly passive income is reaping profits from the sweat of the proletariat.   Rent-seeking is where it’s at.  Getting those returns to capital.  The poor get poorer by comparison because they have to spend their money to live and can’t have their money make money.  It’s terrible.  At the same time, as a member of the upper middle class, it’s something we need to do to keep from sliding down the income/wealth scale.  Because if you only have a choice between rich and poor, it’s better to be rich.  We need major political change in this country.  Yes, charitable donations are nice, but the entire system needs a new Great Society overhaul.

3.  Sacrificing early and starting early with savings is the way to go.  We never really felt the $500/mo cut to our income because it coincided with our employment.  We made our decisions based on a smaller income.  When you get a new job, if you can max out your retirement funding before you get used to the higher paycheck, that’s definitely the way to go.  (Of course, high interest debt is also worth paying off– the trick is not to get used to a higher level of spending that you then cut down.)

4.  I don’t think it’s time to stop contributing yet.  We suspect DC1 will end up going to a private school (or, less likely, an out of state public that costs just as much).  Right now with both of us employed we’re in the middle area of whether or not we’d be considered for any financial aid at all, and there’s that hope that by the time DC1 gets to college we’ll be in the “no financial aid based on income alone” bracket (we can dream, right?).  If not, we still have time between our two kids to adjust based on what kind of aid the eldest gets or doesn’t get.  If DC1 gets aid, then we simply stop contributing to DC2’s plan at that point.

5.  Because of the way that financial aid is calculated, most people should max out their retirement savings before contributing to a 529.  We’re doing that now, but we weren’t doing that this entire time because we had *too* much room for retirement and didn’t realize that DH would be getting a better job that paid more, so we didn’t put away all 72K/year that we could have, figuring we’d need some of that money to pay for college! [Note:  For those who haven’t been following our finances for the past few years, DH no longer works for the government so we can no longer put away anywhere near 72K for retirement because he no longer has a 457 option or a second 403b option, just a really lousy 401K with high fees and a lousy match.]  Yes, you can withdraw ROTH contributions to pay for college, but it would probably not be enough.  The 529 is still a much better place for your child’s money than a savings account in your child’s name, for financial aid purposes.  That’s because the 529 in your name counts as your savings whereas any savings in your child’s name is expected to go 100% to college, which cuts down financial aid from the school.

6.  Regular savings that you don’t miss because you’re used to that money not hitting your checking account really add up.  However, if you can’t afford auto-deducting any of your paycheck (though automatic retirement savings should be a priority), 529s are a great place for monetary gifts for your kids to go.  A little bit early on really does go a long way.

What are your thoughts on retirement and 529s and compounding stealth saving?  Also, how often do you look at your accounts?

Brag about your kids and/or pets!

We haven’t had one of these posts since January 2013.  There’s been growth since then!

What wonderful and adorable things are your kids/pets doing these days?  What makes you beam?  What makes you smile?

RBOQ

Wandering Scientist (aka Cloud) has mentioned that age 7 is questioning age for her daughter.  DC1 is also in on it.  As with Cloud, we’ve had lengthy conversations about race and inequality and gay marriage and so on in the past few months.  Here’s some other random conversation starters.

  • What is gummi bear juice made of?  (Answer:  it is a secret!)  Why do gummi bears bounce?  (Answer:  Gummi berry juice!)  Yeah, but why?  For what purpose?  (Answer:  Um, maybe we should hook you up with some of the cartoon episodes on youtube…) There was a tv show?  (Answer:  Yes, that’s where the song came from.)
  • How much pee do you have?  How could we measure it?  How much water is in the pee?
  • How do people make so many cars?
  • Why do people mostly have multiple [significant others] before they get married?  Why didn’t daddy?  Why didn’t you know what love is until you met daddy?  Why is the type of love you have for your parents different than for daddy?  Is the type of love for us different? How many types of love are there?
  • Why is Boston so big?  Why do people live in cities?  Why is there more stuff in cities?
  • Do you wish you could be daddy?

Things I want but can’t have until my children are older

To catch up in Big Bang Theory.

A full night’s sleep including sleeping in.  For a week or more!  (Two year molars, I shake my tiny fist at you.  COME IN FASTER.)

Expensive pretty breakable china.  Or at least moreso than Corelle.

Freshly painted walls that stay that way.

Clean carpets (that stay that way).

Unscuffed furniture.  Actually, scratch that one [see what I did there?].  We will still have cats.

Is there anything you can’t have until later, and why?

Even the super-confident super-awesome are not immune to culture

Occasionally I have to take a break from mommy-blogs.

Why?  Because they make me anxious.

I know, you’re thinking, how could *I* be anxious about parenting?  I’m the laziest (non-negligent) parent on the planet and my kids are disgustingly perfect (though of course you note that I would never use the adverb, “disgustingly,” I would say they’re “awesomely” perfect or something [actually I would say “amazingly,” but I grant you our frequent use of “awesome”]).  Both of these are true.

But mommy-blog anxiety gets even to me.  Culture is *that* strong.  There’s only so many blogs on having to lose the baby-weight, worrying about what/how much baby is eating or how much screen time toddler is getting or worrying about whether something is too early or too late or too long or whateverthe[expletive deleted] before even I start questioning if these are things I should be worrying about and are my kids really as wonderful as they seem [spoiler alert:  they are!] and if so, what’s wrong with them [rational answer: nothing!].

Now, I’m not talking about blogs where the kids or parents have actual real problems+.  [Also, I’m not singling out any one blog right now.  This unnecessary anxiety seems to be a contagion that is going through a huge number of mommy blogs right now.]  I’m talking about blogs where the kids are seemingly perfect, and the mom is seemingly perfect, but instead of acknowledging that fact, it’s anxiety this and worry that.  If their seeming perfection is wrong, then maybe I’m wrong about mine.

Of course, I’m not.  Even when the skinny girl complains about how fat she is, that doesn’t mean there’s anything wrong with my normal weight.  But (just like in college with the weight thing) I can only stand so many repeated hits before it starts to get to me.  The patriarchy is expert at using the virtual paper cut as a primary weapon.  It perfected the ton-of-feathers attack.  Any one blog or post or NYTimes article can be brushed off, or given a supportive comment in response.  At some point part of me wants to say, “CALM the [expletive] down!  You’re working for the patriarchy!”  But that’s not supportive so I try not to, especially since it’s not any one post’s fault or even any one blogger’s fault– it’s the culmination of many posts and blogs with the same message to be more anxious.  I get grumpy because the patriarchy does that to me.

And you may be thinking, “You’re grumpy because deep down you know things aren’t really that perfect.”  But that’s not true.  Deep down I know they really are, because I have huge trust in my family.  I have trust that even if there’s bumps and growing pains, that they’ll figure things out for themselves even if I’m not doing whatever is “optimal” for them.  I trust that there is no “optimal,” that there’s just “different” and “sub-optimal” is another word for “learning experience” (or, as my mom would say, “character building”).  I trust that my husband and I love our kids and will always be there for them and that they know that.  I don’t have to trust me to know deep down that my kids are doing great, I have to trust them and my husband and that we’ll tackle the challenges as they come.

And I’m sure there will be challenges and we’ll work through them.  But if there aren’t any right now, I don’t need to @#$#@ing create any.

I could do one of three things.  1.  I could comment super-supportive calming words on these blogs in an attempt to spread confidence (though of course this sometimes backfires because tone is difficult in writing among other reasons), 2.  I could do lots of introspection and re-affirm my core confidence and awesomeness, or 3.  I could avoid the anxiety paper-cuts by not going to those blogs.  Guess which option is the least work and most conducive to getting two more papers and a grant proposal out before summer ends?++

So… currently taking a break from mommy blogs, at least until swim-suit season is over.

+And we are *certainly* not talking about things like post-partum depression.

++Also note that we are not blaming people for working through their anxieties via the media of blogging.  It’s the patriarchy that is the ultimate root cause of that kind of unnecessary anxiety.  But that doesn’t mean we have to read about it if it has negative effects on our own well-being.

Ask the grumpies: Kindergarten skillz

Becky asks:

I wanted to ask – what is the “minimum” I am supposed to do to prepare my four year-old for kindergarten? He has all the basics, I think (can count to 20, does some simple addition in his head, knows the alphabet, recognizes letters, their sounds, and associated words). I have taught him some French words, and he knows a lot of Spanish from daycare. He just started printing practice, but he is not that fond of it! I have the starfall apps and we’ve started looking at them, but I often feel like a slacker Mom in this department. Thoughts? He is currently in the uni childcare, no preschool, so the teaching falls to us.

What do you really need for kindergarten?

1. potty training (some accidents ok)
2. self-feeding (hands ok)

Unless you’re going to a fancy highly competitive coastal k, your kid is already ahead and would be ready for 1st grade in much of the country, skills-wise. If it is half day k, you might be able to get away with no self feeding, but that would be a little odd.

Ideally your child will also be able to sit still for reasonable periods of time, will listen to the teacher, takes instruction, and plays relatively nicely with others.  Mostly being able to put shoes and jacket on are also good things, and to pull pants etc. back up after going potty.  These are skills that most children who went to almost any kind of daycare have.  But there’s still kids who stayed at home who aren’t used to not being the center of attention, and they learn those skills in kindergarten rather than coming in with them.

It doesn’t hurt to know numbers, colors, letters, scissors, patterns, printing, etc. but those should happen in kindergarten or first grade if your child doesn’t get them before that time.

Competitive kindergartens with tests and so on, have a lot more requirements, but they only exist in NYC and a few other places.  There’s an entire industry that exists just to fake these exams out, so a little Googling and maybe a book purchase or two can help for those in that situation.  But for the majority of us, it’s ok to just make sure the kid is out of diapers.

Grumpy Nation parents, what did your children need to know/already know before kindergarten?

DC1’s reading buddy is awesome

DC1 hadn’t been reading chapter books for a while, and when ze did read, ze would reread super easy stuff ze had read a zillion times before.  Big NateA to Z MysteriesSheldon Comics.  We didn’t say much about it because we don’t want to make reading a chore instead of a pleasure and we figured it would pass, but we did kind of miss hir reading fun new chapter books (and talking about them with us–Big Nate is great and all, but we already know he gets in trouble at school and doesn’t get along with Gina etc.)

Then DC1’s friend loaned hir Spy School (this is the friend whose mom throws the awesome parties).  DC1 loved it. And then the friend loaned it to another kid in the class.  So even though they’re all slowly reading A Wrinkle in Time in class, they’re getting through another book much faster outside of class.

So DC1 loaned hir friend The Familiars, which ze had enjoyed before going off chapter books.  DC1’s friend enjoyed it, so DC1 loaned hir book 2 in the series and realized that ze should probably actually read the fourth book in the series (after rereading the rest, of course).

So then DC1’s friend loaned hir The Mysterious Benedict Society and proudly proclaimed it to be a big thick chapter book. I showed DC1 our copy of the book, but DC1 stated that the loaned copy is better.  And, of course it is.  Then ze checked out the second Spy School book when signing up for the summer reading program.

I’m not sure what the point of this post is, except that friends recommending books to friends is totally awesome.  And I’m glad there’s kids who like books enough to recommend them to DC1.

Did you share books as a kid?  Or an adult?  What are you or your kids sharing these days?

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