britton thinks out loud

I wish I were a poet like Miriam or Laura -- I want to etch this picture into my memory with words, and the ones that come to mind just don't quite fit.

The house I left half an hour ago was a bit chaotic; Peter bouncing off the walls, Elissa crying, Liz struggling against weariness and a sinus headache. When I came back, all was still.

A scattering of letters nearby show where Peter played a bit before crawling into bed and surrendering to naptime's siren song.

Elissa is in her crib -- dreaming about milk, from the sound of it.

Liz is sleeping on the couch, serving as a pillow for one of the cats.

My family -- how the meaning behind those words has changed in the past decade! -- is at peace, for a small, precious time. Twenty years from now, when Elissa is fending off the boys in her classes and Peter is unleashing his passion and energy on the workplace, I will think back to this moment and smile.

Liz and I have finally started buckling down and looking at saving for our kids to go to college, and I figured the information we've garnered is by and large worth sharing.

Item #1: College will cost a ton of money.

Well, you already knew that, but we took a look at exactly how much it would take to fund our (current) goal: 100% of four years at a public Texas school. We're not looking to limit Peter and Elissa's choices, mind you; our assumption is that they will aim as high as possible, and any funds required above and beyond what we have saved can come from scholarships and loans.

The easiest answer comes from a combination of the World's Simplest College Calculator (for the calculations) and College Navigator (for current price information on our example, Texas A&M-make-any-Aggie-jokes-and-Liz-will-crack-your-skull). Did you know that college costs inflate at an average of 6% annually? Anyway, it all adds up to $190,378. At reasonable return rates, that's over $400/month starting *right now*. And that's just for Peter.

Of course, if we fall short of even our supposedly-modest goal, student loans are plenteous and cheap. At least, they were in my day -- who knows what life will be like in the coming decades, after The Great Deleveraging? I'm wondering, though, if part of the reason why college inflation is so rampant is precisely because loans are so readily available, and that if loans become scarcer inflation will slow down a bit...well, we'll start with the information we have and adjust as necessary.

Item #2: 529 Plans

So how to save? The first word appears to be 529 Plans: state-sponsored investment plans that allow you to invest for college and not pay federal or state taxes on the earnings. The limits that you can put in vary from state to state, but they are unilaterally ginormous, on the order of hundreds of thousands of dollars per child. Of course, as we saw above, that's not completely unreasonable...

I discovered a tricksy thing about 529 plans: there is no fundamental reason to go with your own state's plan unless you pay state income tax (and thus would benefit from not paying it), and there's quite a bit of variation in terms of the fees levied and portfolios offered. (It's more like a 401(k) than an IRA: you've got a fixed set of funds you can choose from, depending on the plan, though generally you have an order of magnitude fewer choices than for a 401(k).) Texas' plans, from what I can tell, are pretty awful. So does that mean you have to comb through hundreds of plans in order to figure out which one to get? Well, luckily, Kiplinger has a nice little tool for that. It's even got what it considers to be the top plans in each of 5 categories: Lowest Fees, Best Portfolios of Underlying Funds, Best Plan for Conservative Investors, Best Mix of Investment Choices (though this plan also has some of the highest fees), and Best Adviser-Sold Plan.

"But what if my child doesn't end up going to college?" I hear you cry. Well, then you can transfer to a sibling or save it for a later grandchild. Worst comes to worst, you can just pull your money out, but you'll pay taxes on the earnings plus a 10% (ouch!) penalty.

Main Advantage: high max payments. Main Disadvantage: Investment flexibility is hard to come by, and what little can be found comes at a premium.

Item #3: Coverdell Education Savings Account

These used to be called Educational IRA's, which I think is an excellent way of thinking about them: you can put in up to $2000/year, and it behaves just like a Roth IRA, except for education instead of retirement. Like a Roth IRA, you call the investment shots. Also, you can use them to pay for private secondary education.

It's worth noting that in 2010 Coverdells go back to The Way They Were Before: you can only invest $500/year, and you can only use it to pay for college. Of course, $500/year is a patently ridiculous amount to save for anything beyond a community college, so I don't see how that is going to stand, but still, there it is.

Main Advantage: High level of investment flexibility, ability to use funds for secondary education (for now). Main Disadvantage: Extremely low yearly maximum (for now).

It's worth to note that there's no reason why you couldn't get one of each kind of plan, and Liz and I are considering just that.

So that's where we stand right now. Anyone else come across any other interesting info in the realm of Paying For A Bit Of Lambskin With Some Ink On It? I'll update this post accordingly.

Update #1: Utah! Utah! Gooooo, Utah! I checked out Utah's 529 plan -- billed as "the cheapest plan" by Kiplinger's -- and it turns out to have what I consider to be a nice selection of funds, as well. So I set up a 529 for Peter, Elissa, and Liz -- 529's can go towards grad school, as well, and are transferable!

When I was in high school, I decided to take two language courses. They ended up being French and German. Why not Spanish? There are an order of magnitude more Spanish speakers in the US than French or German, right? Well, I just liked the sound of French and German better -- French flows so beautifully, and I'm convinced just about anything can be funny if you say it in German.

As it turns out, French was not only a good choice, but the single best choice I could have made. It serves me extremely well when I go overseas to visit my colleagues in Rennes, and as I'm regularly included in their internal e-mail discussions, it's nice to not have to chuck the entire e-mail thread into a translator program and hope that it works.

It just goes to show -- you never know.

This morning I began the leisurely stroll to consciousness at around 6:30AM -- not yet awake, but at the same time ready for Peter to walk in at any moment, as is his wont around that time. I found this relative alertness odd, as I'd gotten to bed sometime after 11PM the night before and generally require a full 8 hours-plus of rest in order to maintain a sufficient level of bright-eyed-bushy-tailed-ness.

Then I realized -- what sleep I had was completely uninterrupted. No night terrors for Peter, no hunger pangs for Elissa. The advertising phrase "a better six" leapt to mind, and I began to truly comprehend the appeal. I thought back to previous mornings, and sure enough, the hour we actually went to bed seemed to matter much less than the productivity (as it were) of the time spent.

Take from that what you will.

Only those of you who play World of Warcraft will find this at all funny, but it begs to be shared regardless:

Achievement Unlocked.