College Savings Fund

It looks like some folks have already told you a little about this option, but my husband and I are using the 529 plan, along with Upromise. There is a "529" website that you have to pay to use. You do NOT have to do that, google it and you can find other sites that describe it w/out having to pay a fee.

Hi C.,

I too had this problem when my son was small. I looked into 529 college funds and all that but if your child never goes to school they will attach a penalty to your 529. I started my son two accounts that are wonderful. One at Bank of America, I started with a Custom Savings account and that only required $25.00 to start and a monthly deposit, when it reached a certain amount, I was able to change that over to a Money Market Savings account. The other account, which yields the most interest is my son's ING DIRECT account. I have a Orange Savings and a Orange CD with them yielding 5%, the smartest move I think I've made for my son. You can open them both online and start your savings. I hope that helps...

Ta'von

My husband and I enrolled in one of the state sponsored TAP 529 accounts for our son. There are two types. One, you deposit money and it goes directly toward the purchase of college credits. The other is more like a 401(k)type, where you deposit money and it is invested and then you can withdraw it when the time comes. We are enrolled in the first one. We have also signed up for a credit card through upromise...so each month, depending on purchases, we earn money that way as well. The downside to the credit card is it's high APR(around 13%), so it is best to pay it in full each month, but you still get the credits back, so it is all good. Hope this helps! Good Luck, S.

We've been doing 529 funds for our two kids (12 and 7). We put in about 150 a month per child and cross our fingers. The plans are set up to decrease the risk level of the fund as the child gets older (so more stocks for younger kids---higher yield) and more bonds or secure funds for the older ones--lower yield but you can't take as much risk as they get closer to college age. I don't expect we'll have enough to cover college for them both but maybe I"ll be surprised. Of course it also depends where they go to school. I figure we'll supplement with loans (or they'll do loans--I had them and don't think there is anything wrong with kids having some responsibilty for their schooling--motivation to get a job!!). It's really daunting to be honest---the financial implications.

Oh, I worked with a financial planner at Smith Barney. He set up our 529s as well as IRAs for my husband and I (we had 401Ks from prior jobs and he helped us roll out of those funds into the IRAs). A colleague recommended him and I continually cross my fingers and hope it was the right choice for us. So far our retirement savings looks good and we continue to keep investing in 401Ks at our employers.

Good job starting early. It's absolutely the best thing to do.

This can be a overwhelming topic especially if you are new to investing. Congratulations on starting now! Compound interest our best friend!!! I love investing money! We had a 529 plan set up through our financial advisor and decided to pull the money and re-invest it somewhere else. A 529 plan (college savings plan for our children) can only be used for college. So if my son doesn't want to go to college that money we saved for 18 yrs now can only be given to another child for college. We set up an account within a mutual fund subtitled "kids fund" where we put money in there for the kids. We decide where the money goes when its time for them to go to college, invest in their IRA's, or whatever. Bottom line. If you are new to investing here's my suggestion. Set aside an amount every month or week, commit to that amount and put in away in the bank. If you have enough, put it in a money market acount that will bear you more interest in the bank. Then start reading books, talking with friends to see what they do. Educate yourself. If you have a financial advisor talk with them. I started out with a 529 plan but as we read more and became more educated we decided that was not the best option for us and we could only make that decision once we did educate ourselves. Good luck!!!! And have fun saving and investing!!!!

Hi C.,

This is very confusing. All the sites, and different accounts. We have an almost 4 year old and we opened a regular savings account for her by making a weekly deposit directly from my husbands payroll. Once her account would reach a few thousand, we would roll it into a CD. Also, ING accounts have a pretty high interest, at least in this market, and the minimum is very small.

I do know people who have used the TAP program. The problem with that is if you move out of PA, you only get to use a portion of the money and your child must go to a school in PA to get the whole amount, or something like that. I know someone who has a senior in high school and they recently moved to NJ. She has very little for him because of their relocation. I'm not sure how much she lost, but if you are like we are, you can't afford to be losing money.

Good luck. I hope this helps.

I use upromise.com to save for the kid's education. You can open a 501 and you can register your supermarket cards, CVS cards, credit/debit cards and buy online and get between 1-10% of your purchase back. With the supermarket and CVS cards you get back depending on the product that they are promoting at the time of the purchase. For example, Kraft foods may be giving you 1-10% back on any kraft products you buy and use your supermarket saver cards within a particular month or months. Basically, I register all of my supermarket, CVS and credit cards and use them as I normally would and at the end of the month upromise send me a statement via e-mail detailing my credits. When I accumulate $50 in credits it automatically gets invested into a 501k linked through Fidelity. It's all there on their website. It's not much but why not get credit for what your spending on anyway. Plus I invest an amount every month into that same fidelity account.

I am also a single mom of bi-cultural children; two to be exact (5 & 1). I actually opened an INGDirect account. You can do it online and it's easy to deposit money. I actually have money come out of my paycheck each time I get paid and goes into their account. It's not alot but a little bit is better than nothing. You can also open CD's with them and they have a high interest rate. Opening actually "college funds" is complicated and I haven't done that myself, it takes A LOT of investigation to pick a good one...so being a single mother I haven't had the time. But the savings with ING has been great! I'll try to forward you a special link...they give you money if you recommend someone too!

Hi,

I want to give you a word to the wise now. The more money you have in savings or more specifically the more money that your child has in their name means the less grant money and federal aid that you can get for them. We talked to a family fincial guru and he said that unless you can save and get the WHOLE tuition, sometimes its better to not save, or to "put it under your mattress".

If you are really set about a college fund, I would go to fidelity's website and get their phone number and call them. The are very customer friendly.

L.

Hi C., I was catching up on my e-mail when I saw your question here. I know that it's a little late, but I hope it still helps. I'm a big fan of Dave Ramsey, who has several books and a radio talk show. I find his books are very easy to understand, especially someone like me who is not very math literate. I also like Suze Orman. Both have several books available at the library & both have websites. While they don't exclusively talk about college savings, they are both really good guides for getting financially fit in general. Good luck!