Listener Question: Saving for My Kid's College #025

we just yes, no bye. I always just say maybe yeah. But we figured, you know, Mark sounds like a good guy in his email, and so we would dedicate probably what's going to be a lengthy discussion about this topic in order to hopefully bring up the nuances of what you should canto it or when you're thinking about, you know, if you have young kids, if you're thinking about having kids someday, if you've got kids that are in middle school or elementary school, like should you be saving for

their college? And and we hope to shed some light on that today. Yeah, man, And this would be a good time to to say, if any of your listeners out there have questions. We're gonna hope to do more of these here in the future. Man, email us. You know you're You're welcome to comment and hit us up in the messages on the socials, but the best way though, email us. Yeah, and we're gonna read all those questions that come in and hopefully we'll be able to respond

to some of those in an episode format. Most definitely. So actually, real quick, before we launched the question, I broke my phone. Have you seen my screen? Oh? Yeah, I saw that. You shouted your screen quickly after my wife shattered hers. Yeah, so you mentioned something. Have you seen any deals out there on Uh? You know I love the iPhone? Well, you know I'm a deal hunter, so I will say, should I put you to work?

You should? I got really fortunate. My wife broke her phone on the exact same day that there was a twenty percent off coup on site wide on eBay. So it's like literally you could buy anything that's nice all over eBay, and eBay comes out with those coupons like once a month, once every two months. Um, so you know it doesn't look too bad. It looks Emily's. Emily was like literally getting charge of glass in her finger. It was pretty rough. It does keep the kids away now, though,

like they're like, oh, I don't want touch Ddy's phone anymore. Yeah, I cut my fingers. But we ended up buying her a refurbished iPhone six S and I think it costs around hundred and seventy five dollars, not too shabby, but yeah, I'll be on the lookout. Yeah, be on the lookout man. Seriously, chunks of glass are also falling off mine a little bit, and I can for the first time see like inside the phone, which is like, oh, look at that. It's

less solid than I thought. That brings up one thought for me for people who have smartphones out there, put a case on it. Put a case on it. That's actually the cheapest insurance that you can have. Uh. And then but don't buy the actual insurance through your phone carrier because it usually is very costly, between seven eleven maybe even more dollars a month for the insurance, and

then you have a deductible on top of that. And then in addition, you're probably gonna get a refurbished phone when they replaced the phone that breaks, so it's usually not worth it. Just self insure and save up your money for wide Yeah, it does break, and then kind of consider buying cheaper phones. I personally don't put a

case on my phone. I'm pretty careful with it, and I just I don't know, I think it kind of actually ruins it for me if you case on it and it's all bulky and hard to get out of your pocket. I kind of like rolling with a smartphone with no case. So I used to be that way, you know, like I was all about the form. I mean that's a huge part of specifically the iPhones, right, like the design and the lines and like the curves and stuff. Except that this current phone that I got

it is like a little over. I think it's two years ago. Maybe no, actually it's coming up on three. I think literally the week I had it, I went to put it back in my pocket, uh and missed me and I was I was out for a walk at night, and I'm like no, And I checked the glass and it didn't break. But then when I got home, it had landed directly on the edge, like on the bezel and dented the metal like there's a huge, huge gash,

but it did not crack the glass. But literally after that was like, seriously, I've had this for a week. I've got to get a case now, for the first time ever, I'm gonna put a case in my iPhone. And I had a case on here except that I've been running. You know, I've been running lately, and I use this arm band and I have to take the case off when I put the phone in the arm band.

So when I took the phone out, as all was cool, you know, a cool down, and my hands are all sweaty and slippery because it's freaking thousand degrees in Atlanta. It's slipped out of my hand and freaking landed on the street. Then I've been meaning to ask you, what are you running from? By the way, like, are you tormented? Is there something my fears? Imaginary animals? Dude, I just you couldn't pay me to run like that. Biking, I'm all about it. Bike, It's fun. I don't know something

about running, man, It's just so simple. So, I mean, I have my phone with me, but I use it to just track my speed right, to track my distance and all that kind of stuff. I don't like. I don't listen to stuff. I don't listen to music. I just like to zone out and just kind of clear my head and start my mornings off that way where I'm able to just get the it flowing. And well, specifically, I signed up for a race. I'm training for that.

It's just my excuse to once a year start running a few months out of the year and to run in a hundred degree heat in July, massive humidity. The humidity is terrible. It doesn't get that hot that early, but I try to run early anyway, That's how I cracked my phone. Well, I will be looking around the interwebs because you know that is one of my gifts, finding a deal. So I'll see what I can do for you. Yeah, maybe you'll convert me over and see if you can try to get me on the Android.

I've been trying. I've been trying. You know what, if the deal is good enough, you might make it happen. It's true, you know, because I because I haven't been self insuring and I don't have the money set aside already. Like, yeah, I could go buy a phone, you know, a decent phone. Now, maybe not the new one like the X or whatever. I don't want to drop a thousand freaking thousand bucks on a new phone, but it's got that kind of money. Also,

don't lease a phone. That's a terrible paying monthly payments and then not keeping it at the end. That's like leasing a car. Don't leave a phone. Yeah, that's I guess the most expensive way to own a fancy new phone. That's gonna well, you need to put owning clothes to have a fusee utilized for a while. Um yeah, I wanted two matches. We're talking about saving for college tonight. I wanted to quickly, uh tell our tell listeners about our college experience. So how many keg stands did you

do in college? Is my first question? Zero? Man? Oh good? Oh me too. Actually, yeah, we're both straight edges, so tame college. Yeah man, But even still, we had had an amazing time in college. I went to school Georgia u g A, which everyone knows is a fantastic school. I could probably name both the colleges I went to and no one would know the mascot. So our college experience is probably couldn't be any more different, I'm going

to guess. So I went to a small private school for the first two years, and everybody knew everybody, and we would have like foot races, like like we just did the weirdest things for fun. We would uh we would like play poker or a lot of video games, you know, stuff like that. Yeah. Like, to be honest, dude, that was the majority of like what happened at Georgia from me as well. But but specifically I wanted to ask you too, like sort of what was your parents

like expectation for you, like to go to college. Was it a big deal? You know, like was it expected? Did you come from like a long line of like college professors or graduates sort of thing where it was just like, oh, yeah, you better go to school, or was it sort of like, uh yeah, do your own thing, dude? You know, I think it was always assumed, but there was this never this overbearing expectation put on it either.

I think if I had whatever I did, if it was if they thought that it was well thought out and then I really felt compelled to do something, I think they would have supported me. And so if that was to go be an underwater welder or whatever that might be, I think my parents would have said, go for it. That's great. I thought you're gonna say, like the classic underwater basket weaving. They might not have supported

that because there's probably not much direction in that. But um, both of my parents graduated from college and education is important to us. Yeah, but also it wasn't this big built up thing where, um, you know you have to achieve this certain level of education or in our eyes you're a failure. There was there was no that, right. Yeah, I'm with you, dude. My parents are are very Yeah,

we had we had similar parents. I guess in their regard, there's definitely an expectation and with that expectation came money as well, and so like there's a big chunk of money set aside for me to go to college, and like my mom and my like my dad. I remember my dad specifically like talking to me and just really, look, you don't have to go to college, but just know that this would probably make break your mom's heart because she's Korean, and I think the Asian sort of culture

and and mindset of higher education. It's very esteemed, right, It's it's sort of like, well, that's what you do. There's like no questions asked. Certainly, I know she would have loved me like it had I not gone to college and taking that money and you know, maybe either invested or started a business. But fact is I didn't have any sort of direction. And you know, so I was like, Okay, college, that sounds great, let's do it. Well.

I think that's actually probably one of the biggest things in the plus column for going to college is that you get that direction. You get that direction, and especially in this day age when you're you know, seventeen or eighteen and you're applying to go to college, most kids at that age have zero idea what they want to do and and really like don't have any of the life skills even in order to pursue something that they

might even have an inkling they want to do. And I know that those are total genius like Elon Musk or something like that, and you just know exactly what you want to do, right or that Bill Gates type or Steve or whatever. But so I think that four years for me was really formative, like relationally, culturally, the things that I know you learned a lot the things that I learned just outside the classroom. I think we're

equally as important, if not more important to me. But when I learned inside the classroom going to college, so that might not be what college is for. But that was so I mean, I just remember looking back, those

are the things that were formative for me. No, no, I think it's good that we actually talk about that because we're gonna spend the rest of the podcast probably talking about why you shouldn't go together or not, maybe not why you shouldn't, but we're I mean, we're gonna have more or ultimately not why you shouldn't, but like why you shouldn't maybe not be saving for your kids college, right, So uh yeah, I feel like we're gonna highlight more of the reasons why, and just in general, we're kind

of knocking it down a few spots on the tone and pole, right, Like, you know, it's not like this be all end all thing that you put all your money towards. I think that's kind of how we're gonna end up walking away from this episode. But they're, like you said, there's a lot of intangible things that you learn in college that that's really hard to quantify. The relationships the people that you meet, and all the sort

of personal things that you mentioned too. But it's so funny how like we both love beer so much, but neither of us have these amazing kig stand beer stories. I know you think we would, right, feel kind of lame to be honest. Speaking of beer, though, let's pop this one. Uh. It's toime to make up for lost lost time all the last years, so we have to drink at least once a week on the podcast. Now I'll pop this beer right now from Firestone Walker. It's

a wild ale fermented with strawberries. Yeah, as you could hear, this is another cork and cage. What do we what do we have? Last week? Is this two beers in a row, two weeks in a row that we've had fancy beers? It sure is. Yeah, the RuSHA River Consecration. Yeah, so this is to California beers back to back. Uh, two donated beers from friends back to back. So last week our friend Carl donated the beer and then this week.

That's right, my friend Josh, who I don't think he has any Twitter handle or blog that he wants repped, but just a really good friend for a long time. And uh, he lives out in California and has access to these amazing beers. And he went to the Firestone Walker Brewery and this is a big name out West out in California right, well there, I think there are

in a lot of states too overall. I mean I think they're probably more than half of the states distributing now and so, but he went to the actual brewery and got this beer. It is called schumps. The phrase I shouldn't even do it, I shouldn't even try it. So I mean I'm thinking of like in like in Paris, the sham, the sham sham shamps de liz is how I think. So, Josh, thank you for providing this beer. Super pumped to dip into it. Yeah, tell us about this beer, Joel. This is is so wild ale for

a minute, was with strawberries. It's hung out in French choked barrels for fifteen months. So I think people that listen to the podcast, no, I think we're both kind of obsessed with sour beers with fruit in them, and this is one of those. Well, in fact is too man. It's summertime, and so you know we we can have an occasional stout here and there, but you know, these bright, tart, refreshing sours with a little bit of fruit added are

especially delicious in the summer. But a sund like this, yeah, particularly refreshing. Dude, I just stuck my nose and crap, that is like it smells like beer concentrate. Man, I think this thing is about to knock us back. Cheers. Oh wow. That beer is like really tart in the perfect way. It's more tart than consecration. It's more tartly than most of the beers we've had. But on this podcast, man, that strawberry has almost like this nice sort of funky

edge to it. The oak and the strawberries really come through nicely. Um, and then that really nice tart finish. That's delicious. That's really great. Thank you Josh for sending this over. I mean, my goodness, that's delicious. Thanks Josh. All right, enough about beer, onto our listener marks question. Here's what he said. He said, I was wondering about your thoughts on saving for a child's education. My wife

and I both work at colleges. She's a professor, I'm a counselor, and we're actually not sure what college will look like in fifteen years and what the value proposition will be. Also, will our kids even want to go to college. We haven't made decisions on a nine or other account, but starting to have the discussion. Thanks fellas, Mark, awesome question. And I say that because this is a discussion that my wife and I started having several years

ago too. Being self employed, we quickly realized that we didn't need to go to school to do what it was at the time. We were both working in the business and so we were both photographers and neither of us went to school for that, and neither of us have taken a formal class. But that being said, we both went to date college for four years and got our got our undergrads. So there's a period there where we're both like, God, sucks, Like, what's the point, you know,

it's not practical at all. And he kind of went through this whole phase where we're like, nobody should ever go to school. Certainly that's advice that isn't for everyone, right, Like, if you want to be a doctor, you've got to be a science major. You have to those the stuff you know you need to take. But yeah, it's good to kind of revisit this, uh, this discussion and kind of cover some of these topics. Yeah, I think even from the beginning, Mark is kind of thinking about it properly.

I like the way that even as a husband and wife that both work out of college. He's still saying, Yeah, I what is this? What's the value proposition? What are things gonna look like in fifteen years? Will our kids even want to go to college? Like? Those are the right questions, awesome questions, Mark, because usually people are like, how much should I be putting in? Yeah, the assumption is, of course we're gonna save, and this is just what

you do. Of course, right, that's just the right thing to do, right, And so I like the questions that he's asking, and I think there are obviously a bunch of things to go into this. The first thing is it kind of depends on how your family views college. So you know, Matt and I were just talking about kind of the expectation for our families, and you know,

they were similar but a little different. Mark, with both you and your wife working out of college, the likelihood of your children wanting to go to college is higher. I mean, the statistics will bear out too, that your parents go to college. It's assumed sort of basically, there's a there's a much greater chance that you will, and especially working in a college, so for them, a plan that's like one check in that in that box, there's

just a greater likelihood that it's going to happen. And you know, I think we'll give you kind of a lot of unchecked boxes that you need to think through. But that's just kind of one thing. Okay, there's a good likelihood that your kids, all things being equal, based on statistics, are they're much more likely than a lot

of other children tend up pursuing higher education. And so, Mark, you specifically asked about the five twenty nine and so for you, unless there's something that you didn't share, Like, I think there's a good chance that your your kids or your kid would be going to college, and in which case it might makes sense for you to to be setting aside money in a plan. You didn't mention whether or not you guys are you know, are are

kind of maxing out your retirement savings. I think that's something that we would want to see in a in a particular order. But yeah, so let's talk about specifically. Let's a lot of your listeners out there probably have heard maybe the term plan, but you may not exactly know what that is. Let's dive into that right after

this break. Yeah, I think Matt, like we talked about in our Investment Basics episodes, like there's like a lot of different numbers and letters and all these things put together for all these different retirement accounts, and most people probably have heard nine. But then you know, well what is it? Uh? And so it is an investment accounts specifically designed to help you save for college. Uh. And

it's got great benefits. The investments are allowed to grow on a tax deferd basis, and your withdrawals will be a percent tax free no matter how much profit you've seen from those in vestments, as long as those proceeds are used for qualifying education expenses. Uh. And you can kind of look to see what those things are like that computers and room and board and things like that also count. You can use five pollion nine money for

those things, not just for the tuition bill. But the other thing about five nine plans is that many states offer a tax deduction or credit on your contributions into a five plan. So a lot of people think, boom, I want to do this, so I can you know, avoid paying state taxes on that income. And so that can be you know, a really good way to to use a plan to kind of lessen your tax burden, um, and say for your kids college in the in the

same way. Nice. Yeah, And another huge benefit to man is that it's transferable and so even And it's good to mention this too, because Markey's like the way you wrote kids in your question, you kind of put the s in parentheses, which tells me, I guess that you maybe have one child and that you might have multiple

so down the road. And that's me that's a huge distinction to make there because with a single kid, it's like, well, we're gonna set all this money aside, and there's a chance that you know that that kid may not go to college. Well, if you have two or more, there's a much greater chance that one of those kids will

go to college. Right, And so you know, say your first kid doesn't end up going to college, well you still have kid number two and maybe even kid number three, plus that you can transfer the benefits of the five to Yeah, and you can even transfer it to you or your wife or or a nephew or a niece or something like that. And so if you are just dead set against taking the tax hit, which we'll mention in a minute, uh, you can transfer it to a

wide variety of people. You can go back to school yourself and use those funds, uh and still claim that tax benefit. So Angel, you could go back and do the underwater welding. You know, dude, I'd be so good at it. Some of such a good swimmer these days. I feel like I can see underwater holding your breath, that's true, getting the wells in real quick. My concentration level might be lacking in order to perform that job. But I think I heard it pays well, so I'll

consider it. So, I mean, those are just a couple of the benefits of a five nine plan. This isn't necessarily gonna be an episode where we talked through all the pros and all the cons of all the different ways that you could potentially save for college, and of the college specific savings accounts out there, it's probably the most popular one, and so we definitely want to make

sure we we hit this one. And then we're gonna spend the rest of the episode talking about some alternatives to that, uh and some maybe some more creative ways to think about not only saving but just thinking about higher education in general. Yeah, let's hit a few of the drawbacks of a five twenty nine playing real quick. The biggest drawback that it has that it has to

be used for educational expenses. Otherwise we'll get hit with a ten percent penalty, UH, and that will be counted as federally taxed income plus the state rate if you receive that state deduction or credit. Another big drawback potential is high costs. Each state has their own five twenty nine program, and different states offer different investments inside of that.

FIE then again is like the vehicle, and the the investments inside are like the passengers, and so you know, one fine plan could be great, low cost, widely diversified, and another five twenty nine plan UH could have investments that are high cost and not widely diversified. And so you don't want to enter into a plane like that.

So definitely watch out for the high cost plans. And in general, I mean it could be underperforming as well, right, just aside from the costs, I mean, it depends on what they offer and allow you to invest UH within your five twenty nine. Right, Like, sometimes there's like basically like a limited menu of options, and if you're stuck with one of those five nine, you're probably going to

see that account yeah, just underperform. Yeah, but there are great resources out there for you too, essentially review each state's five nine plan and see whether the state you live in offers one that you should consider participating in. So, in particular, there's a great resource at Clark dot com.

That's the place where I work, by the way, for a full disclosure, and Clark Howard, my boss, has put together a really good list of the five nine plans you should consider and the ones that you should stay away from. And that's essentially based on what states offer a decent tax break for you for investing, and then on top of that, which states offer great funds at low costs so that your money is actually you know, working and growing hopefully for your kids as opposed to

getting eaten up by fees by the plans administrator. Awesome. Yeah, man, So that's the five nine plan. And you know, we would recommend that if there's a high likelihood of your kids going to college, and if you have prioritized retirement savings. Yeah, that's right, Matt. There's a few reasons why we think it's way more important to be focused on saving for retirement than it is to be focused on saving for

your child's college future. Kind of the main reason for that is there are lots of ways that you'll be able to pay for college, and there just aren't that

many ways to pay for your own retirement. And we'll kind of give you some things to consider, you know, a little bit later in the podcast about how to pay for college other ways, but really, no one else is gonna help fund your retirement, and so making sure that you've got that buttoned up, make sure that you're contributing up to the match and hopefully more in your four oh one K. Making sure that if you meet the income limit eligibility, that you're fully funding a roth

for you and if you're married, for you and your spouse, and if you exceed those income limits, then making sure that you are are putting a substantial amount into a traditional i RA. Essentially prioritizing your retirement over your kids college future is more important and actually ultimately better for

them at the same time. Yeah, man, you know, one way I'm thinking about it too, is like when you're on the airplane and they always say that, like if the mask drops, uh, make sure you put on yourself before helping others around you, especially your kids, Right it's like the same that's the perfect It's like the same thing because often times you think, oh crap, my kid,

you know, a good parents should say that. But you know, if you're thinking about it soundly, and if you think about ahead of time, which is why they have the videos that no one ever listens to, including myself. Um, but you want to get on yourself first. That way, you can't help others you. That way, you can't help your children and elderly whoever else around you get their

masks on too so they don't pass out. I think the same thing applies applies with this, you know, like you kind of need to get your own footing to be solid before you're able to kind of start working on, you know, setting aside the funds to specifically to go

towards children's college. Yeah, and I think it would be better for your kid to rack up some student loans and have to pay those off, you know, over the next ten, fifteen, twenty years than to find out that your destitute and retirement and not have student loans to deal with, but then have to figure out, you know, how to support you and and make that work in retirement. I think it makes a whole lot more sense to

be saving for your retirement. The other thing, too, is that your your retirement accounts have longer to grow more compounding interest. To make nine account, even if you open it when your child is born, is going to have, you know, eighteen years to grow into compound. You're gonna have extra cycles of compounding interest on your retirement accounts

that are gonna grow and grow and grow. And so if you, yeah, so what you're saying that they had you not contributed to that, you're going to be missing out on some massive final compounding interest years there in the end. Yep. Yeah, and so yeah, I think that's another another check in the box of saving for retirement as opposed to saving for your kids college. Yeah. I mean.

The other thing is too, is kids are young, you know, like they're strong, They can figure out, figure things out while they're young and take on an extra job like when you're old. You don't want to have to deal with that, like you know, like you want to be taking on a second job, you know, taking on additional hours in order to make up some of those last years where you weren't contributing to your retirement. I mean, no,

that's that's that's the answer. No, you want you want to be in a in a position to where that's that's already going for you, and hopefully from a position of financial strength, you can at that point look to maybe help your children out after the fact. I think that's maybe even a better approach than to sort of sacrifice on the front end for yourself. But then you're sort of in a much weaker position long term, and then they're almost having to kind of pull you up

versus you being in a position of of financial strength. Yeah. I mean again, there's really a lot of ways to pay for college. There are a lot of options. There are grants, there are scholarships. But when it comes to paying for retirement, essentially, since pensions are super rare now, we have to foot more of the bill for our own retirement and so that's something that we have to plan for. There's no retirement scholarship right right, and all

the lottery which you shouldn't be playing. And so yeah, saving now and saving well for your retirement is the biggest priority. I want to say too, in a perfect world like all the above, right like that, But I think what we're talking about here is kind of finite resources. You know, most of us can't afford to fully fund to four oh one K and a roth and save you know, a good chunk of change for our kids college and so well, where do you prioritize if you

have limited funds? And so that's kind of where we're trying to hit. You know, Mark, I don't know exactly how much money you have going towards all of those things, but just kind of, you know, run through the list. Hey, how am I doing saving for retirement? Am I saving a good chunk? Am I at a good pace? And that's really the first question to ask before you consider are opening account? Just to clarify here, five twenty nine is,

like we said, designed specifically for college savings. We're touching on retirement accounts right, so our favorite being a roth ira A. We're talking about how we want to prioritize that because that kind of comes first. You want to have a solid financial footing before you're you're looking to

start saving for your kids college. But also to I mean with a rath, you're able to withdraw and a lot of people know this right, but you can withdraw any of your contributions to a wrath for anything, taxing, penalty free, tax exactly, tax and penalty free. So if you're looking for some extra cash for when your kids are are going off to school and you've been contributing, you know, you've been maxing out, and say maybe even you've got a spouse or a significant other as well

that's also been contributing to a wrath. I mean, I mean right now, the the contributional limits year, I mean, that's a lot of money that you can sock away over not just eighteen years from from the time you have a kid, but potentially since you had your job, you know, since you were first employed, and if you started saving then that's I mean, that's potentially decades worth of of you know, years worth of savings that you

can draw on. That's not something you necessarily want to count on, but it's worth noting that that's there as as an option. Yeah, and the tax break depending on what state you're in, it could be the exact same essentially as a wrath or it could be a little bit better. But there are a couple of risks involved, right that you have to use it for education expenses, and that if not, you're hit with a tax and

penalty and so the wrath is just this. I know I'm retiring, right, I know I'm gonna need money at some point in the future for myself to live on. And so you're kind of skipping that gamble by putting money directly in a wrath as opposed to in account. Awesome.

So the next what we want to talk about then, are sort of some true alternatives and things that you want to consider as you start thinking about college, as you start having these discussions with your children, you know, aside from Okay, how much should we save and where should I put the money, there's sort of some you know, let's like zoom out a little bit and even think

about college from you know, hopefully even a different perspective. Yeah, so the first thing that can consider is kind of a cultural shift that's happening with how our society views work. And college is great for so many people, and I think Matt and I would both say that it's been worth it and good for us, but we also need to kind of think outside the box a little bit.

There's lots of money to be made right now in blue collar careers and people that are skilled laborers, good with their hands, that have people skills, and so learning a trade is becoming more and more valuable. You know, I made a joke about underwater welding, but I mean, yeah, that's true though, right, but underwater welders make a heck

of a lot more money than I do. And things are changing so much in the workforce with jobs and AI and computerization that there are a lot of jobs right now that you know, people go get an English degree, you get a master's degree, and the pay is so low.

But then there are industries out there that are begging for workers that require you know, months or years of training and no college that off times can be paid for by that employer, and like while you're working, yeah, yeah, and then you're essentially set up to make a heck of a lot more money than someone with a history or an English degree or a master's degree in a lot of different areas. Yeah, So certainly those are jobs and careers where a four year undergrad degree or or

additional schooling, yeah, wouldn't be necessary. And along those lines too, men, even like artists, you know, like I think back to like what Kate and I did when we started the photography company. Did we need to go to college for that. No, I mean we learned a ton. There's a lot of again, like we said earlier, like a lot of intangible things

that we learned and in that period of time. But at the same time, we've had zero formal education in regards to what we actually do is as far as photography specific, we've had zero formal education and running our own business. We've learned all that through friends, through going to the just different workshops in the city, going through just researching online and with our world today. Man, there's

a lot of resources out there. There's a lot of resource is online where you're able to learn the things that you want to learn if you know that there's

something you want to pursue. And so yeah, I don't think this means that you should push your child who is super into history or English into underwater welding necessarily, but it's just something to consider right that there are a lot of high paying jobs plumbers, h fact technicians, contractors, those sorts of jobs are in high demand right now, and so you don't want to put a square peg

in around hole. But it's just something to consider as uh as the shape of the workforce changes and the kind of jobs that are being lost as technology advances. It's just food for thought for when for when you're thinking about where to put your money to save for the future. Yeah, there's probably not gonna be a robot that like can lay down, crawl upunder your sink and you know, reconnect the pipe that your kid broke or

something like that. Right makes me think of our friend, uh, our attorney friend that lives down the street from us, you know, you like always complains about how much the plumbers make. He's like, man, they're hourly rate is more than I may. You know, it's like plumbers are going to rule the world and they don't have all that college set exactly. I mean, like we joke about it, but you know, I mean there's a lot there's a lot of actual truth theory, which is why, you know,

why we want to bring it up. So yeah, another thing is you should really consider spending the money that you would have saved in a five account right now on things that will enricher kids, so interesting books, memberships to museums, traveling. Man, I know that a lot of kids who are able to travel in their preteen teenage years, those sorts of experiences with their parents mean a lot developing that relationship with you as the parent, right like

that father son, that mother, daughter or whatever. That family time that you have together. Traveling is so meaningful. And then on top of that, travel is such an eye opening experience for all of us, but especially for a kid to see another culture history, you know, going to Europe and seeing things that are so much older than

we can even imagine here in the United States. Spending money on things like that for your kids experiences now as opposed to, uh, you know, basically lightening their college bill later on, those can be such meaningful experiences, and just consider whether your money is better spent now forming those cultural experiences as opposed to saving for their future education. That's great. I think what's important to note there too, is that it's not like these experiences are going to

replace college, right. It's not like it's instead of setting aside the money for tuition, we're gonna do this instead, as if like that was able to be like a one for one sort of thing. I think a good way to look at it, too, is that it kind of, like you said earlier, like opens their minds, like opens their eyes a little bit, and I think it changes the way they learn as well. It's it's kind of opens their eyes to receiving knowledge in a different, more

informal sort of way. And you know, again, this sort of points them in the direction of considers other things other than the standard four year degree, which is what Joel and I both did. But there's there's a lot of options. And when you're able to see the whole world for sort of what it is, I think it does leaning you to literally look at the world slightly

differently than had you not have those experiences. It's sort of just shapes the way kids learn and perceive new information and sort of training them to learn more efficiently and differently, is is what's really valuable there? Yeah, so I completely agree. I mean, after after college, I got a job and I worked there for like six months, and then I quit and I went on a road

trip around the country for three months. And that changed me in so many ways and just the way I perceived the world, the things that I take seriously or don't take seriously, the cultural norms that I assumed were correct or that I thought were important, and then they just didn't seem to hold as much wait for me after that, right, and so I think that can be

the same for your kids. As you do those things and as you maybe maybe instead of you know, saving four account, you take them to a major musical that comes to town, or pay for music lessons. Right, Learning an instrument can train a child's brain in such an interesting way. But I guess just think outside the box.

There are a lot of ways that you can put that money to use that can grow your relationship with your child or then also kind of grow their aptitude for learning in different and creative ways that can have a much longer lasting effect than essentially just lessening their college bill that they have to pay after the four years or up. After a quick break, we'll continue to talk about some more legit alternatives to saving in a plan. All right, Matt, we just kind of went high level

grand scheme of things. Let's talk specifics. It turns out theft of kids get scholarship or grant money to go to college. Lots of states offer scholarships and tuition support, making college virtually free, and there are more that might follow suits. So if you live in certain states, either community college or state schools are essentially free in different spots around the country, if you maintain a certain g P A g P A s aren't even like that high. Man.

I was looking at some of these, some of the different states, and like, I know, for the one that Georgia has, like the Hope Scholarship, like at least he used to be like you needed to maintain a three point oh, but some of them are there in the twos, you know. I was just like, man, this is free money, Like, it's not that difficult right to maintain a see average or above. But did you is that what you had?

Did you have Hope? Yeah? So the first two years I went to an out of state school, a private school, and ended up racking up a little bit of student loans. But then I wiped up and I came back and took the free money for the last exactly. Yeah. And then in addition to like this big state scholarships like that, there's just other smaller scholarships and work study programs. Uh. I mean we kind of touched on that earlier, but

you just need to know where to find them. Fast web dot com is a great site to to explore of kids get scholarships or grants for college. I mentioned

that site so fast web. It's basically this site where you get to I mean, you register and they just have like this catalog of all the past scholarships and grants, basically all the free money out there that's out there for your education, and you kind of fill out like a profile and it matches you up kind of automatically for scholarships that you already qualify for, which sounds awesome, right, It's amazing, Yeah, it really does. It's just such an

efficient smart way to to go about it. It kind of makes me want to do it just to see how much like how much uh, I mean scholarships could I get, like right now, even because I mean, dude, as a kid, I was terrible about that. I mean, I got my I got the Hope and that pay for all of my school, but I still had to pay for books and other school fees and stuff like that.

And there's a lot of scholarships out there that can even apply to your room and board, you know, like these additional costs that you have that at least when I was eighteen and going into college, I just assumed that was just like, oh, that's just part of that's just part of school. That's just what you have to pay. But man, that's not the case. You know, had I gotten these scholarships and scored some of these sweet programs to pay for that, I would have been able to

keep that money in my pocket. Yeah, I want to say to that when I was in school, I did a work study program on campus, and that essentially paid for a decent chunk of my education for those first two years when I was going to the private school. And man, it also helped me to take my education really seriously. Yeah, that I kind of had a stake in the game. Um that it wasn't just kind of being handed to me on a silver platter. But you know what, if I'm gonna go here, if I'm making

this choice like I'm, I gotta work for it. And so I think that's like a worthwhile thing to ask your child to do. To you know, five or ten hours a week of work study on campus um or or even potentially an off campus job. You know, college is really fun. I remember being in college and thinking I was busy, And now, you know, with the kind of life I lead today, I can't imagine how I

thought I was ever busy in college. But your kid can definitely handle taking you know, fifteen or sixteen or seventeen hour course load, and then on top of it, you know, working five to ten hours a week. I think that creates a sense of ownership over that college experience and can actually probably help them take their classes

more seriously at the same time. Dude, yeah, I completely agree with that, Like having skin in the game, you know, where like there's like sweat equity, Like literally you're working and paying for your school. That is so valuable and and honestly, like a lot of parents can't pay for their or can't help contribute to their their children's education.

Like it sucks for a kid to have to pay for their own college done, but it's way worse for the parents to not be prepared for retirement because they just don't have the time. You know, you don't have the time to catch up because you're older, and like kids are young and youth, you have the option to take on multiple jobs and and work really hard when you're younger to kind of dig your way out of

that student loan, you know. But yeah, it's a lot tougher to be reaching the end of your working career where you're going to have fewer options to save for retirement. Another thing too, is uh. I think it's important to explain the costs of college to your child and encourage them to choose an affordable option. For instance, we mentioned the state scholarships, but let's say your state doesn't offer that. Community college is so much cheaper than going to a

private school or even just an in state college. The average cost of in state community college is less than five thousand dollars a year. So even if you can convince your child to do their first two years at a community college and then move on to get their degree from another institution, just that one move alone could save them tens of thousands of dollars in student loan debt that they'll have to pay back over the next ten, fifteen, twenty years. Makes me think of a community like the

TV show I love that show? Did you Yeah? Did you watch that back? And all? The other thing too, is that even if you can afford to pay for your your your kids college, you may decide that you don't want to, just depending on how you view the view the world and just sort of your outlook on finances and just what it is that you want your children to experience, you might even decide that that's not the best thing for you to do for them, you know,

as for your children as individuals. And we want to encourage you guys to to not feel guilty, right, to not feel the sort of pressure of like, oh, I can't believe you're not saving for your your kids college. The way we spend time with our our children has a lot more bearing on on on the way that we love them than just how much money we were able to sock away and put towards their their school that they may or may not you know, go to

down the road. So fight the urge to feel that guilt, because I think there's a lot of things that we do in regards from money, uh that's sort of guilt driven, and it needs to be out of love. If if in that's something that you want to do, then man, go for it. But don't at all feel guilty if that's either not a part of your financial plan because it's not able to be, or if you just decide

that it's not going to be part of your financial plan. Yes, so I think ultimately it's a plan, isn't a huge priority. And if you do feel like your kids are definitely gonna get a higher education and that's important to you, and you really do want to say for their college education.

I may plan is a great vehicle, but make sure that you're maxing out your retirement accounts first, because it's more important to get that step right and make sure that you're taking care of in retirement before you start

saving for your kid's future. And then let's say, even if you're not sure if your kids are going to college, right, like it's just they're kind of on the fence or you think that they you know that they probably aren't going to go to college, Well, the same thing applies just continuing to invest like you normally would and if they do end up into college, well there's ways that you can sort of tap into some of that, like we talked about earlier with the rath, or you can

just fund it out of your regular investments. You know, it's not is it going to be completely optimized with all the tax advantages that you would see in a five nine. No, I mean to be honest, like, it's not going to be like the five nine. There are advantages, uh when it comes to the taxation on that, But the fact is a lot of people just don't know if their kids are going to go to college and yeah,

for them invest like you normally would. All right, Matt, that brings up the question that I want to know because I don't know whether you say for your kids college or not. So you've got three young girls, have you started saving for their college at all? Dude? That's a great question, And honestly, the short answer is no, Like, we haven't specifically, right, we haven't specifically set money aside for college in a college shavings account. Next question, why

don't you love your children? But we have been smart and wise with the money, and we have lots of other investments, for instance real estate, you know, I mean how much college you know, where we just sell us single house and and take the proceeds from that. Shoot, you'd be able to fund three kids worth of college, you know, assuming they were in state and not going off to an ivy League school. So how we started

saving specifically for that? No? But are we taking the steps that we've talked about in this episode as far as making sure that we have a solid foundation set up from all for Kate and I to where we have the option to contribute to their education down the road, and so that yes, you know, like we have taken

those steps. It might be time soon, though, to to start maybe sitting aside money specifically towards a for us, because we've got three kids, you know, And that's one of the things we talked about is that that's one of the huge advantages of a five nine is to be able to transfer that, uh and and take that and necessarily have it maybe some for one kid, but then if they don't use all of it, to be able to you know, push that to to another. That's

just a sweet thing to be able to do, you know. Um. And the likelihood that one of my three kids at least would go to college, I think it is pretty high. You've got two bright girls, though, what do yeah, what are you thinking? Man? Yeah, currently, I'm not saving for their college at all, and I just don't see it

becoming a priority anytime soon for us. You know, there's a guy that I know who's a real estate investor, and he essentially, when his daughter was born, bought a quad quad plex and bought it on a fifteen year note and said, you know what, this essentially is her college education. Right here, I'm kind of more partial to

real estate. It's something that I really enjoy and uh so I'd rather put my money there and kind of see what happens and maybe not have the most tax advantaged account possible saving for a kid's college, but hopefully I'll be pointing my girls in the direction of cheaper school or free school when it comes to you know, state scholarships and other scholarships and grants that exist, and so very little of my money will have to go

towards our education, or maybe they'll choose another path altogether. Like we mentioned, you know, our society is changing when it comes to work, and I think like work could look a whole lot different by the time they are college age, and that will be in self driving cars and you know, AI all these different things. Man, I

don't know what the world's gonna look like. And so I'd hate to be putting money in something like that as opposed to, you know, building my wealth for the future that they will certainly be able to partake of in other ways. I just hate to put my money, you know, in this one account that's reserved for one purpose, that and that alone. Yeah, as opposed to building my other assets. Yeah, do you think that would change if you had more than two kids? That's a good question.

I don't think so if if you had five, though, you know, you're like, okay, certainly one of these five kids wouldn't like when you want to get like the sweet tax benefits of of of the five. Even I'm not saying that you would want to like completely dump tons of money in there, because that's the other thing you gonna be careful of. Two is it's not over fun to five because yeah, you're earmarking that money, and that's the only thing that you can do with that money.

I'll say, I think if I had more kids and had a higher income, it would change things, like if the essentially the tax benefit was greater. But where I'm at income level wives, it makes more sense for me to do to a roth as opposed to trying to limit my tax exposure. And so I'd rather take the tax hit now, uh and not take it later. And that's why I do a wrath. But you know, people

that are making a lot higher income. Let's say you're making you know, two fifty thousand dollars a year, you know, I think a five account makes more sense for you if you're a higher income earner because deferring those taxes now actually makes a lot more sense. And so if I was in a higher tax bracket, I would completely consider a five account a lot more seriously. Be where I'm at now, I just it just really doesn't make

that much sense. Yeah, man, Once Port and Port starts making bank, you're gonna have to want to get that tax deferred growth. That's a good point. Um, Well, Mark, thanks again for the question. Man. We talked a lot about the five twenty nine and saving for college and just alternatives to that, and hopefully we give you plenty to think about. It's not a you know, it's not

a clear cut, straight yes or no answer. There's a lot of Again with a personal finance man, there's just so much personal preference that kind of goes into this and things to consider for you and your own family and your children. Hopefully, though, this did give you more information and you feel a little more confident in whatever decision you and your wife decide to move forward with.

And if I could boil it down to two things, I would say, prioritize your own retirement savings very highly number one, And then you know what, spend your money now on things that will enrich your kids and enrich your family. Even if your kids end up racking up some student loan debt because you didn't prioritize saving for their college education. If you prioritize those first two things, you know what, you'll be leading a rich life. And that's what we care about. Yeah, we try to maintain

that balance, man, like we want to live life now. Yeah, like you said, but at the same time, also be smart with our money. So it's it's it's tough to find that balance as an individual and for your family. But hopefully this helps. All right, Quickly back to the beer, Matt the Firestone Walker. I'm not even gonna pronounce it while they all with strawberries from our friend, uh Josh, thank you for this beer, like absolutely delicious. One of us, one of us should have taken French and in college,

but we didn't want to waste the time. But man mouth puckering lye tart, delicious strawberry, like robust strawberry, you know, like it was not like this just little strawberry fragrance. It's like this full on. It's like I was chewing a strawberry, but not like in a bad way. It's not like this was a chewy beer. It just had lots of flavor. Awesome for the summer with this heat and having a refreshing beer. I love this man. This is great. Yeah, thanks everyone for listening. Our home on

the web is how to money dot com. We will have show notes up for this episode and uh, if you like what you hear, be sure to let us know. We would really appreciate it if you would review and subscribe either on Apple Podcast or our favorite app, cast Box. So until next time, Man, best Friends Out, Best Friends Out. M