If you could cash flow college now

[Anonymous]

Early 40s w kids under 5. If we had to, we could cash flow college based on our current salaries. Barring random disaster, if we don’t up our lifestyle, should we feel pretty ok that we could cash flow college in 14 or so years? Don’t expect huge salary growth but prob like 2 to 3 pct per year. PITI should stay same. I know college costs have outpaced inflation but hope they won’t go too much out of control.

[Anonymous]

Speak English.

[Anonymous]

If you could cash flow now, why not save some of that money so you will definitely be able to afford it even if college costs continue to outpace inflation?

[Anonymous]

Anonymous wrote:Speak English.

She doesn’t want to save for her children’s college.

[Anonymous]

Anonymous wrote:If you could cash flow now, why not save some of that money so you will definitely be able to afford it even if college costs continue to outpace inflation?

Probably because she's anticipating not having to pay for the daycare/ballet/swim lessons/etc that she's currently cashflowing?

OP, I am in a similar position (I could pay for college now; wouldn't be super fun, but we'd manage) and I'm saving windfalls and bonuses and things toward college on the theory that if I can cashflow all of it, it will be easier to cashflow 75% or 50% of it. And it gives us a cushion if we take any big financial hits in the next 15 years.

[Anonymous]

If you have extra money, why not put some in a 529 plan now so it hopefully grows tax free and then you only have to cash flow 25-50% later? Then you can spend the amount you would have paid in other things. Basically, why do you want your future self to sacrifice spending instead of your current self?

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you could cash flow now, why not save some of that money so you will definitely be able to afford it even if college costs continue to outpace inflation?

Probably because she's anticipating not having to pay for the daycare/ballet/swim lessons/etc that she's currently cashflowing?

OP, I am in a similar position (I could pay for college now; wouldn't be super fun, but we'd manage) and I'm saving windfalls and bonuses and things toward college on the theory that if I can cashflow all of it, it will be easier to cashflow 75% or 50% of it. And it gives us a cushion if we take any big financial hits in the next 15 years.

Maybe. But they didn’t say that. They said they could cash flow now.

[Anonymous]

First I wouldn’t count on it— college tuition inflation has been much more than 2-3% a year, altho who knows how long they can keep that or what happens over the next 10 years.

Second, how you can be in a position to cash flow tuition now and not be able to/want to save in a 529? That sort of boggles the mind.

[Anonymous]

We save because we don’t want to work forever and will most likely retire and start traveling a lot more by the time they start college.

[Anonymous]

Anonymous wrote:Early 40s w kids under 5. If we had to, we could cash flow college based on our current salaries. Barring random disaster, if we don’t up our lifestyle, should we feel pretty ok that we could cash flow college in 14 or so years? Don’t expect huge salary growth but prob like 2 to 3 pct per year. PITI should stay same. I know college costs have outpaced inflation but hope they won’t go too much out of control.

Yes.

However, if you are currently investing the leftover money in the stock market, who not do that inside the 529 container? You get a 5.75% state tax deduction on the entire amount (if in VA) and the money grows tax free - benefits you don't get if you are growing the money outside the 529. If you are ultra conservative, you could also park your cash in a money market fund within the 529.

I thought I was smarter than everyone else and did not focus on the 529 when i was your age. We are now cashflowing about 50% of the spend, routing the money through the 529 to get the 5.75%, etc. but missed out on the tax sheltered growth of the past decade. Don't make that same mistake.

[Anonymous]

Save, you can not know the future for the next two decades.

[Anonymous]

OP here. Yeah we already have a good amount in a 529 and get the deduction for VA. I just sometimes have random anxiety about whether we'll be okay, but rationally we should be fine b/c 1) we could cash flow based on current income (if we weren't paying for childcare + the $ we're currently sticking in 529 + some other costs) and 2) we'll have the 529. It's just hard to predict actual costs, since we have no idea if they'll go private or not, but we could cashflow private and have the 529/brokerage as a backup/supplement.

Appreciate the more helpful answers.

[Anonymous]

Mid 40s. 3 kids in elementary and middle school. We can cash flow college (and all of our expenses) from passive investments on current distributions with significant room to spare.

[Anonymous]

We thought we had a plan where we were going to be in position to cash flow it (but was saving just in case). So glad we have the just in case cash because we needed to move a child to private school due to a child having a learning disability. And due to the child's needs, I needed to move into a different role at work and reduce my hours and I was the higher income (but my DH has much better benefits).
I look at saving for college sort of like making a insurance payment.

[Anonymous]

Then save half that cashflow amount for each kid for the next 8 years in a 529. If that feels tight or harsh to you, it won't be nearly as easy to cashflow as you think.