Savings - screened porch v college?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OK I take the point that you are all aligned on college over porch. So I will take that into extreme consideration going forward.

On the mortgage vs. student loan thing - I think my DH and DCUM are going to have to agree to disagree. I get what you are saying about 6% being higher than 3.6%. But his feeling on the loans is the total amount of interest paid on $150K at 3.6% is more actual money than what you pay on $28K at 6% and then he also feels secure in where we have to live. Without being able to do the actual math on the interest myself - I think it's a close enough call to be a wash.

HHI is $300K. I don't know the actual amounts currently in the 529s - I will find that out ASAP.

Omg. No. The actual math does not work like that. If you believed in math, it is always more advantageous to pay off the higher interest rate, regardless of principal amount. Then once that is gone, you pay off the next highest rate. And this doesn’t factor in the mortgage deduction. Omg.

Seconded, and in particular the OMGs. And let me add a JFC.

[Anonymous]

OP .. I am of a similar mindset as your DH. I needed that "security".

Mindful of that I have paid off my mortgage and now saving that for my DC's college. (Just one DC)

It does make math a tad easy vs 3 kids.

However, in addition to the Taxes and Insurance, please account for stuff that breaks. I have had to replace my A/C and had a fat bill owing to a water leak.

If it were me I would pay the minimum amount towards the mortgage and the rest to pay off the student loans (highest interest rate) and continue.

[Anonymous]

15:36 poster here
Forgot to add .. I'd also save a little mindful of the market conditions (layoffs etc)

[Anonymous]

Anonymous wrote:

Anonymous wrote:You have three kids with the oldest entering college in 3.5 years and you’re trying to justify a screened in porch after years of underfunding their 529s?

Both you and your husband need a basic finance class given the mental gymnastics you are going through to justify your wants.

With a $300k HHI!!! Where's the money going?!

Idk how you are all funding retirement - but a lot is going to the retirement I said we have.

[Anonymous]

Having so much equity in the house will be used against you when calculating financial aid. Better to have a larger outstanding mortgage, unfortunately. Stopping pre-paying your mortgage and instead dump that money into 529s for the kids and eliminating your student loan.

Don't buy a screened porch unless one of you gets a major raise.

[Anonymous]

Anonymous wrote:OP, why did you post if you don’t want to accept any feedback? As others have said, stop paying extra on the mortgage and funnel any extra funds to your student loans. After that, save as much as possible in 529s and don’t stop until the second child has finished college. With a HHI of $300k, you won’t receive any financial aid. Also, please start speaking with your children to let them know they have limited funds for college.

We never broke $300k in HHI until last year and have $400k saved for three kids and a NW of $3.5. What have you been spending your money on?

I am not, not taking feedback - I said got it to consider adding more to college over porch.

I am talking to my kids - that we will pay for 4 years of in state tuition/room & board or the equivalent amount at a private college. And they need to pay their own spending money. I want them to have some skin in the game. I am ok with this.

The way I had previously been looking at it which I guess everyone else is against - is UVA costs $40,000 a year to attend now (just an example). We have the 529 - plus assuming after we pay off mortgage and just put that straight to college - an extra $3600x12= $43,200 a year to put towards college - so that's more than tuition. (And, that leaves $1000 for insurance and taxes / month on the house). I believe there are only two years where I will have 2 kids in college at the same time fwiw also.

[Anonymous]

Anonymous wrote:OK I take the point that you are all aligned on college over porch. So I will take that into extreme consideration going forward.

On the mortgage vs. student loan thing - I think my DH and DCUM are going to have to agree to disagree. I get what you are saying about 6% being higher than 3.6%. But his feeling on the loans is the total amount of interest paid on $150K at 3.6% is more actual money than what you pay on $28K at 6% and then he also feels secure in where we have to live. Without being able to do the actual math on the interest myself - I think it's a close enough call to be a wash.

HHI is $300K. I don't know the actual amounts currently in the 529s - I will find that out ASAP.

Yeah, took me a little while to get my head around the total cost thing too -- however, the thing that really got me eventually was that with the cost of inflation, your money today is more valuable than it will be 30 years from now. You'd get more putting that money in your high yield savings and paying it down later. Plus, the tax deduction when you lose it (and fall below the SALT cap) will really start to hit you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, why did you post if you don’t want to accept any feedback? As others have said, stop paying extra on the mortgage and funnel any extra funds to your student loans. After that, save as much as possible in 529s and don’t stop until the second child has finished college. With a HHI of $300k, you won’t receive any financial aid. Also, please start speaking with your children to let them know they have limited funds for college.

We never broke $300k in HHI until last year and have $400k saved for three kids and a NW of $3.5. What have you been spending your money on?

I am not, not taking feedback - I said got it to consider adding more to college over porch.

I am talking to my kids - that we will pay for 4 years of in state tuition/room & board or the equivalent amount at a private college. And they need to pay their own spending money. I want them to have some skin in the game. I am ok with this.

The way I had previously been looking at it which I guess everyone else is against - is UVA costs $40,000 a year to attend now (just an example). We have the 529 - plus assuming after we pay off mortgage and just put that straight to college - an extra $3600x12= $43,200 a year to put towards college - so that's more than tuition. (And, that leaves $1000 for insurance and taxes / month on the house). I believe there are only two years where I will have 2 kids in college at the same time fwiw also.

I don't think you are figuring in rising college costs at all. How are you going to pay for the two years with two kids in college?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, why did you post if you don’t want to accept any feedback? As others have said, stop paying extra on the mortgage and funnel any extra funds to your student loans. After that, save as much as possible in 529s and don’t stop until the second child has finished college. With a HHI of $300k, you won’t receive any financial aid. Also, please start speaking with your children to let them know they have limited funds for college.

We never broke $300k in HHI until last year and have $400k saved for three kids and a NW of $3.5. What have you been spending your money on?

I am not, not taking feedback - I said got it to consider adding more to college over porch.

I am talking to my kids - that we will pay for 4 years of in state tuition/room & board or the equivalent amount at a private college. And they need to pay their own spending money. I want them to have some skin in the game. I am ok with this.

The way I had previously been looking at it which I guess everyone else is against - is UVA costs $40,000 a year to attend now (just an example). We have the 529 - plus assuming after we pay off mortgage and just put that straight to college - an extra $3600x12= $43,200 a year to put towards college - so that's more than tuition. (And, that leaves $1000 for insurance and taxes / month on the house). I believe there are only two years where I will have 2 kids in college at the same time fwiw also.

Yes, you can do that. But, you're losing out on the gains you could have had investing in in retirement/529/stock market for even more years.

[Anonymous]

A couple of thoughts - your HYSA isn't actually yielding the stated interest rate because you will also have to pay taxes on the interest you earn. So your return there might not be as high as you think it is, and it may not be much more than just paying off the car if you already have the cash on hand.

Second, the FAFSA changed recently to no longer take into consideration families that have more than one kid in college at a time. It looks like you'll have a couple of years where you have two kids in college at the same time, and you won't get a discount anymore because of it. Have you factored that into your plans to pay for college? As other have pointed out, the amount of extra cash that you'll have on hand won't actually be 43K because of taxes and insurance, so you could be looking at only having an additional 30K /year if your mortgage is fully paid off. Any additional debt is going to eat up the cash you have available to fund college out of pocket.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, why did you post if you don’t want to accept any feedback? As others have said, stop paying extra on the mortgage and funnel any extra funds to your student loans. After that, save as much as possible in 529s and don’t stop until the second child has finished college. With a HHI of $300k, you won’t receive any financial aid. Also, please start speaking with your children to let them know they have limited funds for college.

We never broke $300k in HHI until last year and have $400k saved for three kids and a NW of $3.5. What have you been spending your money on?

I am not, not taking feedback - I said got it to consider adding more to college over porch.

I am talking to my kids - that we will pay for 4 years of in state tuition/room & board or the equivalent amount at a private college. And they need to pay their own spending money. I want them to have some skin in the game. I am ok with this.

The way I had previously been looking at it which I guess everyone else is against - is UVA costs $40,000 a year to attend now (just an example). We have the 529 - plus assuming after we pay off mortgage and just put that straight to college - an extra $3600x12= $43,200 a year to put towards college - so that's more than tuition. (And, that leaves $1000 for insurance and taxes / month on the house). I believe there are only two years where I will have 2 kids in college at the same time fwiw also.

You haven’t answered this question: how much do you have in non-retirement savings? Your (taxable) HYSA or otherwise. That is how we will be able to tell you how off-base this situation actually is.

[Anonymous]

There are generally two ways people approach paying off debt: pay off the lower balance first (get a good psychological effect to motivate you) or pay off the highest interest rate first. You are trying to choose option C: keep both debts going and buy a screened porch.

[Anonymous]

Anonymous wrote:

On the mortgage vs. student loan thing - I think my DH and DCUM are going to have to agree to disagree. I get what you are saying about 6% being higher than 3.6%. But his feeling on the loans is the total amount of interest paid on $150K at 3.6% is more actual money than what you pay on $28K at 6% and then he also feels secure in where we have to live. Without being able to do the actual math on the interest myself - I think it's a close enough call to be a wash.

SMH that you had three kids…

[Anonymous]

Go for the porch, OP! You’ll figure out the rest of the finances at some point and in the meanwhile enjoy your home even more! Don’t listen to all of these losers with their math.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

On the mortgage vs. student loan thing - I think my DH and DCUM are going to have to agree to disagree. I get what you are saying about 6% being higher than 3.6%. But his feeling on the loans is the total amount of interest paid on $150K at 3.6% is more actual money than what you pay on $28K at 6% and then he also feels secure in where we have to live. Without being able to do the actual math on the interest myself - I think it's a close enough call to be a wash.

SMH that you had three kids…

On the other hand, the fact that OP was able to present the numbers she did in her OP and shows awareness there is a question about being to able to afford a screened porch and the tradeoff between that and college, probably puts her ahead of 80% of the population in financial literacy.