What would you do with extra money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, low cost total stock market index fund. Park it and forget about.

So almost no one has suggested maxing out the 529 (15k per kid per year). This kind of makes sense to me, because that would be a lot of our HHI into a fund with limited use. And like the other poster said, we could potentially want to move, although I am pretty comfortable with where we live now and we have a lot of space.

Maxing out a 529 would be 30k per year per child for a married couple. How much are you on track to have in your 529 when your dd graduates from high school? Will you need more than that to pay for college? If so then it does make sense to increase the amount you are saving.

I find this so tricky to estimate. My kids have tuition remission at UMD, which I am inclined to encourage them to take advantage of should they get in. If they want to do an expensive program like med school or law school I would be happy to help. But what if they just go to UMD and that’s the end of it? Or should I plan as if they are going to the most expensive schools and put as much as I can afford in the 529? What if I want to invest in something else? I am just clueless.

I'm all for state schools, but if I lived in Maryland, I would seriously beef up the college fund. I'm in Virginia and my kids are 9 & 12 and currently have 200k set aside for each kid. I do not contribute any longer and hopefully that will grow. Hopefully my kids will get in one of the great VA schools, but competition is very tight. UMD is a pretty low bar IMO.

OP here. I went to an elite college AND an elite law school and was utterly miserable at both, and my career is so-so, which I can only admit on this anon website. DH went to a no-name school in a foreign country no less, has no graduate degree, and makes more, has better benefits, loves his job. So I wonder if my hesitance to hoard money for college (despite my instinct to hoard money period) is incorrectly colored by my crappy experience. Should I hoard money in the 529 or wait for a better investment opportunity elsewhere? How much of the 50k should I put in the 529? I don't know what will be the right thing for my kids.

State schools can be great, I'm not denying that. I hope mine gotntonstae schools, but a school in Maryland is not what I'd want to force my kids into. By you refusing to save, if you cant badger your kid into UMD, then they will be saddled with debt.

[Anonymous]

Anonymous wrote:I would buy an investment property with it. Put down some money, use some to fix it up and rent it out.

In our area? Where would you buy such a property with only 50k and get a positive cash flow?

[Anonymous]

Anonymous wrote:

State schools can be great, I'm not denying that. I hope mine gotntonstae schools, but a school in Maryland is not what I'd want to force my kids into. By you refusing to save, if you cant badger your kid into UMD, then they will be saddled with debt.

PP, I'm not worried that I won't have the money saved should they decide to go somewhere else. It would just be in a non-tax advantaged account or some other investment. I save a lot of money regardless of what kind of account I place it into. I just question devoting money to that specific cause when I may not need it and won't be able to put it somewhere else.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would buy an investment property with it. Put down some money, use some to fix it up and rent it out.

In our area? Where would you buy such a property with only 50k and get a positive cash flow?

Probably outside of Baltimore. You'd still have a mortgage (hopefully a 15 year mortgage), but the rent would cover it and then after 15 years it's pretty much all profit. You'd probably break even month to month, but in the long run you'd about $2000 cash flow a month and of course could sell it whenever

[Anonymous]

op, one other tax advantaged account I haven't seen you mention is HSA. If you have a HDHP, you can put the max in to a HSA and then use your extra cash to pay medical expenses. Save your receipts from any medical expenses because you can reimburse yourself any time, but invest the HSA.

I think that is the only tax advantaged account option that I haven't seen mentioned by you in this thread.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would buy an investment property with it. Put down some money, use some to fix it up and rent it out.

In our area? Where would you buy such a property with only 50k and get a positive cash flow?

Probably outside of Baltimore. You'd still have a mortgage (hopefully a 15 year mortgage), but the rent would cover it and then after 15 years it's pretty much all profit. You'd probably break even month to month, but in the long run you'd about $2000 cash flow a month and of course could sell it whenever

Do you know of a specific area? Whenever I have looked at properties they are way deep in Baltimore. DH does not feel comfortable with Baltimore city to buy cheap property there. I worry about safety more than losing money.

[Anonymous]

Anonymous wrote:op, one other tax advantaged account I haven't seen you mention is HSA. If you have a HDHP, you can put the max in to a HSA and then use your extra cash to pay medical expenses. Save your receipts from any medical expenses because you can reimburse yourself any time, but invest the HSA.

I think that is the only tax advantaged account option that I haven't seen mentioned by you in this thread.

We don’t have an HDHP, so I think that means we’re not eligible, right?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, low cost total stock market index fund. Park it and forget about.

So almost no one has suggested maxing out the 529 (15k per kid per year). This kind of makes sense to me, because that would be a lot of our HHI into a fund with limited use. And like the other poster said, we could potentially want to move, although I am pretty comfortable with where we live now and we have a lot of space.

Maxing out a 529 would be 30k per year per child for a married couple. How much are you on track to have in your 529 when your dd graduates from high school? Will you need more than that to pay for college? If so then it does make sense to increase the amount you are saving.

I find this so tricky to estimate. My kids have tuition remission at UMD, which I am inclined to encourage them to take advantage of should they get in. If they want to do an expensive program like med school or law school I would be happy to help. But what if they just go to UMD and that’s the end of it? Or should I plan as if they are going to the most expensive schools and put as much as I can afford in the 529? What if I want to invest in something else? I am just clueless.

That is tricky because it isn't in hand. If something happens and whoever is employed there is laid off, or goes somewhere else, or becomes disabled and has to leave that job, then the benefit will go away. I would probably save at least enough to cover the other stuff 529s can cover - Room and board, books (you should check this) and then save in taxable investing whatever is left over. If you aren't already maxing IRAs then think that is actually something to do as well. Do Roth IRAs (either directly or by back door) and then you can pull the contributions out if you ever needed to with no penalties.

According to the UMD tuition remission policy, if you have worked for the university over 5 years (DH has worked there 10), you are eligible for the tuition remission even after leaving from the university system. So unless the policy drastically changes, he could leave and still be eligible.

Are you sure about that? I think it is for active employees (who are working at least a 50% schedule) and retirees. If you leave rather than retire you would not be eligible. If your DH is 39 he probably isn't eligible to retire yet so he will need to stay at UMD if you want your kids to go there. Hopefully he has a tenured position.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, low cost total stock market index fund. Park it and forget about.

So almost no one has suggested maxing out the 529 (15k per kid per year). This kind of makes sense to me, because that would be a lot of our HHI into a fund with limited use. And like the other poster said, we could potentially want to move, although I am pretty comfortable with where we live now and we have a lot of space.

Maxing out a 529 would be 30k per year per child for a married couple. How much are you on track to have in your 529 when your dd graduates from high school? Will you need more than that to pay for college? If so then it does make sense to increase the amount you are saving.

I find this so tricky to estimate. My kids have tuition remission at UMD, which I am inclined to encourage them to take advantage of should they get in. If they want to do an expensive program like med school or law school I would be happy to help. But what if they just go to UMD and that’s the end of it? Or should I plan as if they are going to the most expensive schools and put as much as I can afford in the 529? What if I want to invest in something else? I am just clueless.

That is tricky because it isn't in hand. If something happens and whoever is employed there is laid off, or goes somewhere else, or becomes disabled and has to leave that job, then the benefit will go away. I would probably save at least enough to cover the other stuff 529s can cover - Room and board, books (you should check this) and then save in taxable investing whatever is left over. If you aren't already maxing IRAs then think that is actually something to do as well. Do Roth IRAs (either directly or by back door) and then you can pull the contributions out if you ever needed to with no penalties.

According to the UMD tuition remission policy, if you have worked for the university over 5 years (DH has worked there 10), you are eligible for the tuition remission even after leaving from the university system. So unless the policy drastically changes, he could leave and still be eligible.

Are you sure about that? I think it is for active employees (who are working at least a 50% schedule) and retirees. If you leave rather than retire you would not be eligible. If your DH is 39 he probably isn't eligible to retire yet so he will need to stay at UMD if you want your kids to go there. Hopefully he has a tenured position.

You can "retire" from the University at any age. DH is a supervisor (staff, not faculty) and has worked to get tuition remission eligibility for an employee who was in his 30s and has two kids and left. In fact, DH insisted that the employee stay on an extra 2 weeks because he was that close to his 5 year mark, and then he worked to get the workaround for the employee because he wanted his kids to have that option. My DH is nice!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, low cost total stock market index fund. Park it and forget about.

So almost no one has suggested maxing out the 529 (15k per kid per year). This kind of makes sense to me, because that would be a lot of our HHI into a fund with limited use. And like the other poster said, we could potentially want to move, although I am pretty comfortable with where we live now and we have a lot of space.

Maxing out a 529 would be 30k per year per child for a married couple. How much are you on track to have in your 529 when your dd graduates from high school? Will you need more than that to pay for college? If so then it does make sense to increase the amount you are saving.

I find this so tricky to estimate. My kids have tuition remission at UMD, which I am inclined to encourage them to take advantage of should they get in. If they want to do an expensive program like med school or law school I would be happy to help. But what if they just go to UMD and that’s the end of it? Or should I plan as if they are going to the most expensive schools and put as much as I can afford in the 529? What if I want to invest in something else? I am just clueless.

That is tricky because it isn't in hand. If something happens and whoever is employed there is laid off, or goes somewhere else, or becomes disabled and has to leave that job, then the benefit will go away. I would probably save at least enough to cover the other stuff 529s can cover - Room and board, books (you should check this) and then save in taxable investing whatever is left over. If you aren't already maxing IRAs then think that is actually something to do as well. Do Roth IRAs (either directly or by back door) and then you can pull the contributions out if you ever needed to with no penalties.

According to the UMD tuition remission policy, if you have worked for the university over 5 years (DH has worked there 10), you are eligible for the tuition remission even after leaving from the university system. So unless the policy drastically changes, he could leave and still be eligible.

Are you sure about that? I think it is for active employees (who are working at least a 50% schedule) and retirees. If you leave rather than retire you would not be eligible. If your DH is 39 he probably isn't eligible to retire yet so he will need to stay at UMD if you want your kids to go there. Hopefully he has a tenured position.

You can "retire" from the University at any age. DH is a supervisor (staff, not faculty) and has worked to get tuition remission eligibility for an employee who was in his 30s and has two kids and left. In fact, DH insisted that the employee stay on an extra 2 weeks because he was that close to his 5 year mark, and then he worked to get the workaround for the employee because he wanted his kids to have that option. My DH is nice!

As a MD resident I find this kind of shocking. Why should the university provide that kind of benefit to any employee with 5 years of service? It's meant to reward employees, and in the case of retirees long term employees (and usually retirees are using it to take a class here and there, not send their kids to college). That seems out of the norm for universities. What other costly benefits is the university system providing to people who have only been there 5 years and are able to retire? Given the budget and tuition pressures someone needs to look into this.

[Anonymous]

Travel.

[Anonymous]

Anonymous wrote:
As a MD resident I find this kind of shocking. Why should the university provide that kind of benefit to any employee with 5 years of service? It's meant to reward employees, and in the case of retirees long term employees (and usually retirees are using it to take a class here and there, not send their kids to college). That seems out of the norm for universities. What other costly benefits is the university system providing to people who have only been there 5 years and are able to retire? Given the budget and tuition pressures someone needs to look into this.

How is it "shocking?" It's a good benefit, from an employer that does not pay that well. DH struggles to hire staff because they have strict limitations on how much they can pay. DH is not faculty, and his program actually makes hundreds of thousands of dollars in profit FOR the University, and he's paid less than people in the private sector.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
As a MD resident I find this kind of shocking. Why should the university provide that kind of benefit to any employee with 5 years of service? It's meant to reward employees, and in the case of retirees long term employees (and usually retirees are using it to take a class here and there, not send their kids to college). That seems out of the norm for universities. What other costly benefits is the university system providing to people who have only been there 5 years and are able to retire? Given the budget and tuition pressures someone needs to look into this.

How is it "shocking?" It's a good benefit, from an employer that does not pay that well. DH struggles to hire staff because they have strict limitations on how much they can pay. DH is not faculty, and his program actually makes hundreds of thousands of dollars in profit FOR the University, and he's paid less than people in the private sector.

Because they are giving the benefit to people who AREN'T staying. It's one thing to give it to current employees but another to give it to people who only stayed for 5 years. You can start to build up a pretty big obligation that way.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
As a MD resident I find this kind of shocking. Why should the university provide that kind of benefit to any employee with 5 years of service? It's meant to reward employees, and in the case of retirees long term employees (and usually retirees are using it to take a class here and there, not send their kids to college). That seems out of the norm for universities. What other costly benefits is the university system providing to people who have only been there 5 years and are able to retire? Given the budget and tuition pressures someone needs to look into this.

How is it "shocking?" It's a good benefit, from an employer that does not pay that well. DH struggles to hire staff because they have strict limitations on how much they can pay. DH is not faculty, and his program actually makes hundreds of thousands of dollars in profit FOR the University, and he's paid less than people in the private sector.

Because they are giving the benefit to people who AREN'T staying. It's one thing to give it to current employees but another to give it to people who only stayed for 5 years. You can start to build up a pretty big obligation that way.

I don't see it that way at all. In the private sector, DH and his colleague would be getting higher pay, stock options, or have a profit sharing arrangement, all guaranteed benefits, given the amount of revenue he is generating for the organization. Instead, he is offered tuition remission at ONLY MD state schools, a benefit he may or may not use, depending on so many factors. Other universities actually offer tuition support outside their own system. Further, you are not even aware of the actual cost, you just assume that MD employees are taking advantage of it right and left (they're not). Even worse, the University reserves the right to change access to the benefit at any time. You can rest assured that if tuition remission was actually having much of a negative impact, the policy would change instantly. The University has no obligation to lose money on it. So I am not counting on it, but it is a good benefit if we do happen to use it, and DH has no intention of leaving anytime soon.

[Anonymous]

Anonymous wrote:
As a MD resident I find this kind of shocking. Why should the university provide that kind of benefit to any employee with 5 years of service? It's meant to reward employees, and in the case of retirees long term employees (and usually retirees are using it to take a class here and there, not send their kids to college). That seems out of the norm for universities. What other costly benefits is the university system providing to people who have only been there 5 years and are able to retire? Given the budget and tuition pressures someone needs to look into this.

I would not be surprised if this is actually a very affordable benefit for UMD. First, would-be students need to get admitted before getting remission. Second, they have to want to go to Maryland. If an employee's kids don't, then it's a benefit that is never realized. I expect UMD and the state have considerable information on what percentage of this benefit actually gets realized and factors that into their operating budget and benefits plan.

In addition, UMD in-state tuition is currently under $11k/year for College Park, and less elsewhere. Depending on the rate that employees make use of this benefit, it might not be any greater cost than something typical like a 401k match.