Thread: Baby Tech Talk

Originally Posted by ts01

Congrats xtrapickels on the twins. I've got a pair (now pushing 19) and there's never a dull moment.

In addition to immediate concerns, I know this seems crazy, but they WILL grow up. Way faster than you realize. And if they're going to get schooled then eventually a very key piece of baby tech = college money.

As with all money, the best kind to use is other people's. Want some? Sign up for upromise (http://www.upromise.com/welcome), set up a 529 plan, and use the upromise credit card as much as possible, for every conceivable expense. It'll add up and the sooner you start, the better.

Details of the upromise program are on the website -- basically, participating vendors kick back a percentage on every purchase, and the credit card kicks back an additional 1%, and the kickbacks are swept into a 529 education account.

Obviously there are other credit card reward programs but this one packs double / triple the punch of most, with vendor kickback in addition to the credit card kickback, and then you get the added benefit of tax-free earnings in the 529 plan. Sure it's nice to get free plane tickets or whatever on other cards, but when tuition bills roll in it's nice to have some savings to pay with.

I learned about this when my twins were twelve - paying their college bills now, and having just finished paying the older sister's tuition, I wish I'd known about twelve years earlier.

Glad you brought this up. I was going to tap the collective on this as well. Having the proper programs and accounts set up is one thing, but I am wondering how people are marketing the account to friends and family. My money guy is helping with the account set up and he mentioned that with proper marketing, you can get college paid for after 18 years of donations. Hmmm, sounds good, but we haven't yet talked about the marketing aspect with him yet. I know this sounds kinda sheisty, but I simply mean having people spend money on the kids college fund, and letting them know how (tactfully), rather than give her some new duplicative toy for her 3rd birthday.

Originally Posted by auvgeek

Love those big blue eyes!

Thanks man!

At current interest rates, you'd be much better off paying down debt than packing it into college savings accounts. Why on earth would you pump money into a 3% savings account instead of cutting down a 5% car loan, or 8% student loan? Take advantage of anything you can do pre-tax, but beyond that interest rates are so shitty, that $10,000 put away today will yield $16k in 17 years. 6k in 17 years barely keeps up with inflation. In 17 years with everything paid off, 20k tuition doesn't look all that bad anymore.

Get out of debt first and stay out. Open the account and let the grandparents send cash, but I wouldn't worry about it until you're debt free, or savings plan rates are greater than your loan rates.

Originally Posted by commonlaw

... I know this sounds kinda sheisty, but I simply mean having people spend money on the kids college fund, and letting them know how (tactfully), rather than give her some new duplicative toy for her 3rd birthday.

No clue ... really depends on your friends / family and their attitudes. Personally if someone had told me to bring $20 for college funds instead of yet another crap toy for half the birthday parties I went to over the years I would've been thrilled. And raising my kids, they often seemed to enjoy only one or two toys at a time, so other than the fun of opening a lot of presents at birthday parties, having a lot of toys didn't matter.

But, hint to grandparents: relatives can enroll their own cards in the Upromise account so that the vendor kickbacks through Upromise go to kids' 529 account; they don't have to get a Upromise card, they can just enroll existing cards.

Originally Posted by DJSapp

At current interest rates, you'd be much better off paying down debt than packing it into college savings accounts. Why on earth would you pump money into a 3% savings account instead of cutting down a 5% car loan, or 8% student loan? Take advantage of anything you can do pre-tax, but beyond that interest rates are so shitty, that $10,000 put away today will yield $16k in 17 years. 6k in 17 years barely keeps up with inflation. In 17 years with everything paid off, 20k tuition doesn't look all that bad anymore.

Get out of debt first and stay out. Open the account and let the grandparents send cash, but I wouldn't worry about it until you're debt free, or savings plan rates are greater than your loan rates.

If this was directed at my uPromise post it misses the mark. Whether your own money should go to paying down debt or directly investing in a college fund is not the point; this is about other peoples' money. In the uPromise program, participating retailers, airlines, groceries, gas stations, restaurants, etc. kick back a percentage of your purchase to your kids' college fund as a promotion; and the uPromise credit card also kicks back a percentage. Doesn't add to what you're already spending; it's just that the other people who you've just spent money with will pay some into your kids' college fund.

Originally Posted by ts01

If this was directed at my uPromise post it misses the mark. Whether your own money should go to paying down debt or directly investing in a college fund is not the point; this is about other peoples' money. In the uPromise program, participating retailers, airlines, groceries, gas stations, restaurants, etc. kick back a percentage of your purchase to your kids' college fund as a promotion; and the uPromise credit card also kicks back a percentage. Doesn't add to what you're already spending; it's just that the other people who you've just spent money with will pay some into your kids' college fund.

No, my post was more directed at Commonlaw. I've seen too many parents go crazy on the 'College Savings Plan' and miss the fact they're making minimum payments on their credit card.

Not sure if this was covered, but I hate having to match sippy cups with their tops. stick to one size and one brand.

Originally Posted by DJSapp

At current interest rates, you'd be much better off paying down debt than packing it into college savings accounts. Why on earth would you pump money into a 3% savings account instead of cutting down a 5% car loan, or 8% student loan? Take advantage of anything you can do pre-tax, but beyond that interest rates are so shitty, that $10,000 put away today will yield $16k in 17 years. 6k in 17 years barely keeps up with inflation. In 17 years with everything paid off, 20k tuition doesn't look all that bad anymore.

Get out of debt first and stay out. Open the account and let the grandparents send cash, but I wouldn't worry about it until you're debt free, or savings plan rates are greater than your loan rates.

I agree about being debt free in general (although you don't exclude mortgage debt, which is a different animal). I think the proper advice is not just "always pay down debt first" but rather consider doing that, ie consider the rate of return via investing versus paying down current debt. Credit card debt is almost always high interest relatively speaking, but my student loan is under 3%; there's very little point in paying that off before investing. And investing in a savings account is silly anyhow, one can surely get a better long term return than 3%. Fairly conservative funds are still getting 5%+, if not higher. I have my money split between an index fund (with 1 yr, 3 yr, 5 yr, and 10 yr returns all 6% or higher) and an income fund (with 1 yr, 3 yr, 5 yr, and 10 yr returns all 5.5% or higher)

FWIW, I don't have a college savings account per se, I have a Roth IRA I am using (I had a little money in it before baby, but now think of it as a college savings fund). I'll be 60 when my kid is in college, so it makes sense for me.

I hear ya DJ, but I would rather have other people's money earning meager interest than have another plastic mailbox toy. I will be more judicious with my money.

Marketing strategy:

All donations will be aggregated for college. If my daughter decides to hit the pole instead of an institution of higher learning, pro rata shares, with interest, will be returned in 18 years sans a small timeshare maintenance fee handling charge.

Originally Posted by commonlaw

Marketing strategy:

All donations will be aggregated for college. If my daughter decides to hit the pole instead of an institution of higher learning, pro rata shares, with interest, will be returned in 18 years sans a small timeshare maintenance fee handling charge.

I love it! Though it may encourage your friends to provide suspect advice regarding your daughter's career choice.

Originally Posted by hutash

Skis, ya can't start 'em too young.

+1 on the rocker. Get as much stuff for friends second hand, and don't obsess of safety. If a friend has a good crib, score it. The one thing I would buy is a good car seat/carrier. Those things change rapidly, and every year seem safer and safer (this is one place to obsess on safety.)

Get/barrow a travel crib, this makes life surprisingly easy.

Don't buy any clothes, and don't take the tags off of anything given to you. Take them all back, for the first 6 months the lid will never be out of PJs, unless it's hot and he is sport just the pampers. Laeit(sp?) gowns are the best, the ones with no legs, just a draw string. Kids live in those.

Get him a college savings plan...never too early to start.

I dont have kids but the college savings plan (if you are diligent about it) will pretty much eliminate any chance of financial aid.

I would argue Roth IRA so that way if the kid is a fuckup you didnt piss all your cash away on nothing and you can use it as a super emergency fall back if shit goes down say in ten years and you need cash to keep a roof over the kids head. The IRA will keep your assets protected for the financial aid reason above and it gives you more security for whatever life throws at you. Yes you are giving up a couple percentage points, but you should make that up with the financial aid package you will hopefully receive as a result.

If you make enough already that you think financial aid is out the window already, then ignore this advice.

Originally Posted by AdironRider

I would argue Roth IRA so that way if the kid is a fuckup you didnt piss all your cash away on nothing and you can use it as a super emergency fall back if shit goes down say in ten years and you need cash to keep a roof over the kids head. The IRA will keep your assets protected for the financial aid reason above and it gives you more security for whatever life throws at you. Yes you are giving up a couple percentage points, but you should make that up with the financial aid package you will hopefully receive as a result.

I know this is obvious, but keep in mind this only works if you're gonna be over 60 when the kid enters college. Meaning you have to be early 40s when he/she's born.

Not that Roth IRAs aren't an excellent idea (particularly for us younger folk).

Originally Posted by ts01

Congrats xtrapickels on the twins. I've got a pair (now pushing 19) and there's never a dull moment.

In addition to immediate concerns, I know this seems crazy, but they WILL grow up. Way faster than you realize. And if they're going to get schooled then eventually a very key piece of baby tech = college money.

As with all money, the best kind to use is other people's. Want some? Sign up for upromise (http://www.upromise.com/welcome), set up a 529 plan, and use the upromise credit card as much as possible, for every conceivable expense. It'll add up and the sooner you start, the better.

Details of the upromise program are on the website -- basically, participating vendors kick back a percentage on every purchase, and the credit card kicks back an additional 1%, and the kickbacks are swept into a 529 education account.

Obviously there are other credit card reward programs but this one packs double / triple the punch of most, with vendor kickback in addition to the credit card kickback, and then you get the added benefit of tax-free earnings in the 529 plan. Sure it's nice to get free plane tickets or whatever on other cards, but when tuition bills roll in it's nice to have some savings to pay with.

I learned about this when my twins were twelve - paying their college bills now, and having just finished paying the older sister's tuition, I wish I'd known about twelve years earlier.

Awesome info-
I was looking into 529 vs. Bonds etc.
Thanks. I appreciate it.

Originally Posted by auvgeek

I know this is obvious, but keep in mind this only works if you're gonna be over 60 when the kid enters college. Meaning you have to be early 40s when he/she's born.

Not that Roth IRAs aren't an excellent idea (particularly for us younger folk).

Hence my you lose a couple percentage points. Principal is still tax free for withdrawals, and it protects your cash. You are effectively hoping for a larger financial aid package than you would provide in pure returns from the college savings plan.

Ahhhh, I misunderstood. Got it now. (I suspect it's more than "a couple" percentage points, but no need to argue about it.)

Originally Posted by auvgeek

I know this is obvious, but keep in mind this only works if you're gonna be over 60 when the kid enters college. Meaning you have to be early 40s when he/she's born.

Not that Roth IRAs aren't an excellent idea (particularly for us younger folk).

Actually, my understanding is that you need not be 60 when the kid enters college (BTW, isn't it 59 1/2, not 60?). You need to be that age by the kid's junior or senior year. Because if I understand correctly, you don't want to use that money in year one or 2, because it will then be counted as income for the kid on the FAFSA for year 3 or 4. Your best bet is to take out as much in loans as needed for the first 2-3 years, then use the Roth to pay for the last year and pay off what loans you took out. by then, it will be too late to screw up any financial aid.

And yeah, my kid was born when I was 43, so Roth works for me!

Of course, the best bet is to be a slavedriver and force your kid to work super hard and get scholarships.

Originally Posted by Danno

Of course, the best bet is to be a slavedriver and force your kid to work super hard and get scholarships.

Successful parenting: when you push your kids so hard they can afford their own therapists.

Originally Posted by Danno

Actually, my understanding is that you need not be 60 when the kid enters college (BTW, isn't it 59 1/2, not 60?). You need to be that age by the kid's junior or senior year. Because if I understand correctly, you don't want to use that money in year one or 2, because it will then be counted as income for the kid on the FAFSA for year 3 or 4. Your best bet is to take out as much in loans as needed for the first 2-3 years, then use the Roth to pay for the last year and pay off what loans you took out. by then, it will be too late to screw up any financial aid.

And yeah, my kid was born when I was 43, so Roth works for me!

Your talking for capital gains. Im talking initial principal withdrawals. Its a weird concept to think going for basically just what you put in with no return as a college fund, but the game of college finance doesn't operate like the real world.

The game is not for everyone, including high earners (or the trajectory is leading there) or high net worth individuals. But the way the college finance game is set up, its often better to give up any capital appreciation and go for the financial aid package than hope for the college savings plan to be a better deal.

The average financial aid package at my University (private, 44k a year when I graduated 5 years ago) was north of 21k per year. Ill admit, that was only among aid receiving students which was the minority of the student body, but thats some serious performance in a college savings account in a 18-22 year timeframe to be able to supplant that much of an aid package.

Not every kid is going to go to private school either, and you're gambling on a decent aid package, but for the average middle class family it can be a solid option. 80k in a college fund is pretty damn spectacular IMO.

Originally Posted by Danno

Of course, the best bet is to be a slavedriver and force your kid to work super hard and get scholarships.

That's what my parents did. No therapists yet...the hot female ones only exist in dreams, right?

AdironRider: That's a very interesting way to protect principal. Thanks for the info!

PS: yes, 59 1/2 is when you can start withdrawing, but I was being lazy.

Haven't searched yet, and there may be a thread dedicated to it already, but how does one find a "great" nanny/baby-sitter/au pair? I used to work at home a few days a week and the wife the other days. Without getting into unnecessary details, neither of us can be at home as much and we need hired help. I will pay whatever top dollar is, as long as top dollar gets me someone who cares about the kid as much as a human can for something that didnt come out of them. As important, that they stimulate and challenge her. When I am with her, I play logic games, sing and speak to her and my wife speaks another language all the time. There is no way to capture the same dedication, but if there were, how? Best websites?

http://www.sittercity.com

We haven't hired a sitter yet, but we're thinking about trying this site out. Only downside is you can't sort the sitters by age and bra size. That seemed to bother me more than my wife.

Originally Posted by commonlaw

Haven't searched yet, and there may be a thread dedicated to it already, but how does one find a "great" nanny/baby-sitter/au pair? I used to work at home a few days a week and the wife the other days. Without getting into unnecessary details, neither of us can be at home as much and we need hired help. I will pay whatever top dollar is, as long as top dollar gets me someone who cares about the kid as much as a human can for something that didnt come out of them. As important, that they stimulate and challenge her. When I am with her, I play logic games, sing and speak to her and my wife speaks another language all the time. There is no way to capture the same dedication, but if there were, how? Best websites?

I know pegleg used a site, maybe care.com? I haven't seen him post in this thread recently, so maybe a pm will confirm that.

We went the daycare center route, the county (I think it was the county, maybe it was the city) had some resource guide that gave us a list of all approved daycares as well as questions to ask, things to look for, etc. We went and visited a bunch and found one we really like. They love our kid, and what more can you ask for? They also do way more than just provide "day care", there's a recognition that it is "school" no matter the age; what they learn and how they learn varies with age, of course, but I like a place that recognizes that 8 hours for a 6 month old should be packed with as much learning (age-appropriate) as a 6 year old. I also like getting over the hump of illnesses early, the first year of day care is brutal for that (both for the kiddo and us) but our doc said you can get it over now or deal with it when they go to school for the first time.

There are advantages and disadvantages to both, but I prefer letting professionals I trust deal with my child.

Originally Posted by Danno

...There are advantages and disadvantages to both, but I prefer letting professionals I trust deal with my child.

x2 and I like the multiple eyes that only a daycare/school setting can provide. Sure, nannies/aupairs are great but what happens when shit hits the fan? (though to be fair I've never heard of anyone I know having problems)

Originally Posted by jfost

x2 and I like the multiple eyes that only a daycare/school setting can provide. Sure, nannies/aupairs are great but what happens when shit hits the fan? (though to be fair I've never heard of anyone I know having problems)

To expound further. If you have a clear parenting philosophy and want to be able to direct exactly how your child is taught and raised, then perhaps the au pair/nanny route is best. If, however, you're winging it, just trying to do the best you can day by day, then a day care may be better. I, for one, do not relish the responsibility of interviewing someone to care for my child. I prefer knowing that the program director of the day care is screening applicants and their qualifications, and knows what questions to ask. I also like that the center has numerous controls to ensure that the children are safe, that there are protocols to deal with things, etc. I want those procedures and such, but wouldn't want to be the one writing them up.

Also, the two options differ in how they handle illness and absences.
au pair/nanny: if the caregiver is sick, you're forced to cover. If the caregiver quits, you're forced to cover. but if your kid is sick, the caregiver can take care of her.
center: if a caregiver is sick, no problem, the center will cover that absence. If a caregiver quits, no problem, the center will cover that absence. but if your kid is sick, you have to keep the kid at home, and must stay home with her.