Christmas time is here. This time last year I would be busy with church choir practices. I feel something's missing this year as I realised churches here mostly do not have choirs. I remember whenever we sing a new piece each month, I would always struggle with the notes as most of them are not familiar songs to me. And I was always amazed at how some of the choir members would recognize the song and I marvelled when Pak Lin (choir conductor) told the background behind song(the composer, why it was created, etc etc).
Yesterday, I was reading ODB and the bible phrase is taken from Isaiah 9:1-7 and the main bible verse is taken from Job 19:25" I know that my Redeemer lives". Well, I soon began singing a song "I know that my redeemer liveth" (Handel version) which was a song I would never have heard if I had not joined choir before. As I began reading the Isaiah chapter, I just realised I quoted one of the verses for my Christmas card this year:
For to us a child is born,
to us a son is given,
and the government will be on his shoulders.
And he will be called
Wonderful Counselor,
Mighty God,
Everlasting Father,
Prince of Peace
And I remember us trying to sing the song "For Unto Us a Child is Born" but we didn't proceed with it as it is a difficult piece requiring a minimum number of SATB (Christmas is the time when the choir members go back to Indonesia for holiday so there were only a few of us left). Also, it requires a strong choir to sing the song and we were not one hehehe..
So this Christmas we went to the mall and were surprised to see Santa Clause taking picture with kids (for a fee) which I don't remember we have one back in Singapore (or I seldom go to the mall during that period coz of choir practices). My friends brought us to Sutherland to see nice houses decorated in Christmas lightings, and I thought it was all only in the Christmas movies I have seen on TV hahahaa...
My MIL watched the Christmas Carols in domain on TV and she said "So sad that your father would miss this". Oh well, there would be many Christmas-es ahead for him to enjoy here. I think this feels like Chinese New Year in Singapore, where people would go out and shop and shops/offices close down during the period and time would be spent with family.
As for us, it would be filled with gatherings with friends (YumCha, children's birthday party and Boxing day dinner with Singaporean friends). Looking forward to all of them...
Now, I just enjoy the Choral songs from youtube so I don't miss my choir and church so much :)
Saturday, December 20, 2008
Saturday, December 6, 2008
I'll walk with God
This morning I was glancing at my homepage of internet page, which is the Our Daily Bread page. So I read the article, skipping the bible reading (very bad of me) . Thee bible phrase was "Enoch walked with God; and he was not, for God took him. —Genesis 5:24" and the story was about walking with God. I was reading it and humming a song I sang in choir "I'll walk with God". I miss choir!!
I look it up in the internet for the lyrics, and they are beautiful:
I'll walk with God
I'll walk with God from this day on.
His helping hand I'll lean upon.
This is my prayer, my humble plea,
May the Lord be ever with me.
There is no death, tho' eyes grow dim.
There is no fear when I'm near to Him.
I'll lean on Him forever
And He'll forsake me never.
He will not fail me
As long as my faith is strong,
Whatever road I may walk along.
I'll walk with God, I'll take His hand.
I'll talk with God, He'll understand.
I'll pray to Him, each day to Him
And He'll hear the words that I say.
His hand will guide my throne and rod
And I'll never walk alone
While I walk with God.
Not sure how to upload video from Youtube, if it's even possible but I found several videos by different singers for the song, the original one probably from Mario Lanza though I prefer Jon Christos' or Russell Watson only because it's less opera-like. I think I remember Pak Lin singing this song at one of our Eklesia gathering or when we were practising this song.
It's a good song to memorize (I have yet to), it will help me whenever I feel lost or down or sick. I think the song was sung at a funeral in the movie "Student Prince". Hubby, if you're reading this, I want to request this song at my funeral.
Again, I miss Eklesia :)
I look it up in the internet for the lyrics, and they are beautiful:
I'll walk with God
I'll walk with God from this day on.
His helping hand I'll lean upon.
This is my prayer, my humble plea,
May the Lord be ever with me.
There is no death, tho' eyes grow dim.
There is no fear when I'm near to Him.
I'll lean on Him forever
And He'll forsake me never.
He will not fail me
As long as my faith is strong,
Whatever road I may walk along.
I'll walk with God, I'll take His hand.
I'll talk with God, He'll understand.
I'll pray to Him, each day to Him
And He'll hear the words that I say.
His hand will guide my throne and rod
And I'll never walk alone
While I walk with God.
Not sure how to upload video from Youtube, if it's even possible but I found several videos by different singers for the song, the original one probably from Mario Lanza though I prefer Jon Christos' or Russell Watson only because it's less opera-like. I think I remember Pak Lin singing this song at one of our Eklesia gathering or when we were practising this song.
It's a good song to memorize (I have yet to), it will help me whenever I feel lost or down or sick. I think the song was sung at a funeral in the movie "Student Prince". Hubby, if you're reading this, I want to request this song at my funeral.
Again, I miss Eklesia :)
Tuesday, November 18, 2008
New contract role
Since my last entry, I was just into my 2 weeks of break and I got a call from my recruitment agent that the interview I had earlier was successful but pending approval from head office with regards to head count. I was asked if I could start the next day if all went well, so I said ok.
It's been 2 weeks now with my new role, another 6-month contract til May09. The role was a permanent role previously, but due to pending merger there is a headcount freeze. Talking about headcount freeze, my ex-employer (DBS) announced it's going to retrench 900 staff. One of church friends sms-ed me about it (I seldom read news nowadays) and she said I was lucky that I left DBS. Well, now i'm in another bank that is bought over by another bank so I'm not sure if there'll be any job cuts later.
I really enjoyed this role as I'm going back to the role I did in Singapore. The people are nice, friendly, and they joke a lot (though I understand only half of what they are saying most of the time). There are fruits in the kitchen 3 times a week and kitchen is well stocked with variety of tea (I usually have 3 different cup of tea every day). One minus point is that the building is about 10-minute walk from train station, but it is a good morning walk I guess.
For now, I need to learn how to drive and plan to sit for the written exam by end of the month. Hopefully by December, I could start learning how to drive a car. For the first half of next year, I would be busy with studying for an exam (in June, 3rd attempt) and I may start on IVF program. Hopefully IVF will affect my study plan coz I really need to pass this exam. Each year I fail, I would need to register for next year's exam and they'd send me another pack of 6 textbook for reading! I have 2 sets of books already (2008 and 2009).
It's been 2 weeks now with my new role, another 6-month contract til May09. The role was a permanent role previously, but due to pending merger there is a headcount freeze. Talking about headcount freeze, my ex-employer (DBS) announced it's going to retrench 900 staff. One of church friends sms-ed me about it (I seldom read news nowadays) and she said I was lucky that I left DBS. Well, now i'm in another bank that is bought over by another bank so I'm not sure if there'll be any job cuts later.
I really enjoyed this role as I'm going back to the role I did in Singapore. The people are nice, friendly, and they joke a lot (though I understand only half of what they are saying most of the time). There are fruits in the kitchen 3 times a week and kitchen is well stocked with variety of tea (I usually have 3 different cup of tea every day). One minus point is that the building is about 10-minute walk from train station, but it is a good morning walk I guess.
For now, I need to learn how to drive and plan to sit for the written exam by end of the month. Hopefully by December, I could start learning how to drive a car. For the first half of next year, I would be busy with studying for an exam (in June, 3rd attempt) and I may start on IVF program. Hopefully IVF will affect my study plan coz I really need to pass this exam. Each year I fail, I would need to register for next year's exam and they'd send me another pack of 6 textbook for reading! I have 2 sets of books already (2008 and 2009).
Monday, October 27, 2008
Relaxing at home
It's been a week since I left my contract job and so far I've enjoyed every minute at home. Except for the last few days before an interview. As usual, I was very nervous and started reading my CFA textbook to prepare myself for the technical questions.
Also, I have started playing Wii Fit as an attempt in losing weight. I think I have ballooned in the past 2 years that even my cousins couldn't recognize me from Facebook photos. My PIL who has encouraged me to put on weight since my wedding day has admitted that my stomach is getting too big hehehe..
As I don't really enjoyed exercising, it's quite hard to be consistent in my morning jog. I was determined to watch "Lust, Caution" at 6am this morning and was still watching it when my FIL left for jogging. And, I was still watching it when he had come back from his run and when my MIL went for her power-walk.
The weather is getting warm lately and it is actually a good weather to swim. Our apartments' pool was directly behind my unit, but I made excuses that the pool looked dirty with leaves. Hubby and I promised that we would start cycling when he's back from work but so far we only managed to go for 2 evening walks and a walk to Woolies yesterday.
Also, I should actually start studying for my level 2 CFA exams (June-2009). Well, perhaps later..
Aud is going down and down... and I'm trying to recall if anybody owes me money in Singapore. And now the deposit rate is going down, I would start looking for other deposit account once Bankwest 8.10% stops in Jan-09. I was thinking of putting some money to new NAB U-Bank account but, alas, the rate has dropped from 8.5% to 8% for 3-mth term deposit.
We are thinking of buying a house of our own but not sure of what kind of house (house, townhouse, flat), the size (2-bed, 3-bed) and location. Personally I prefer buying a less-than-ideal house first, so we could upgrade to an 'ideal' one later. So we could settle for a cheap 2-bedroom apartment somwhere near train station 15-20 km away from city, and try to repay the loan as soon as we can (thus reducing the interest expense of the loan). But 2-bedroom means we would not have spare room for guests.....
The irony about not working is that .. now I have time to pursue my hobby (dancing-ballroom/latin) but I am reluctant to spend the money. But once I start working, I am more willing to spend, but no time to do it (most of the classes are on weekdays). Maybe I would keep this hobby with my knitting project for retirement.
Talking about retirement, I have been asking my girlfriends to start planning of what type of retirement village we should go to. I think it will be more fun to retire with 'old' friends. We don't have to waste time getting to know new people, we could play cards together and we could reminisce old times. One of my girlfiend suggested that instead of going to retirement village, we could buy a large land and build our houses next to each other. Sounds good.... only that it's hard to find big land in Sydney and to agree on good location for 2 families. Let's see how it goes...
Also, I have started playing Wii Fit as an attempt in losing weight. I think I have ballooned in the past 2 years that even my cousins couldn't recognize me from Facebook photos. My PIL who has encouraged me to put on weight since my wedding day has admitted that my stomach is getting too big hehehe..
As I don't really enjoyed exercising, it's quite hard to be consistent in my morning jog. I was determined to watch "Lust, Caution" at 6am this morning and was still watching it when my FIL left for jogging. And, I was still watching it when he had come back from his run and when my MIL went for her power-walk.
The weather is getting warm lately and it is actually a good weather to swim. Our apartments' pool was directly behind my unit, but I made excuses that the pool looked dirty with leaves. Hubby and I promised that we would start cycling when he's back from work but so far we only managed to go for 2 evening walks and a walk to Woolies yesterday.
Also, I should actually start studying for my level 2 CFA exams (June-2009). Well, perhaps later..
Aud is going down and down... and I'm trying to recall if anybody owes me money in Singapore. And now the deposit rate is going down, I would start looking for other deposit account once Bankwest 8.10% stops in Jan-09. I was thinking of putting some money to new NAB U-Bank account but, alas, the rate has dropped from 8.5% to 8% for 3-mth term deposit.
We are thinking of buying a house of our own but not sure of what kind of house (house, townhouse, flat), the size (2-bed, 3-bed) and location. Personally I prefer buying a less-than-ideal house first, so we could upgrade to an 'ideal' one later. So we could settle for a cheap 2-bedroom apartment somwhere near train station 15-20 km away from city, and try to repay the loan as soon as we can (thus reducing the interest expense of the loan). But 2-bedroom means we would not have spare room for guests.....
The irony about not working is that .. now I have time to pursue my hobby (dancing-ballroom/latin) but I am reluctant to spend the money. But once I start working, I am more willing to spend, but no time to do it (most of the classes are on weekdays). Maybe I would keep this hobby with my knitting project for retirement.
Talking about retirement, I have been asking my girlfriends to start planning of what type of retirement village we should go to. I think it will be more fun to retire with 'old' friends. We don't have to waste time getting to know new people, we could play cards together and we could reminisce old times. One of my girlfiend suggested that instead of going to retirement village, we could buy a large land and build our houses next to each other. Sounds good.... only that it's hard to find big land in Sydney and to agree on good location for 2 families. Let's see how it goes...
So You Want Your Kids to Go to Harvard?
by Suze Orman
Saving for your children's college education is the last thing you should do.
Now that I have your attention, let me explain.
One of the biggest mistakes I see parents make is to put saving for college ahead of all their other financial goals. Granted, it is a loving and well-intentioned mistake. But it is still a mistake.
You need to listen up here: You must take care of your other financial needs before you save one penny for your kids' college educations. That means getting rid of your high-rate credit card debt, contributing enough to your 401(k) to get the maximum company match, saving up for a home if you don't yet own one, funding a Roth every year if you meet the income eligibility requirement (under $95,000 for a single tax filer, $150,000 for married couples filing a joint return), and saving up an eight-month emergency cash fund. And when all of that is done, go back and max out on your 401(k) contribution and save a bit more for retirement in a regular taxable account.
All of that comes before you are to even think about a college fund.
Now, I know this runs against the conventional wisdom these days. But the harsh reality, my friends, is that no one is going to help you out with paying for your retirement -- while you and your kids can get plenty of financial help for their college costs. Just look around you. There are tons of student loans available for both kids and their parents. But I do not know of a single loan available to help you afford your retirement.
So that's why you need to focus on taking care of yourself first. You need to build your financial security before building a college fund.Get Over the Guilt Trip
I know that's not an easy thing for a lot of you to hear. Your kids mean everything to you, and so you want to give them everything. Including money for college. In a perfect world I would agree with you. But life ain't perfect, right? So you need to step back for a second and be a rational, rather than an emotional, parent. If you ignore all your financial needs for the sake of building up a college fund, you will screw yourself over, and possibly your kids as well.
This becomes clear if you think things through for a minute. Say that instead of building up your retirement assets, or paying down your mortgage, you focus on the college fund. So the kid goes off to school on your dime. Great, you think. But now let's jump forward another 10 or 20 years. You've reached retirement age -- or worse, have been pushed out of your job earlier than expected. The problem is, you discover you can't quite afford to retire. You simply haven't been able to save up enough. Why? Because 10 or 20 years ago, instead of funding a Roth IRA, contributing enough to your 401(k) to get the max company match, and also saving on your own in regular taxable accounts, you poured all your money into the kid's college fund.
And that has put you in a financial pickle. Your kid got a "free ride" through college on your financial back, but now you're straining to support yourself. So what do you do? You start living off of credit cards and running up dangerous debt; or you take out a home equity line that you can't afford to pay back. You're too proud to tell your kids what's going on, but trust me, they will eventually figure it out. I constantly hear from young adults who are torn up about their parents' financial problems. And they all tell me the same thing: "Suze, I feel so guilty that they spent all that money on my college education, when they should have been saving up for themselves. And now I am worried about how I can help them. If only they had been straight with me back then, I could have gotten student loans and worked my way through school."
If only.
Please don't allow yourself, and your kid, to fall into that trap. Focus on getting your debt under control, saving for retirement, and creating an emergency cash fund. Knock those big-ticket items off of your To Do list and you'll be sitting pretty when it's time to retire. That'bs by far the best thing you can do for your children.And I just want to take a sec right here to make sure you don't make the biggest of parental blunders: you are to never ever take out a home equity line of credit or a home equity loan to pay for college! Consider this scenario: You tap the equity in your home and five years later you are laid off. You are struggling to keep up with the payments and thus at risk of losing your home. Meanwhile, your kid is just out of college and lucky to be making $30,000. So all she feels is guilt over the situation. I have seen this happen over and over. And again, what I hear from the kids is that they wish their parents had just been straight with them; they realize it would have been so much easier for everyone if they'd taken out student loans to finance school.
When There's Money to Spare
Now I know that many of you have a solid grip on your financial life and are in a position to save up some money for your kid's college education. Great. But please check out my advice in the next section of this article: Tough Love: Letting Your Child Pay Their Own Way on why and how your children should participate in financing their college education anyway. Because unless you are 100 percent sure you can finance 100 percent of the cost without breaking a sweat, you really do need to involve your kids in preparing for the cost of college.
The first rule of saving for college is to size up your time frame. If your child is just a few years away from starting school, you simply don't have time to invest in stocks or stock funds. You are going to need to use that money in a few years, so you need to be positive the money will be there for you then. Over short periods of time -- say, under five years -- stocks are far too risky. Just look at the past five years. If you invested in 2000 and pulled your money out today, chances are pretty good you'd be under water.
Stocks and stock funds are only for long-term investments; if you have a kid under the age of 10 or so, then you can go this route. But if you have a 15-year old, my advice is to stick with very low-risk savings vehicles such as short-term bonds, CDs, or money market accounts. I know you aren't going to make much -- but you will be sure that the money is there when you need to write the first tuition check. By the way, check out the excellent American Dream Savings Account offered by EmigrantDirect; right now, you are guaranteed a 3.25 percent yield, which is a terrific rate for a guaranteed investment.
When it comes to saving up for college you have a variety of options. And you need to choose wisely, because some types of college savings accounts will have a bigger impact than others on how much financial aid you and your kid qualify for. You want to avoid the investments that can count against you big-time when financial aid is figured out. Also, I need to point out that some of the key tax breaks tied to some college accounts are scheduled to expire after 2010, unless Congress extends the current law. There's really no way to guess what might happen with this. One would hope Congress can act to help Americans save for college, but when we're staring at such big federal deficits, any tax break is going to face a lot of scrutiny.
So with that in mind I want to begin by suggesting a great college savings tool you might not have thought of: a Roth IRA.
If you are married and file a joint tax return with income under $150,000 (or are a single filer with income below $95,000), you can invest a full $4,000 a year in a Roth. True, you get no tax break on your initial investment, but your money grows tax-deferred. Here's the kicker, though: not a penny of your Roth assets are considered by the financial aid wonks in figuring out your kid's eligibility for loans.
As you have heard me say before, the neat thing about a Roth is that your contributions -- not the earnings, but the money you yourself invest in the Roth -- are always under your control 24/7. You can take the money out at any time and not owe a penny in penalty or tax. So let's say you invest $4,000 a year for the next 15 years. That's $60,000 you'll have saved up. And if you want to raid the earnings too, the IRS gives you a break if you are under 59 1/2 years old. Remember, typically when you try and take earnings out of an IRA before you are 59 1/2, you get hit with a 10 percent penalty. If the withdrawal is to pay for school costs, however, the penalty is waived. The only catch to keep in mind is that you will indeed have to pay income tax on any earnings that are withdrawn before you are 59 1/2.
Another advantage to the Roth is that if your child manages to qualify for a ton of scholarships -- or decides to skip college -- you can just leave all that money in your Roth and be that much better off when it's time to retire.
You can also check out opening a Coverdell Education Savings Account (these used to be called Education IRAs). With a Coverdell you can invest $2,000 a year for each child. Like a Roth IRA, you will not get any initial tax deduction on your contribution; but your money grows tax-free, and if you use the money for school costs it won't be hit with Federal tax. And I mean any school cost, not just college. Coverdells can be used to pay for any schooling prior to college, too. Individuals with income below $95,000, and married couples who file a joint tax return with adjusted gross income below $190,000, are eligible to contribute the full $2,000 a year to a Coverdell. A maximum of 5.6 percent of Coverdell assets are factored into financial aid eligibility formulas, so that's not too big a hit.
What's known as a 529 College Savings Plan is also a good way to save and not throw off your financial aid chances. Like a Coverdell, just 5.6 of your assets in a 529 Savings Plan count against you in financial aid calculations. There are no income eligibility limits with a 529, and you can invest much more than is allowed with a Coverdell. Your money grows tax-deferred and will not be hit with federal tax when it is used for college expenses. But unless Congress acts to extend this tax break, it will expire after 2010. And do not confuse a 529 Savings Plan with a 529 Pre-Paid Plan. The problem with pre-paid plans is that every dollar you have saved in a pre-paid will reduce your financial aid by a dollar. So if you think you will be applying for school loans, you probably want to steer clear of pre-paids. You can learn more about 529s at Yahoo's College Savings Center, and you can also check out a new breed of 529s where your savings can be applied to future tuition costs at 240 private schools, at http://www.independent529.org/.
Tough Love - Letting Your Children Pay Their Own Way
Talk about a rock and a hard place. The cost of college keeps increasing well above the inflation rate, and yet at the same time you know you need to be socking away more money for your retirement: not only are we living longer, but it's also a slam dunk that if you are in your 30s or 40s today your future Social Security benefits will be reduced by the time you get around to retiring.
So please don't feel any shame if figuring out how to send your kids to college keeps you up and sweating bullets at night.
You need to rethink your approach. College is not your sole responsibility. You need to make this a true family project and have your child contribute to their own education.
This is not a sign of parental failure. Stop thinking that way! It's actually a sign of parental wisdom. You are not going to screw up your financial future by paying the entire college bill. That is a great example to set for your kids.
Now let's talk about how to talk to your kids about this.
The effectiveness of your chat depends on timing and tone as much as anything else. There are two key "don'ts" here. Don't wait until they are 17. And don't start out with "I wish I could do more for you, but..."
You need to let your kids in on the game plan when they are young teenagers so they have the time to prepare -- and to really help their cause. Tell a 13-year-old that they will be responsible for a portion of their college costs and you have the ability to motivate the child to a) do really well in high school -- both in and out of the classroom -- to boost their chances for scholarships and grants; b) get a part-time job to save up for some school costs; and c) mentally prepare for being asked to take on student loans.
You need to deliver this message with strength, not weakness. The correct tone is: "We are going to save as much as possible for your college education, but we're also going to need you to pitch in too. Here's what we are saving for you, so let's talk about what you can do to help." Notice that nowhere did you say, "Gee, we're really sorry about this..."
I realize your child may not be jumping for joy at the news, but let's get real here. You are not punishing your child. And you are insuring that down the line you are not going to be a financial burden to them. I don't expect a 13-year-old to fully comprehend that right now -- and wouldn't recommend even bringing it up -- but, trust me, when your kid becomes an adult they are going to appreciate completely what you have done for them. In addition to a college degree with no strings attached, you'll have given them an empowering example of financial responsibility: yours and theirs both.
Saving for your children's college education is the last thing you should do.
Now that I have your attention, let me explain.
One of the biggest mistakes I see parents make is to put saving for college ahead of all their other financial goals. Granted, it is a loving and well-intentioned mistake. But it is still a mistake.
You need to listen up here: You must take care of your other financial needs before you save one penny for your kids' college educations. That means getting rid of your high-rate credit card debt, contributing enough to your 401(k) to get the maximum company match, saving up for a home if you don't yet own one, funding a Roth every year if you meet the income eligibility requirement (under $95,000 for a single tax filer, $150,000 for married couples filing a joint return), and saving up an eight-month emergency cash fund. And when all of that is done, go back and max out on your 401(k) contribution and save a bit more for retirement in a regular taxable account.
All of that comes before you are to even think about a college fund.
Now, I know this runs against the conventional wisdom these days. But the harsh reality, my friends, is that no one is going to help you out with paying for your retirement -- while you and your kids can get plenty of financial help for their college costs. Just look around you. There are tons of student loans available for both kids and their parents. But I do not know of a single loan available to help you afford your retirement.
So that's why you need to focus on taking care of yourself first. You need to build your financial security before building a college fund.Get Over the Guilt Trip
I know that's not an easy thing for a lot of you to hear. Your kids mean everything to you, and so you want to give them everything. Including money for college. In a perfect world I would agree with you. But life ain't perfect, right? So you need to step back for a second and be a rational, rather than an emotional, parent. If you ignore all your financial needs for the sake of building up a college fund, you will screw yourself over, and possibly your kids as well.
This becomes clear if you think things through for a minute. Say that instead of building up your retirement assets, or paying down your mortgage, you focus on the college fund. So the kid goes off to school on your dime. Great, you think. But now let's jump forward another 10 or 20 years. You've reached retirement age -- or worse, have been pushed out of your job earlier than expected. The problem is, you discover you can't quite afford to retire. You simply haven't been able to save up enough. Why? Because 10 or 20 years ago, instead of funding a Roth IRA, contributing enough to your 401(k) to get the max company match, and also saving on your own in regular taxable accounts, you poured all your money into the kid's college fund.
And that has put you in a financial pickle. Your kid got a "free ride" through college on your financial back, but now you're straining to support yourself. So what do you do? You start living off of credit cards and running up dangerous debt; or you take out a home equity line that you can't afford to pay back. You're too proud to tell your kids what's going on, but trust me, they will eventually figure it out. I constantly hear from young adults who are torn up about their parents' financial problems. And they all tell me the same thing: "Suze, I feel so guilty that they spent all that money on my college education, when they should have been saving up for themselves. And now I am worried about how I can help them. If only they had been straight with me back then, I could have gotten student loans and worked my way through school."
If only.
Please don't allow yourself, and your kid, to fall into that trap. Focus on getting your debt under control, saving for retirement, and creating an emergency cash fund. Knock those big-ticket items off of your To Do list and you'll be sitting pretty when it's time to retire. That'bs by far the best thing you can do for your children.And I just want to take a sec right here to make sure you don't make the biggest of parental blunders: you are to never ever take out a home equity line of credit or a home equity loan to pay for college! Consider this scenario: You tap the equity in your home and five years later you are laid off. You are struggling to keep up with the payments and thus at risk of losing your home. Meanwhile, your kid is just out of college and lucky to be making $30,000. So all she feels is guilt over the situation. I have seen this happen over and over. And again, what I hear from the kids is that they wish their parents had just been straight with them; they realize it would have been so much easier for everyone if they'd taken out student loans to finance school.
When There's Money to Spare
Now I know that many of you have a solid grip on your financial life and are in a position to save up some money for your kid's college education. Great. But please check out my advice in the next section of this article: Tough Love: Letting Your Child Pay Their Own Way on why and how your children should participate in financing their college education anyway. Because unless you are 100 percent sure you can finance 100 percent of the cost without breaking a sweat, you really do need to involve your kids in preparing for the cost of college.
The first rule of saving for college is to size up your time frame. If your child is just a few years away from starting school, you simply don't have time to invest in stocks or stock funds. You are going to need to use that money in a few years, so you need to be positive the money will be there for you then. Over short periods of time -- say, under five years -- stocks are far too risky. Just look at the past five years. If you invested in 2000 and pulled your money out today, chances are pretty good you'd be under water.
Stocks and stock funds are only for long-term investments; if you have a kid under the age of 10 or so, then you can go this route. But if you have a 15-year old, my advice is to stick with very low-risk savings vehicles such as short-term bonds, CDs, or money market accounts. I know you aren't going to make much -- but you will be sure that the money is there when you need to write the first tuition check. By the way, check out the excellent American Dream Savings Account offered by EmigrantDirect; right now, you are guaranteed a 3.25 percent yield, which is a terrific rate for a guaranteed investment.
When it comes to saving up for college you have a variety of options. And you need to choose wisely, because some types of college savings accounts will have a bigger impact than others on how much financial aid you and your kid qualify for. You want to avoid the investments that can count against you big-time when financial aid is figured out. Also, I need to point out that some of the key tax breaks tied to some college accounts are scheduled to expire after 2010, unless Congress extends the current law. There's really no way to guess what might happen with this. One would hope Congress can act to help Americans save for college, but when we're staring at such big federal deficits, any tax break is going to face a lot of scrutiny.
So with that in mind I want to begin by suggesting a great college savings tool you might not have thought of: a Roth IRA.
If you are married and file a joint tax return with income under $150,000 (or are a single filer with income below $95,000), you can invest a full $4,000 a year in a Roth. True, you get no tax break on your initial investment, but your money grows tax-deferred. Here's the kicker, though: not a penny of your Roth assets are considered by the financial aid wonks in figuring out your kid's eligibility for loans.
As you have heard me say before, the neat thing about a Roth is that your contributions -- not the earnings, but the money you yourself invest in the Roth -- are always under your control 24/7. You can take the money out at any time and not owe a penny in penalty or tax. So let's say you invest $4,000 a year for the next 15 years. That's $60,000 you'll have saved up. And if you want to raid the earnings too, the IRS gives you a break if you are under 59 1/2 years old. Remember, typically when you try and take earnings out of an IRA before you are 59 1/2, you get hit with a 10 percent penalty. If the withdrawal is to pay for school costs, however, the penalty is waived. The only catch to keep in mind is that you will indeed have to pay income tax on any earnings that are withdrawn before you are 59 1/2.
Another advantage to the Roth is that if your child manages to qualify for a ton of scholarships -- or decides to skip college -- you can just leave all that money in your Roth and be that much better off when it's time to retire.
You can also check out opening a Coverdell Education Savings Account (these used to be called Education IRAs). With a Coverdell you can invest $2,000 a year for each child. Like a Roth IRA, you will not get any initial tax deduction on your contribution; but your money grows tax-free, and if you use the money for school costs it won't be hit with Federal tax. And I mean any school cost, not just college. Coverdells can be used to pay for any schooling prior to college, too. Individuals with income below $95,000, and married couples who file a joint tax return with adjusted gross income below $190,000, are eligible to contribute the full $2,000 a year to a Coverdell. A maximum of 5.6 percent of Coverdell assets are factored into financial aid eligibility formulas, so that's not too big a hit.
What's known as a 529 College Savings Plan is also a good way to save and not throw off your financial aid chances. Like a Coverdell, just 5.6 of your assets in a 529 Savings Plan count against you in financial aid calculations. There are no income eligibility limits with a 529, and you can invest much more than is allowed with a Coverdell. Your money grows tax-deferred and will not be hit with federal tax when it is used for college expenses. But unless Congress acts to extend this tax break, it will expire after 2010. And do not confuse a 529 Savings Plan with a 529 Pre-Paid Plan. The problem with pre-paid plans is that every dollar you have saved in a pre-paid will reduce your financial aid by a dollar. So if you think you will be applying for school loans, you probably want to steer clear of pre-paids. You can learn more about 529s at Yahoo's College Savings Center, and you can also check out a new breed of 529s where your savings can be applied to future tuition costs at 240 private schools, at http://www.independent529.org/.
Tough Love - Letting Your Children Pay Their Own Way
Talk about a rock and a hard place. The cost of college keeps increasing well above the inflation rate, and yet at the same time you know you need to be socking away more money for your retirement: not only are we living longer, but it's also a slam dunk that if you are in your 30s or 40s today your future Social Security benefits will be reduced by the time you get around to retiring.
So please don't feel any shame if figuring out how to send your kids to college keeps you up and sweating bullets at night.
You need to rethink your approach. College is not your sole responsibility. You need to make this a true family project and have your child contribute to their own education.
This is not a sign of parental failure. Stop thinking that way! It's actually a sign of parental wisdom. You are not going to screw up your financial future by paying the entire college bill. That is a great example to set for your kids.
Now let's talk about how to talk to your kids about this.
The effectiveness of your chat depends on timing and tone as much as anything else. There are two key "don'ts" here. Don't wait until they are 17. And don't start out with "I wish I could do more for you, but..."
You need to let your kids in on the game plan when they are young teenagers so they have the time to prepare -- and to really help their cause. Tell a 13-year-old that they will be responsible for a portion of their college costs and you have the ability to motivate the child to a) do really well in high school -- both in and out of the classroom -- to boost their chances for scholarships and grants; b) get a part-time job to save up for some school costs; and c) mentally prepare for being asked to take on student loans.
You need to deliver this message with strength, not weakness. The correct tone is: "We are going to save as much as possible for your college education, but we're also going to need you to pitch in too. Here's what we are saving for you, so let's talk about what you can do to help." Notice that nowhere did you say, "Gee, we're really sorry about this..."
I realize your child may not be jumping for joy at the news, but let's get real here. You are not punishing your child. And you are insuring that down the line you are not going to be a financial burden to them. I don't expect a 13-year-old to fully comprehend that right now -- and wouldn't recommend even bringing it up -- but, trust me, when your kid becomes an adult they are going to appreciate completely what you have done for them. In addition to a college degree with no strings attached, you'll have given them an empowering example of financial responsibility: yours and theirs both.
Saturday, September 20, 2008
Parents-in-laws are here, finally.
Last Saturday we fetched my PILs at the airport early in the morning. They were taking the A380 SQ flight from Singapore. My FIL complained about the narrow leg room, and my hubby actually complained about the same thing the last time we took the flight. I was surprised that hubby didn't warned FIL in advance on what to expect from A380.
They love the weather that morning, it was a cool morning. But somehow towards the afternoon, the weather got warmer and warmer (almost up to 30 degrees). We had to tell them that they happened to arrive on a peculiarly hot day. We even accused them of bringing Singapore weather to Sydney.
Over the next few days, we took them to Shopping Mall (Rhodes, Bankstown) for them to buy their necessities and for mum to buy grocery shopping. I brought her home-cooked food for lunch since we stopped our 'rantangan'/tiffin.
They had to learn how to switch on/off the alarm of our apartment, learn to use the phone to let guest in, learn to separate garbage to recyclable and non-recyclable and learn to use dryer. I hope they could cope with the information-overload at such a short time.
But they are very happy, especially my FIL. He had dreamed of living in a foreign country since young so he said his dream came true now he's here. He started buying some potted plants that he could tend during the day. We subscribed to all Foxtel channels for them, my MIL would watch the food channels while FIL will watch the rest. We played badminton yesterday, just like what we used to do back in Singapore :)
They love the weather that morning, it was a cool morning. But somehow towards the afternoon, the weather got warmer and warmer (almost up to 30 degrees). We had to tell them that they happened to arrive on a peculiarly hot day. We even accused them of bringing Singapore weather to Sydney.
Over the next few days, we took them to Shopping Mall (Rhodes, Bankstown) for them to buy their necessities and for mum to buy grocery shopping. I brought her home-cooked food for lunch since we stopped our 'rantangan'/tiffin.
They had to learn how to switch on/off the alarm of our apartment, learn to use the phone to let guest in, learn to separate garbage to recyclable and non-recyclable and learn to use dryer. I hope they could cope with the information-overload at such a short time.
But they are very happy, especially my FIL. He had dreamed of living in a foreign country since young so he said his dream came true now he's here. He started buying some potted plants that he could tend during the day. We subscribed to all Foxtel channels for them, my MIL would watch the food channels while FIL will watch the rest. We played badminton yesterday, just like what we used to do back in Singapore :)
Thursday, August 21, 2008
Monthly update?
I just realised that I have not updated my blog since last month. Well, I am quite good at starting something and not finishing it :)
Too many things to update but the big news is hubby has found a job at a brick company. He finally took the offer that he initially rejected, after considering it thoroughly. Today will be his first week there! It was a big adjustment for him as he likes to sleep late and this job requires him to be at the office/plant at 5.45am. I still couldn't wake up at 4.30 am even though I initially planned to wake at the same time as him and do more things in the morning (quiet time/bible reading, play Wii, have breakfast, check internet).
It was a big adjustment for me too. I now have to go to work by bus, before catching train. My boss suggested that I start early so I could leave early . I thought of the same arrangement but I wasn't sure that he would approve it. The new arrangement is a bit confusing as I need to leave early so I could go home , have dinner and sleep by 9+pm.
Talking about work, I finally told my boss that my last day would be 30 Sep, after having 4 coffee sessions with him to talk and negotiate it. It's not the final decision yet, I think. After having a talk with the recruiter yesterday, she suggested that I take another role my boss offered but negotiate for a one-week notice. The current role is not giving me the same flexibility of notice period as I need to give 1 month's notice due to the workload size and the fact that nobody in the team could cover the work.
This morning bible reading from Our Daily Bread is taken from Psalm 8 and after reading it, I remember that there is a song from my choir that is based on this Psalm. So instead of reading, I was singing the Psalm. Oh, I miss choir session back in Singapore. I just saw their video on singing a Batak song (Arbab) in Batak and Sundanese for the Independence Day 17th Aug. I miss them, the songs, the practises, the dinner after that and the friendship develops.
One of my choir friends is here in Sydney now. She's a vet and she's attending a workshop at Taronga Zoo. Currently staying at her cousin's place and she's stay with us on Sunday to Tuesday. I'm taking leave on Mon -Tue to bring her around. Oooh, so exciting! It's really good timing as I need an excuse for holiday and I miss Eklesia (name of the choir) so it will be good to catch up.
Oops, I need to get ready for work now. Coming up tomorrow.... news about our baby project and ...my PIL are coming soon (finally)!
Too many things to update but the big news is hubby has found a job at a brick company. He finally took the offer that he initially rejected, after considering it thoroughly. Today will be his first week there! It was a big adjustment for him as he likes to sleep late and this job requires him to be at the office/plant at 5.45am. I still couldn't wake up at 4.30 am even though I initially planned to wake at the same time as him and do more things in the morning (quiet time/bible reading, play Wii, have breakfast, check internet).
It was a big adjustment for me too. I now have to go to work by bus, before catching train. My boss suggested that I start early so I could leave early . I thought of the same arrangement but I wasn't sure that he would approve it. The new arrangement is a bit confusing as I need to leave early so I could go home , have dinner and sleep by 9+pm.
Talking about work, I finally told my boss that my last day would be 30 Sep, after having 4 coffee sessions with him to talk and negotiate it. It's not the final decision yet, I think. After having a talk with the recruiter yesterday, she suggested that I take another role my boss offered but negotiate for a one-week notice. The current role is not giving me the same flexibility of notice period as I need to give 1 month's notice due to the workload size and the fact that nobody in the team could cover the work.
This morning bible reading from Our Daily Bread is taken from Psalm 8 and after reading it, I remember that there is a song from my choir that is based on this Psalm. So instead of reading, I was singing the Psalm. Oh, I miss choir session back in Singapore. I just saw their video on singing a Batak song (Arbab) in Batak and Sundanese for the Independence Day 17th Aug. I miss them, the songs, the practises, the dinner after that and the friendship develops.
One of my choir friends is here in Sydney now. She's a vet and she's attending a workshop at Taronga Zoo. Currently staying at her cousin's place and she's stay with us on Sunday to Tuesday. I'm taking leave on Mon -Tue to bring her around. Oooh, so exciting! It's really good timing as I need an excuse for holiday and I miss Eklesia (name of the choir) so it will be good to catch up.
Oops, I need to get ready for work now. Coming up tomorrow.... news about our baby project and ...my PIL are coming soon (finally)!
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