Lesson plan for a single parent.How one mother plans her children's college education LaWanda Greer is like most people who attended college during the Reagan era. As a student at San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. University, she discovered that financial aid was scarce and managed to pay her tuition by finding part-time work. The 30-year-old mother of two remembers the grueling gru·el·ing also gru·el·ling adj. Physically or mentally demanding to the point of exhaustion: a grueling campaign. gru days of rushing from classes to her job and cramming The unauthorized addition of services to your telephone bill such as an 800 number that you never ordered. The charges are usually noted on the bill, but are identified in a cryptic manner and/or are printed in a place that is easy to overlook. See slamming. for exams in the wee hours of the night. It's a legacy that she doesn't want to pass down to her six-year-old son, Martin II, or her two-year-old daughter, Chantell. "My parents, especially my father, have always believed in higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. , but they just couldn't afford to send my sister and me to college as times got hard. So, I had to take on that load myself," she says. "I don't want my children to have to get jobs in order to pay for college." It's an ambitious goal for the Oakland, California “Oakland” redirects here. For other uses, see Oakland (disambiguation). Oakland (IPA: /ˈoʊklənd/), founded in 1852, is the eighth-largest city in the U.S. native. When it's time It's Time was a successful political campaign run by the Australian Labor Party (ALP) under Gough Whitlam at the 1972 election in Australia. Campaigning on the perceived need for change after 23 years of conservative (Liberal Party of Australia) government, Labor put forward a for her children to attend institutions of higher education, state-supported schools will cost roughly $30,000 per year--a whopping $120,000 bill for four years--while private universities will be at least $45,000 per year, or a total of $180,000, for a graduate to leave school with a sheepskin. In order for Greer, who grosses $32,000 a year as an administrative assistant for Technology Credit Union in San Jose California, to pay for her children to become members of the graduating classes of 2011 and 2015, she will need to sock away sock 1 n. 1. pl. socks or sox A short stocking reaching a point between the ankle and the knee. 2. Meteorology A windsock. 3. a. at least $200 a month (for each child) to accumulate $120,000 at 12%. That figure factors in an annual growth rate for her current investments at 12% and an annual inflation rate of 5% for increased college costs. She also has to include books, room and board and incidentals, in her calculations. Greer faces a major financial hurdle, though. She's divorcing her husband, which means that she will handle the arduous ar·du·ous adj. 1. Demanding great effort or labor; difficult: "the arduous work of preparing a Dictionary of the English Language" Thomas Macaulay. 2. transition of going from a two-income household to a single paycheck. Since her separation, Greer's monthly expenses have increased from $1,350 to $2,500--$1,150 in child-care expenses alone. (She has not yet factored in alimony alimony, in law, allowance for support that an individual pays to his or her former spouse, usually as part of a divorce settlement. It is based on the common law right of a wife to be supported by her husband, but in the United States, the Supreme Court in 1979 or child support payments.) "My husband is in the military. We lived on the military base and many of our expenses were taken care of by the service," Greer explains. "Now, I have to maintain the mortgage on a four-bedroom home and pay for my son's private school education, [It seems that] I will be paying tuition all my life." Even before her marriage unraveled, Greer did not neglect building up a college fund. In fact, she started saving by the time Martin II was nine months old. Ironically, it was her father who got the ball rolling by giving his grandson $500 to open up a California Unified Monetary Trust (CUTMA). By practicing dollar-cost averaging--investing a set amount of money in a vehicle on a regular basis--Greer also invests $25 each month regardless of market conditions. Her money is automatically withdrawn from her bank account and deposited into the Oppenheimer Main Street Growth and Income Fund. The current value of her fund holdings thus far: $1,800. "I promised myself that when I had kids of my own, I was going to get a head start on their college funds." It seems that Greer is up to meeting her life's mission. Financial Snapshot: LaWanda Greer Take home salary $24,000 (after taxes) Alimony support $ 6,000 Expenses $30,000 Savings $ 600 Debt/labilities, $ 2,000 (credit card) Investment portfolio $12,000 (includes 401 (k), IRA, mutual fund) RELATED ARTICLE: Expert Advice FINANCIAL EXPERT: Vanessa Donaville, principal of In Touch Investments (www.lpl.com/vanessa.donaville) in Vallejo, California Vallejo (pronounced IPA: /vəˈleɪoʊ/ in English; [baˈjeho] in the original Spanish) is a city in Solano County, California, United States. . HER STRATEGY: Significantly reduce Greer's debt; find savings and investment vehicles that will maximize the return on her money. Donaville's first step was to evaluate Greer's income, expenses and debt, and structure a monthly budget. By doing so, she laid the foundation for a comprehensive savings and investment program. "First, you start with your cash situation--savings, checking and money market accounts," says the financial planner Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. . "Next develop an investment portfolio starting with equity and mutual funds. As your account builds up, add individual stocks to the mix and then bonds." What follows are Donaville's recommendations: * Greer should pay off her $2,000 credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. . * Until her financial situation changes, she advises Greer to continue to dollar-cost average--setting aside $25 a month in her son's account and launching another account for her daughter's education. * Steadily increase the amount of money that she places in current and other investments. * Instead of placing money in a CUTMA, Donaville advises her to open up an education individual retirement account (IRA Ira, in the Bible Ira (ī`rə), in the Bible. 1 Chief officer of David. 2, 3 Two of David's guard. IRA, abbreviation IRA. ) or a Roth IRA Roth IRA An individual retirement plan that bears many similarities to the Traditional IRA. Contributions are never deductible, and qualified distributions are tax-free. A qualified distribution is one that is taken at least five years after the taxpayer established his/her first so that her dollars will grow tax-free. * Greer should stick with the Oppenheimer Main Street Growth and Income Fund, which has a five-year annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return of 21.5%. "Based on its long-term history and performance, the fund continues to generate consistent returns and perform at average with its peers," Donaville says. (Aggressive growth funds, which offer high returns but great risks, are recommended to investors who have five years or more to reach their financial goals.) * Increase contributions in 401(k) to 10% in order to prepare for postcareer life. THE RESULTS: Donaville concedes that $25 a month will not enable Greer to meet the total amount required to send Martin II to a four-year private institution. While she will not meet her goal of amassing $180,000, Greet would save up $15,000 over the next 13 years (at an average rate of 12%). Once she reduces her debt and reorganizes her post-divorce finances, Greer plans to increase her monthly contributions to $2,160 a year. Over a 13-year horizon, Martin II would have $82,500 toward his college education. FINANCIAL GOALS: * To create education funds for Greer's son and daughter, which would be valued at $120,000 each over the next 13 and 15 years. * To build a growth portfolio that would generate about $1 million in retirement income.3 |
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