Still going slightly out of order…
Angie asks:
You’ve talked many times about your school debt. Now with hindsight, is there another you would have/could have paid for college and grad school? And do you plan to pay all of the college expenses for you girls? How are you working toward this? Good thing you don’t mind talking about your finances!
Just for you, my darling readers, I went and looked up exactly how much Mr. A and I owe in school debt right now. I hope you appreciate it, because now I am having an anxiety attack about debt. I hate debt. I hate it, I hate it, I hate it.
Right now, this is the state of our grad school loans:
My Grad School debt: $15,221
+
Mr. A’s Law School debt: $54,573
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Combined (oh my effing gosh): $69,794
So about 10 years after Mr. A graduated from law school and 7 years after I finished grad school, we still owe about 70 grand. Sadly, this is much less than we originally owed. I think Mr. A got out of school with $120k and I think I owed about $33k (several thousand of which was borrowed to cover the rent while Mr. A went on his big bike trip….dumb, dumb, dumb.) The really good news about this debt is that it is all government loans and the interest rates are super low ( I think around 5% for Mr. A and 2.7% for me). We pay $315 and $353 each month. At this rate, my loan would be gone in about 5 years and we will have Mr. A’s loan FOREVER. (The length of his loan repayment doesn’t bother me that much because if he ever dies, his loans evaporate so neither I nor his estate will be responsible for them.)
All those loans are for grad school and law school. Both Mr. A and I had full-ride + living expenses scholarships for our undergraduate degrees because we were National Merit Scholars. (We both had the same scholarship…does that mean we were meant to be?)
If I could go back in time and change things, I don’t know if I would have gone to grad school at all. If I had known I wasn’t going to work once I had kids, I probably would have waited and gone to grad school once they went to elementary school full-time. I didn’t have the slightest inkling I would quit work, so I made what I thought was a responsible decision at the time.
I probably still would go at some point because my degree has been an insurance policy that has always made it very easy for me to get a job. (My degree is a Masters in Nonprofit administration and there aren’t many of them around here, but I also recognize I have never had to job search in an economy like this one!) If anything happens to Mr. A or to my marriage, I am glad I have that degree to help me get my foot in the door at a job.
If I could, I would go back and try to borrow less money to pay for school. Maybe I would have asked my parents to kick in the money they didn’t spend on my undergraduate degree (they paid for 4 years at a state school for my sister and would have paid that amount for me if I hadn’t had a scholarship.) I might also have paid more money down each month (like an extra $50).
Mr. A’s degree was stupid expensive, but totally worth it. He went to a top-tier law school and did pretty well, so he has never had a problem finding a job and has always been paid pretty well for the work he does. I wish he had spent a little less time at “bar review” (aka drinking with other law students) with his loan money, but as an investment, his degree has really paid off.
We have made trade-offs on other financial goals that meant paying down our school loans faster has been put on the back burner. Since I was about 26 and Mr. A and I combined our money, I have always put the maximum amount in my 403B each year I worked. I think that is $13,000 a year, pre-tax. Mr. A maxes out his 401K at that amount too. My parents put $2,000 a year in a Roth for me when I was 20-25 too. I just checked our retirement accounts and it looks like we have a little over $150,000. With compounding interest and all that jazz, that should be a nice chunk of change if we keep adding to it. We are 34 and 37, so Mr. A still has about 30 good working years left in him. (I hope!)
If you measured the amount I hate debt and compared it to Mr. A’s obsession with retirement planning, it would be about equal, so we are always going back and forth about this issue. Because our loan interest rates are so low, I think we made the right choice saving for retirement while we pay them down. If we hadn’t had kids so soon after school (or lived in San FranFreakingExpensive before we had them), I think we would have paid them down sooner, though.
For the girls, we hope to be in a position ot fully pay for their undergraduate degrees. I expect that to cost about $200,000 in today’s money for each of them (i.e $200,000 plus inflation). We contribute $75 monthly to a 529 fund each month for each of them. My parents make generous contribution each year and most of their birthday gift money goes into those accounts. Right now, they have about $18,000 combined which would be enough for one kid to go to school for maybe one semester (depressing!). If they get scholarships or choose to go to a state school, I think we would give them the remaining money for graduate school. The same goes for learning a trade that would provide a good job skills and make them employable. That money is only allocated for education though. No fancy weddings or round the world trips funded by us.
I don’t expect the 529 money to reach $200,000 by the time they get to school. Hopefully, in 10-12 years when M heads off to college, Mr. A will be earning more money than he is earning now. If he doesn’t earn enough to fully pay for it out of pocket, I might be willing to get a part-time job (or even full time, the horror!) to pay the difference. Maybe.
I will admit this has been a difficult post to write honestly. I waffle between feeling A) OK about our financial choices and worrying that other people will feel annoyed that I am sharing them and B) worried that people who have more will think we should be doing much better given the amount of income we have.
Any way you want to look at it, Money=Stress.
I am skipping around in the questions a little because I don’t have time to write a really long answer this morning. I will get to them all, I promise.
Kate asks:
Can you talk more about the Mandarin immersion program that you are taking M to? How was it started, and how did they find teachers? A group of people in my city have talked of starting a program up; would you have any advice for us? Thanks!!
The “Chinese Club” that M attends is an experimental program by a local university with a very well-respected Chinese department. I believe their intention is to design and test an elementary school curriculum and then sell it to other schools. The teachers are affiliated with the university’s curriculum development department, Chinese language department and/ or the foreign language education department in the school of education. Most of the teachers are graduate students who get paid a modest amount of money to teach the class (I think).
Obviously, we feel really lucky that we found this program. We only pay $130 a quarter (10 weeks) for two 1.5 hour classes a week, including snack. I would imagine a similar program run privately would have to be significantly more expensive. The best thing about this class is that it mostly a full immersion class. The kids were very uncomfortable at first, but now (after about 20 weeks), they are all used to it.
The best advice I can offer is that it makes a HUGE difference to have trained teachers who understand the language-learning process. Just picking random Chinese speakers would be much less effective (as demonstrated by our years of untrained Chinese tutors AND the teachers at Chinese school who have no experience with language education).
It is also helpful to have the teachers use American teaching techniques rather than Chinese techniques. In a typical Chinese classroom, there isn’t much fun. The kids seem to learn better and like learning Chinese better when there are games, songs and stories they can relate to in the curriculum. Early on in the class, M’s teachers realized that the kids were not understanding a couple Chinese games they were playing, so they asked the parents to suggest some American games they could play in Chinese.
Sarah in Ottawa asks:
I love travel planning and I would LOVE to hear about your plans for your China trip (if you are willing to share). Are there any other trips that you have planned in the interim?
Right now, we don’t have any plans for any trips before our China trip, because all our travel savings is allocated to making the China trip as amazing (and long!) as possible. We will be going to the beach with my parents this summer because they are paying for it and we can drive. I think the only thing we will fund on that trip is groceries for the week and gas.
Our plans for out China trip are very vague right now, because the dates when we will travel are out of our control due to Mr. A’s job. We will probably go either next January-February or in late spring (I hope NOT Jan Feb! Because I don’t want to be traveling during Chinese New Year). We hope to be traveling for about eight weeks with two weeks in Taiwan and six weeks in China. In Taiwan, we will probably spend a week or so in Taipei and a week in Mr. A’s family’s hometown (Nantou).
Right now, the plan is to fly to Taiwan first. We may split the Taipei portion up and spend 2-3 days recovering from jetlag in Taipei, go visit his family then go back to Taipei for a few more days before we go to China. (If we are traveling during CNY, I might consider spending those weeks in Taiwan with Mr. A’s family (and not in China where traveling is a flipping CNY nightmare). I haven’t researched Taiwan yet, but if there is anything to see between Nantou and Taipei, maybe we will take a train or rent a car so we can stop along the way. (Note to self, get the 2o10 Lonely Planet Taiwan book to see what is between Nantou and Taiwan.) We also have some family business that we might need to attend to in Nantou, not to mention obligatory visits with extended family and probably visiting the graves of Mr. A’s grandparents.
I don’t have a strict agenda for China yet either. I don’t know if we will start in the south and work our way north or if we will go north-south. It depends on the flights and how difficult it is to get from Taiwan to China. I haven’t ruled out flying through Bangkok and taking a few days off there if it ends up being cheaper (I love Thailand).
Once we are in China, we will spend a week or so in Beijing doing all the normal touristy stuff (acrobats, forbidden city, summer palace, great wall, etc.) and hopefully visiting our friends who are living there for a few years. We will probably go to Xian for a few days because the train going south goes right through there and I have heard good things about it. We may also decide to swing through Shanghai. Mr. A’s uncle lives there and we could probably stay with him for a bit to recuperate from all the traveling. We will spend probably about a week in the Guilin area trying to enjoy it more than I did during our adoption trip (which shouldn’t be hard because I hated it with a flaming hot passion then, which I blame on crippling jetlag and an all-night serenade of CNY firecrackers.) and maybe a day or two near Longsheng.
We are expecting to spend a week or so in L’ s Hometown. I don’t know if we will be able to visit the orphanage, but we will stay in a nearby city and make ourselves visible to the locals and do some research for ourselves and some friends whose kids are also from L’s orphanage. Depending on the timing of our visit, we might try to visit a local school and some local sight-seeing locations. ( If we end up having family to visit there, we may have to make ourselves invisible and spend a shorter time in the area. We will have to see how that plays out.) We will probably also visit L’s provincial capital because we had a lovely time there on our last visit. And also because the food at the hotel there was the bomb.
We will definitely be spending a few days in Hong Kong and visiting Hong Kong Disneyland. (I know! Me at Disney! But this trip is all about the girls…see the next pargraph for more info.) We might ask friends of ours who have family there to meet us (if they are available and want to go to HK), because HK would be more fun with them. If we have enough time and money, we might also stop in Hawaii on the way home. You know, to recover from the jet lag. Not because we like Hawaii.
We are going to do our best to keep our plans very flexible. If we get bored, we will move on. If we love where we are, we will stay longer. The key to this trip is to make sure the girls have a really amazing time. We want them to love traveling and love China and Taiwan. We want them to really get to see and touch and taste it. I expect we will spend a lot of time hanging out in local parks and playgrounds (which were highlights of our adoption trip). We are going to try to avoid dragging them to sight-seeing things that only adults would appreciate. Mr. A and I have already seen a lot of China (and we expect to go back to visit again in the future!), so we don’t have to rush around trying to cram everything in.
It goes without saying that we would love any suggestions for kid-friendly places to see or go. We will probably not go to Sichuan for the pandas this time. Nor will we go to Tibet. (I hope for that during a trip I am imagining for when the girls are in Jr. High and High school during our big India, Nepal, Western/Southern China trip.) We may be able to swing over to Kunming if we end up having a lot of spare time.
Ok, I spent about an hour more on this post than I intended. Can you tell I love to spend time talking about and imagining trips?
We had meeting to discuss L’s evaluation with the private Occupational Therapist tonight. I need a little time to process it, but if I forget to write about it in the next week or so, someone should remind me.
On with the question! JLP asks:
I believe you mentioned that you decided to sell your house and rent because you felt it was financially prudent. Could you explain further how that is helping you save money? I would love to save more, and it certainly the case that our mortgage is a big cost each month. However, I admit I am confused, as it seems that you are no longer building up equity. But maybe I am missing something? Is there a big disparity in your area between mortgage payments and rents for houses of comparable size?
I don’t seem to have that gene that makes people want to refrain from discussing their financial details publicly, so this may be way TMI. Also, it might be boring. You have been warned.
When we bought our house, we paid $225,000. We put down $22,500 as a down payment. We took out an 80/10/10 mortgage so we wouldn’t have to pay PMI. Each month our house payment (including taxes) was $1750. I think we spent about $10,000 on big repairs for the house (new furnace, new stove, refinishing hardwood floors, resurfacing bathtubs, semi-finishing the basement). We also spent who knows how much money on minor things like paint, mulch, landscaping etc. each year.
We sold the house for $233,000, but we had to do about $3,000 in repairs from the inspection, so we cleared about $230,000. Our house was at the upper limit of what houses sell for in our neighborhood and we don’t think we could have sold it for any more money even if we had waited a few years.
Basically, we still lost about $8,000 over what we put into the house, but because we sold it without using any realtors, we walked with all the rest of the down payment and the equity we had accumulated. We had accumulated more equity than most people would with a standard 30 year mortgage because we were paying down a home equity line of credit each month (one of the 10s in the 80/10/10). I think we had about $53,000 in equity when it was all said and done. We lived in the house for 5 years, so that means we gained about $30,000 in equity total or ($6,000 a year).
Our new rental house is a bit smaller, odder and not quite as good as our old house, but it is still a nice house. It is also in roughly the same neighborhood as our old house. Our rent is $1,100 a month. Each month we are now putting $700 directly into savings for the down payment on our next house. Each year, we will save $8,400 that way.
In itself, that isn’t a huge increase ($2,400) over the equity we were saving each year in our old house. Plus, we lose the tax benefits of home ownership. On the other hand, we will be saving a chunk of money on house maintenance and home owners insurance. Our house was about 60 years old and something was always breaking and requiring costly repairs. (I figure I have saved $200 just because we don’t have to buy mulch this spring! We had a LOT of landscaping to mulch.)
The biggest benefit of selling now and renting is the ability to buy the next house without worrying about selling our old house in a hurry. If we still owned our house and we found our dream house, we would have to get a bridge loan or do some other kind of fancy financing that makes me extremely uncomfortable. (I am notoriously financially conservative! Seriously, I used to have nightmares about that 80/10/10 mortgage.). We might have had to carry two mortgages for a number of months. We would also probably have had to list our house with a realtor to sell it quickly. Using realtors for both the buyer and the seller, it would have cost us about $14,000.
If we are really smart (and the perfect house doesn’t appear in our current price range in the next year or so), we will wait until Mr. A goes to his next job so we know exactly how much money we can safely spend on our dream house (He took a big pay cut for his current job).
Also, we hope to save up a full 20% down payment before we buy it. Hopefully, the next house won’t cost more than $400,000, so $80,000 should do the trick (+ closing costs, but I don’t want to think about them yet!). It would obviously take us more than a year to save that much. We have been throwing as much other money as we can spare into down payment savings too, but our recent run of crazy medical expenses has made that go a little slower than I had hoped.
I still think we made the right decision, even it it has been kind of a hassle.
I love when I open the door for questions. It always ends up making me think of topics I probably wouldn’t have thought to write about otherwise. Here is the first:
Hermia asks:
I’m studying to be a school counselor. Today in my class we discussed a journal article studying delays in children adopted in the late 80s and early 90s from Romania. We talked about some of the ways children may be affected by early life in an institution and supports that might be helpful. It made me wonder — what would you want a school counselor to do to support L and your family during L’s elementary school years? Do you forsee anything coming up for L or your family?
Given our recent experience with ignorance coming fromthe OT at L’s school, my first impluse would be to say I don’t want ANY help from L’s school. I suspect there is no one at school who knowledgeable enough about adoption issues (e.g. health/mental health related to post-institutionalization and trauma, attachment or issues relating to transracial/transcultural adoption) to be meddling in our business or who could be of much help to us at all.
When I can dial back the know-it-allness and defensiveness, though, there are some little things that could make a big difference for adopted kids. It would be awesome if someone did some adoption sensitivity training with teachers. Maybe they would stop doing the stupid ubiquitous family tree project that our school and many others still do, if someone pointed 0ut how distressing it can be for some adopted kids or kids with non-typical family backgrounds.
I also would like to make sure that people at school don’t perpetuate the dumb adoption fairy tale that is so prevalent in our culture. L probably wasn’t abandoned because her parents “loved her so much” they were sending her off to safety like baby Moses. She wasn’t saved from a terrible orphanage by rich and benevolent adoptive parents like Little Orphan Annie. Like most adopted kids (as well as many kids in non-nuclear families) L’s story is complicated and there is no happy ending. If her teachers don’t understand and respect this, I would rather they not talk about adoption at all.
From our very little bit of experience, I also think that school professionals (like most of the general public) can be woefully uninformed about issues related to post-institutionalization. Learning disabilities, sensory issues, attachment issues, and trauma histories that are common in adopted kids and can obviously impact a child’s experience in the classroom.
In our attempts to figure out what kind of school services would benefit L, I have been forced to repeatedly point out that her issues are likely the result of spending a year in an orphanage and the lack of one-on-one care she probably received. Over and over, these supposedly well-educated professionals seem surprised that I would think there would be any long-term effects because L was still little when she was adopted.
(I mean, seriously? Didn’t these people have to study child development to get an education degree?)
The trick, though, is helping people understand those issues without invoking the “oh, the poor neglected baby!” reflex. I have heard this from medical and educational professionals when I have shared information about the delays L had when she first joined our family. L isn’t a poor baby, she is a survivor. I am not sharing her history with them for sympathy, I am giving them pieces of L’s puzzle. They need to know these things so they can understand she missed out on some early experiences and needs our help filling in the gaps in her development.
It isn’t really fair for me to expect the people at school to be adoption experts, but I wish they were. I don’t really know how you could fix those things as a school counselor. It seems like a pretty tall order.
Spring has fully arrived. Or rather, Ohio seems to have skipped spring and gone to the very best parts of Summer. The weather has been absolutely beautiful here. Sorry coastal areas and small islands, if this is global warming, I have to say I want it to stay. I am willing to back that statement up with extra carbon emissions to make it happen.
With the return of sunshine, my mood has (quite predictably) improved a LOT. Unfortunately, that doesn’t mean I have much to write about. Everybody knows that angst and drama is largely the fuel that keeps blogs going. I have neither. I have literally been tiptoeing through the tulips with a smile on my face.
Maybe this is a good time to throw open the door for questions? No pressure. If you don’t have any questions for me, I will continue to enjoy the sunshine.
To get the ball rolling, someone asked in my comments how our Dave Ramsey financial planning stuff is going. We have kind of petered out on watching the courses online. We might get back to them or we might not. It was kind of annoying because we were already doing almost everything that was suggested (e.g. saving for retirement, building up an emergency fund, etc.)
The one big change we have made, though is switching some of our expenses to cash. Mostly groceries but also (sometimes) our restaurant budget. I do think we are saving some money this way. Don’t tell Mr. A, but I am siphoning off the left over cash each week for debt (school loan) reduction. Having the cash in hand makes it feel like there is more incentive to not splurge on random groceries. In the past month or so since I have switched to cash, I have never gone over budget either. I like the cash system, but I haven’t worked up to using it for more areas of our budget. I think that is a next step we need to work towards.
The only other financial news worth reporting is that I didn’t do my big spending hiatus yet. I meant to, but I wussed out. I am leaning toward trying to make May or June a very close to Zero-Spending month.
Ok, does anyone else have any suggestions for something I can talk about? Seriously, I got nothing over here.
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