Baby Step 5.0: Save for kids college fund

NOTE: There are 3 common college savings avenues

  • Education IRA or Education Savings Account
  • UTMA or UGMA (Universal Transfer/Gift to Minors Act)
  • State Sponsored 529 Plan

Our plan:

  1. Once the second mortgage is paid off, then we can start retirement back and begin our college fund.
  2. Right now we have some money sitting in an ING account designated for our son. I actually haven’t made up my mind yet exactly which avenue we will use for the college fund. Considering using a Roth IRA in my wife’s name, that way it’s not tied solely to education and then if they don’t need or use it, it’s just extra retirement funds for us.

    Another note on steps 4.0 and 5.0, they are typically done at the same time.

Previous Posts:
Dave Ramsey’s Baby Steps - Expanded
Baby Step 0: Live like no one else…
Baby Step 1.0: Save $1,000 in Baby Emergency Fund (BEF)
Baby Step 2.0: Do debt snowball, paying all your debts from lowest BALANCE to highest

Baby Step 3.0: Save 3-6 months EXPENSES in a Fully Funded Emergency Fund (FFEF)
Baby Step 4.0: Start Contributing 15% of you paycheck to retirement

Coming Up Next:
Baby Step 6.0: Pay off house EARLY

Don't Miss anything, subscribe: RSS Feed Email

Reblog this post [with Zemanta]