Where is the money...

Parents Corner
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<p>Aaaah, spoken by someone who hasn't seen a paycheck...I remember the first paycheck that my D got after working a summer job. "Who is FICA and why is he taking all my money?!!!"</p>

<p>Your mom makes $120K a year (let's say to make it easy). That's $10K a month. But take a look at her paycheck--it is probably nowhere near $10K! </p>

<p>The government takes out for Social Security (FICA) and medicare;</p>

<p>There's the money that your mom puts into her 401K for retirement;</p>

<p>There's the money that is withheld from your mom's check for state and federal taxes;</p>

<p>There's money that is taken out to pay for the health insurance provided for your family (which can be quite expensive, with employers putting more of the cost onto the employees).</p>

<p>She'd be lucky to have $7000 left of that original $10,000.</p>

<p>And with that $7000, she has to pay the mortgage (which can be thousands a month), buy food, pay utilities, gas for the car, your band fees, field trips for the little kids, clothing for her and you.</p>

<p>In addition, she has to save up for those bills that come once or twice a year--property tax bills (which can be many, many thousands a year), car insurance for each car. </p>

<p>Then there are the bills that you expect, but never know when they'll occur--the car breaks down, someone gets sick, the washer needs fixing, the TV blows up. </p>

<p>You get the picture.</p>

<p>And somehow you are expecting her to come up with $21,000 of extra money out of her salary to send you to UMCP? </p>

<p>Middle class families often cobble together a number of different things to pay for their kids' college educations. There's savings and investments that have been going on for years. There's extra money that you can take from your salary every month. The kids apply for scholarships and loans. The parents get loans. The kids get summer and on campus jobs. Some parents will take on extra work or will go back to work if they haven't been working. Sometimes the kids will have to go to a cheaper school. So paying for school doesn't just come from savings or salary.</p>

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<p>We obviously don't know all the ins and outs of your mom's financial situation, but I find it extremely hard to believe that she's taking home $110k after tax and that her monthly expenses are only $1,500. I'm sure there is a lot you're not taking into consideration. </p>

<p>Losing almost 85% of the college savings in the current crash is certainly far worse than it should be as it would mean that the investments in question have significantly underperformed the market. However, if the investments weren't well diversified and in the wrong sectors (eg banks) then those sorts of losses, or even worse, are certainly possible. The bigger issue though is that if you are nearing college there's absolutely no reason why most of that money should have been anywhere near the stock market. Asset allocation is something a lot of people ignore in good times, but then get totally slammed for during bad times. The vast majority (eg at least 75%) should have been in 100% safe investments like CDs to ensure the money is actually there when you need it. As the time when you need the money nears, the risk of said investments needs to start decreasing dramatically. Obviously that advice is too late now, but other parents take note!</p>

<p>There is nothing wrong with taking out some student loans to pay for college, but make sure you're realistic about how much and how long it will take to pay them off. If you're not careful, those loans can be a dark cloud over your head for a long time. Remember that the cost of a school generally has little relation to the quality of education that can be achieved there...</p>

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<p>Smalllab - I see from your other posts that you have been very involved with your college planning. That's a very good thing, and considering this I can see how your Mom's comments would be quite a shock. You've done well putting yourself in a good position academically. I'd suggest putting a little of that same energy into investigating the many ways students pay for college. I'm sure you will find some options! Good luck to you. </p>

<p>PS, Congrats on having a financial safety, even though it didn't seem that you needed one.</p>

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<p>thank you nysmile and ellemenope,
I never knew there are that much things to worry about for parents... and yeah, there is nothing wrong going to a state school... thanks a lot</p>

<p>thanks rocketman08,
well.... I don't blame my mom... everybody makes mistakes... thanks anyway</p>

<p>Shrinkrap, thanks
I'll talk to my mom after I get the offers... thank you</p>

<p>And newHope33, thanks for your advice</p>

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<p>Below is an average budget --many will find problems with it, but it will give those out there an idea of family expenses.. so much varies with location .. I think the OP gets the idea but for others</p>

<p>$110000 per month $9,167<br>
Net of deductions $5,958<br>
EXPENSES
mortgage $1,300 21.82%
taxes $400 6.71%
insurance-house $200 3.36%
electric $200 3.36%
cable $150 2.52%
clothes $100 1.68%
gas/oil $200 3.36%
phones/internet $200 3.36%
medical co-pay $300 5.03%
entertainment/travel $200 3.36%
groceries $600 10.07%
car loan $450 7.55%
gas $200 3.36%
car insurance $150 2.52%
Miscl-haircutss, tolls, etx $150 2.52%</p>

<pre><code> Total expenses $4,800

</code></pre>

<p>Discretionery $1,158 </p>

<p>I might add that this would be a relatively austere lifstyle at home, limited movies and restaurans, no excesses, limited clothing. This might give you perspective.</p>

<p>I cant answer to the investment drop.<br>
However, listen to your parents, and understand what they mean when they say dont worry about how to pay. Frankly, as parents we need to treat the upcomign students as more adult and explain whatever financial reality exists...... AND UM-CP is certainly not a bad choice, extremely reputable public university, excellent if you seek the opportunities that are available</p>

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<p>rty456 - $11,000 per month is a six figure salary. I'd hazard a guess not many of the kids asking these kinds of questions are living in a family with a gross income of $11,000 per month.</p>

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<p>Ahem.....watch what you're saying!! There are a LOT of college kids with parents in this age range. Many families had their first kids in their 30's not their 20's (as with past generations). </p>

<p>56...is not all that old anymore.</p>

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<p>56 is getting old when it comes to the working world. Older, more expensive workers are being pushed out with increasing frequency. It's not every job that can guarantee you a paycheck until you're ready to collect social security (67 in our case).</p>

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<p>Smallab, give your mother a hug and lots of credit for having that hard talk. This financial situation is a really big problem for many of us who planned for college and had money in the market for it. If your mother had $100K put away for college for you, that meant that she would have at least $25K a year to pay for your school out of savings. She might have had other savings that she had earmarked for other things as well. When those funds all diminished, it's a big problem, especially if the emergency fund is one that is low as well, since that is not one that is an extra but a necessity. Throw in some other unexpected events, and some job uncertainties and you have a problem. </p>

<p>We have a house that we intended to sell this past year. The market is dead here. Our HELOC has been reduced. We had some crises. That has reduced our flexibility enormously. I would love to sell our house, and move into something smaller, less expensive and in not such a great school district. Can't do it without incurring a huge loss, which we may well end up doing anyways if things continue going downhill. </p>

<p>You see, when you make $X, your standard of living tends to be scaled to that amount. It seems like your mother did save and have a cushion, but that is no longer there. Nor is money intended for your college. A lot of things we acquire cannot easily be disposed of, like a house and the attendant costs of homeownership.</p>

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<p>Smalllab, if you have good stats, make sure you apply to a couple schools where you might be competitive for a merit scholarship!</p>

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<p>momofhtreeboys
the OP said his mom had $110,000 (and I just read after tax) ... so numbers above are not quite right....
.... I think it is often good to mention general issues while talking about specifics, for those reading the board and in case some facts are wrong. My point ( in general ) is that even with a 'six figure' income, one can rapidly go through money in todays society. </p>

<p>It emphasizes the need for everyone to be realistic about what they can afford. I feel i have been 'successful' in the broadest ways and started at a 'second tier' state school.... I hate when especially on CC kids seem to think life is over if they dont get into XYZ</p>

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<p>thank you all for helping me out and giving me a lesson</p>

<p>My dad used to tell me that "money is not important, do what you like."
well I guess he lied. But it's my fault not to recognize it.</p>

<p>Oh yeah btw, My friend just told me every undergraduate school has the same education, it's just the net work that's different. Donno if it's true... It makes me feel better tho =]</p>

<p>thanks again!</p>

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<p>Smalllab, I commend you on your compassion toward the situation. I've ready many posts where students are resentful that their parents aren't able to provide them with a private school education. You seem to comprehend that your mom has done all she can and you're willing to compromise as she has to find success.</p>

<p>Best of luck to you!</p>

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<h1>32. Your father did not tell you a falsehood, "money is not important, do what you like.". You are perhaps simplifying the lesson. May it be that you have heard, "Do what you like, and money will come," "Money is not the end game," "Money is only one measure of success," "Money is only an illusion."</h1>

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<p>This economic downturn has been very dramatic. I have heard even more dramatic than the drops of 1929-1932. Proper allocation may not have saved your college fund; Government Sponsered Agency mutual funds, whether they are short, medium, and long term, have fairly very badly, even when once thought to be very conservative and for widows and orphans.</p>

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<p>Brought the financial stuff up to date this past weekend. YIKES!! Thank goodness I was sitting down. </p>

<p>Glad I made a bunch of changes in Feb to bring our asset allocation in line with our age and time left before retirement. Still saw the ole 401K drop precipitously...and that was just from mid August!</p>

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<p>So few folks have "guaranteed pensions" these days, which makes retirement assets so difficult to predict and manage, OP/smalllab. We can no longer look ahead & know that when we retire, we will regularly get a set amount (which some of the old-fashioned pensions promised). </p>

<p>So much depends now on each person as an individual making good investment and savings choices and even then we can have things lose tremendous amounts due to circumstances far beyond our control (like the current financial crisis).</p>

<p>It is important to find what we really enjoy that can pay the bills--many times our skills can be used in different ways, some of which provide better compensation than others. Finding a way to earn a living doing what we love--that is really something worth striving for and leads to great satisfaction, professionally and personally. Perhaps that is what was trying to be conveyed to you? I know that personally I'm happiest & the folks I know and most admire are happiest when we are able to do this.</p>

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<p>Your mother did not lose in the stock market. She lost money in companies, bonds, loans, commodities, and countries that *other people, companies, and countries * thought were going [future tense] to make less money and therefore less valuable.</p>

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<p>I believe you when you say your mom lost that much. People I work with have lost so much in their 401k's with wells fargo. When I received my paperwork for it I denied it. Im only 21 and its not a job I wanna work for the rest of my life, I wanna go to college and have a career, not a job!</p>

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<p>We lost much, much more and $110,000 income is not that high this days either. So, I understand your mom. We talk to our D. also. Times are tough.</p>