Time to get serious about college savings

[bigdaddybus]

So I just turned 40 and its about time I get serious about saving money for my kids educations. I have been focusing on retirement/emergency fund the last few years and I am happy to say my wife and I are in good shape there.
Currently, We have a 6 month cash emergency fund and I we have reached 29-30% of our retirement nest egg goal so far.

I went to college on the Illinois Veterans Grant and GI Bill. My wife is not a big fan of any of our kids serving in the military like I did. So I need to get a game plan for saving and knowing how much me or the kids will have to fund through loans.

The bad..........financially speaking

I have kids that are 13,12,4,and 3. I have approximately $20,000 now I can contribute to their college savings and $450-500 a month I can start contibuting.

Where do you suggest we start?

Here is the sorry excuse for college saving we have now.
1. The older 2 kids have Coverdale ESA accounts (I believe these have contribution limits of 2K per year) Each have a balance of $1000.
2. Each of the older two kids have many savings bonds from their grandmothers (no idea the exact amount) I would guess a face value of $1500 each kid, most received from 2000-2006.
3. we are good about having our kids put half of whatever they get in their saving accounts. Older kids have 2-3K in savings, younger ones around $1K ea.

Additional note: The younger two are adopted from the foster care system in IL. I have been told there are alot of programs to help fostered/adopted from foster care kids. For example last year 30% of the qualified adopted/foster kids that applied for college scholarships from the Walter Payton foundation received full rides. Its a sweet deal from Sweetness, and considering my adopted kids have come from 3-4 generations living below the poverty line with generations of abuse I want to give them the best opportunities I can.

thanks for reading, and whatever insights you care to share

[snafu]

Older children: If the older children will likely get support from the military, I suggest 1st, reviewing their current ESA and Bond gifts. Depending on the rates and type of Bonds, there may be significant potential to do much better with a different product since interest rates are extra ordinarily low at this time. Risk is reduced in an equity product when there is potential for a minimum 5 years growth and I'm guessing the funds will be divvied out over a 4 year university program.

I would hesitate about a 529 as those monies have stringent rules which may not mesh well with military benefits. I believe Vanguard has a program for children or it could be a 'custodial.' I'd begin with the basic sum Vanguard requires to open a fund and DCA [ automatic monthly payments] in their Index Fund. Once you're comfortable with the arrangement, or if there are economic changes, you can adjust the Vanguard product.

Younger children: You've very uncertain funding because politics can change priorities for funding by changing legislation with every new team and each new term of office.

For new monies $ 450. - $ 500. I'd choose a Vanguard fund as custodian for 4 children that can be re-directed at your discretion. It's too early to tell whether the two tykes will go to college or choose technology not yet discovered. It's difficult to guess how much support the 4 will need.

just my .02

[creditcardfree]

I would be top heavy with investing for the older two, more for them since you don't have as long to save for. The other two you can still invest for, just not as much. Increase their funding as you get raises or the older two get closer to graduating college.

[bigdaddybus]

Older children: If the older children will likely get support from the military, I suggest 1st, reviewing their current ESA and Bond gifts. Depending on the rates and type of Bonds, there may be significant potential to do much better with a different product since interest rates are extra ordinarily low at this time. Risk is reduced in an equity product when there is potential for a minimum 5 years growth and I'm guessing the funds will be divvied out over a 4 year university program.

I would hesitate about a 529 as those monies have stringent rules which may not mesh well with military benefits. I believe Vanguard has a program for children or it could be a 'custodial.' I'd begin with the basic sum Vanguard requires to open a fund and DCA [ automatic monthly payments] in their Index Fund. Once you're comfortable with the arrangement, or if there are economic changes, you can adjust the Vanguard product.

Younger children: You've very uncertain funding because politics can change priorities for funding by changing legislation with every new team and each new term of office.

For new monies $ 450. - $ 500. I'd choose a Vanguard fund as custodian for 4 children that can be re-directed at your discretion. It's too early to tell whether the two tykes will go to college or choose technology not yet discovered. It's difficult to guess how much support the 4 will need.

just my .02

Thanks

I hear alot on here about Vangaurd funds. Is there benifit to getting the funds directly from Vangaurd or just buy Vangaurd funds through by existing brokerage? (Scottrade). I'm not excited about opening additional accounts, but if it makes sense I wont hesitate to go that route.

[bigdaddybus]

I would be top heavy with investing for the older two, more for them since you don't have as long to save for. The other two you can still invest for, just not as much. Increase their funding as you get raises or the older two get closer to graduating college.

Yes my initial estimate was....

30.5% towards the 13 yr old
29% to the 12 yr old
20.5% to the 4 yr old
20% to the 3 yr old

not 100% sure on my math, but it seems to be close

[creditcardfree]

That seems like a good plan. I would NOT buy Vanguard funds through a broker (if you even can). The beauty of Vanguard funds is that they do sell their products through investment professionals, but directly to the investor. You save on fees this way. They have a very easy site to navigate!

[johnt78]

Saving for college is hard not just because it's a huge expense, but because you can't predict how much, if any, financial aid you'll get. That's why you need to save what you can now. Fortunately, you have a number of tax-advantaged federal and state college-savings vehicles at your disposal. The best option is the state-sponsored 529 plan, which comes in two flavors: the prepaid tuition plan and the savings plan