The $6,000 College Tuition Savings Challenge

The specter of college tuition has been breathing down my neck for several years now. I, like many parents, spent my daughter’s high school years living in dread that she would get into her dream school, but that financial aid would fall short of what we could actually afford. If you are also looking down the tunnel at a potentially sizable college tuition, this challenge is for you.

In April, my daughter did get into her dream college. Fortunately, the financial package was very generous. College tuition might not be the massive financial hit I feared after all.

The College Tuition Situation

Starting in September, my daughter will be attending a school whose ticket price for tuition, room, board, and fees is north of 70K. I know that sounds crazy-town. But after the school’s hefty scholarship offer, my daughter’s reasonable student loans, and some grandparent contributions, the  out of pocket cost to my ex-wife and I is only about $18,000.

My ex and I have agreed to split college costs evenly, so I will be on the hook for $9,000 per year. This is much less than I feared, but still more than is comfortable. Fortunately, I have been building a 529 plan for my daughter’s education for several years now. That savings will cover about $3,000 per year across her projected four years of college. I will thus have to come up with $6,000 annually to pay for college tuition, room and board, etc. Prior to getting the final numbers, I had assumed I’d need to do some fancy financing such as:

1. Potentially remortgaging the house
2. Consider selling the house
3. Taking out a personal loan
4. Selling vital organs

The Savings Challenge

We, like many parents, are in an interesting spot. We don’t have a spare $6,000 lying around each year for college tuition. However,we should not need to resort to great lengths to cover $6K. After all, that’s only $500 per month. We make more than half that side hustling alone.

As we often do, Heather and I turned to our detailed budget to see whether we have an extra $500 a month hidden under the budgetary mattress. Finding the fat in our budget was no mean feat, as we have already attacked our dining out, grocery, gas, and several other budget lines.

However, after examining our current expenditures, we found potential cuts without resorting to Spartan measures.  After some brainstorming, here is our solution to the College Tuition Challenge.

“Retired” Costs

Cell Phones: We purchased two cell phones almost 2 years ago, the cost of which has been rolled into our monthly bill ever since.  That charge finally ends in August (and we will not be financing phones through our provider again). Starting in September our cell phone bill thus drops $80/month. We’re also researching cheaper phone options to cover the six of us (including the 4 children) that could get this bill down further.  Possibilities include lowering the data plan from the current 16 gigs/month (did I mention 3 teenagers?) or finding another provider altogether. Current Monthly Cost: $260. Projected Monthly Cost: $180.

Monthly Savings: $80.

 

Braces: My younger daughter’s braces are scheduled to come off in the Fall! No matter the timing, the last payment is August as well.  Current Monthly Cost: $122. Projected Monthly Cost: $0.

Monthly Savings: $122.

 

Reductions in Household Expenses

Groceries: We’ve tackled the grocery budget over the past two years. However, we recently have started reviewing the details of  our shopping receipts. Our monthly grocery budget rose from $472 in late 2017, to over $500 over the past three months.  We are also failing to eat as healthy as we would like.  So we have quantified monthly spend on each item for the last 3 months. A not-so-shocking finding: we spent more on crunchy snacks (chips, pretzels, Popcorners, etc.) than we did on fruits and vegetables. We are actively working to turn this around and instituting some strategic shopping tweaks. We expect that $50 can come off the monthly budget easily.  Current Monthly Cost: $500. Projected Monthly Cost: $450.

Monthly Savings: $50.

 

Household Items: This is a catch-all for household expenses other than food. These include bulk purchases of paper products, CVS runs for shampoo, vitamins, propane for the grill, cleaning products, etc. We are exploring cheaper ways to buy staple products online, as well as optimizing the constant CVS coupon barrage.  Savings will be slim here, but there is some play. Current Monthly Cost: $120. Projected Monthly Cost: $100.

Monthly Savings: $20.

 

The Kids: This category will shift depending on how you define it. We’re not including the day-to-day expenses of housing, feeding and clothing kids. We’re talking about all the other expenses that accrue. Things like sports equipment, activity fees, family outings, gifts for parties they attend, tickets to school performances, etc. One hidden college tuition windfall we discovered: it’s expensive every month to sustain an active child in all their needs. My daughter who is heading to college was an activity junkie, and I am not a father who ever said no to such enrichment exploits. She did everything: band, chorus, theater, community sports.

I split all these costs with my ex-wife so it cushions the bottom line a bit, but the overall number was staggering when we added it up. She loves movies so we go to more movies with her than Heather and I ever would alone. All of these expenses vanish when these activities are part of her college fees. Work study and summer jobs will also cover many of the expenses that we have previously paid for. Conservatively, her move to college and shouldering more expenses saves us $200 per month. Current Monthly Cost: $450. Projected Monthly Cost: $250.

Monthly Savings: $200.

 

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Extras

Dining Out: We’ve also cut our dining out substantially over the past year. We not only eat out less frequently, we keep costs down by passing on that glass of beer or bottle of wine with dinner. We also rarely go to high end restaurants, save for birthdays and our anniversary. But looking at our current spending, there are still restaurant nights we’d like to cut.  Current Monthly Cost: $200. Projected Monthly Cost: $150.

Monthly Savings: $50.

 

Alcohol: We like to split a bottle of wine at home while watching our favorite shows. And we like a beer or two at our pub trivia nights.  Sure, we buy our wine as a mixed case for a 20% discount. And we never drink heavily. But at our yearly physicals we report to our doctors that we drink “2 glasses of wine, 2-3 times per week.”  Our goal now is to have reality match that lie.  Current Monthly Cost: $150. Projected Monthly Cost: $100.

Monthly Savings: $50.

 

Travel: Over the last year or two, we’ve cut down our long weekend travel. Finding a summer vacation for all our children is more challenging as they age, and we’ve largely put that aside for more targeted shorter trips with one kid at a time. We’re also looking to be more strategic about our travel over the next 2-3 years. Our plan is to take three to five days trips three times a year. December-born Heather gets a large annual monetary birthday/Christmas present from her Mom that largely pays for one of those trips. Current Monthly Cost: $300. Projected Monthly Cost: $200.

Monthly Savings: $100.

 

Total Potential Savings = $672/month, $8,064 annually!

We’ve left out other areas we reviewed that near-term savings were not likely or feasible for us, but may be for you. These include cable/Internet, gifts, life insurance, and entertainment.

Take the College Tuition Challenge

It’s stunning how much “extra” there is in the budget when you don’t feel that you’re a profligate spender. However, when facing college tuition up close, you get scared straight fast. Before panicking, sit down and go through the exercise above for yourself. Account for the fact that your child will be away for 7-8 months per year. How much will that save alone? Look at bills that may have cheaper alternatives. See if there are other expenses coming off your monthly total, like braces or a product you financed. Then make a few hard decisions about the extras you can live without. And don’t forget, there are always side hustles to help close the gap!

You may be pleasantly surprised to find that college tuition payments are actually in reach. Our exercise showed us that $6,000 is attainable even of we don’t meet every goal above. I’m feeling a little better. Now we just need to execute the plan and try not to cry when we leave my daughter in her dorm room in September.