College, Car, and Home Costs for Our Kids

[brydan]

My .02 in regard to family members, lead by example. Trying to convince them to do something they're not interested in is a losing proposition most of the time as well intentioned as it may be.

Stop focusing on "how hard life is now". It's never been easier to make money than it is right now. Just looking at hourly wages isn't the whole story. To use an example from my life, when I started doing landscaping work in the early 90's, knowledge of the trade and how to run a business took a heck of a lot of effort and mistakes to learn the ropes. Now there's endless resources on how to learn a trade and/or run a business. Not to mention investing opportunities. Get on Fidelity or something and there's a lifetime of investment opportunities at your fingertips. Compare how easy that is to 30, 40 years ago.

 

[TreeCreep]

What do you want to know? I’ll run it by the Illuminati

@NMSbowhunter had me at Hilux
Stick shift diesel Hilux is my goal retirement rig .

 

[neonomad]

This is a big topic. I'll suggest a couple external resources:

Retirement Planning Education A podcast not specifically related to education planning, but lots of nuts & bolts of financial topics. I really wish this was available 20 years ago.

Bogleheads This site is the saddlehunter.com of DIY personal finance.

IMO the Bogleheads highlight a very important concept in investing… very very few people / experts can beat the market over time. Focus your time and effort into earning, saving, and investing, and direct that investing into a simple asset allocation that you keep an eye on. Once you have all your ducks in a row you could take a piece of money and try to get fancy with it (individual stocks, real estate, etc), but active investing should be way down the list of things to waste time on for the large majority of folks.

 

[TreeCreep]

IMO the Bogleheads highlight a very important concept in investing… very very few people / experts can beat the market over time. Focus your time and effort into earning, saving, and investing, and direct that investing into a simple asset allocation that you keep an eye on. Once you have all your ducks in a row you could take a piece of money and try to get fancy with it (individual stocks, real estate, etc), but active investing should be way down the list of things to waste time on for the large majority of folks.

100% .
Excuse my nonsensical response.
A recent resource for beginners is Ramit Sethi’s “ I will teach you to be rich”.
It’s more geared to millennials then Dave Ramsey ‘s tough love approach and it gets into investing passive / active examples. Cites millionaire next door as well.
I ve always liked / respected the Swenson /aka Yale approach in a smaller active portfolio as it helps with financial literacy understanding.
* I am not an expert and my defined retirement date fund will outperform my individual picks. No doubt.
For every Netflix there is a Kodak .

I’m very fortunate to have a great financial advisor, parents that reinforced investing / saving early and a wife that lets me toe the budget line on adventures.

There is a chart that I’m having trouble posting here that show’s buying $150 Nike shoes every quarter over 10 years vs buying Nike Stock. I believe it would be over $22000 with added dividend payouts every year .
I’ve had discussions with my kids to reinforce delayed gratification , credit and private vs public ownership with that example . ( I know Nike can get into foreign labor and politics - it’s just an easy to understand example. )
Quarterly is an excessive example but sadly realistic for a high school aged athlete
. The s&p 500 beats this example by a large margin.

next Christmas or birthday , May I suggest gifting sibling a fidelity or vanguard account?
Challenge them to contribute, reach a goal , etc.
offer an small gift incentive / sibling bet if they reach goal by next holiday.

I have one brother who is highly driven and another that well , I have been thinking about a similar way to get him on track.

I don’t have the inclination to post stats on inflation. It’s not going away and real estate , secondary education, elder care , stock appreciation, barrier to small business entry, defy logic

 

[Nutterbuster]

For basic calculations, just assume the same rate of inflation on everything you earn and spend. The only thing you’re applying compounding interest to is the money you save/invest.

I assume average rate of inflation for appreciation on real estate. 5% compounding for standard retirement accounts/investments. Both are long term plays, and can’t be predicted or gamed in the short term.

Over the past 50 years, college tuition has increased at a 10.8% average annual rate. Median household income has increased at 6.1%. New car price has increased at 8.3%.

A "basic calculation" assuming the same rate of inflation on everything across the board leaves you screwed from what I see.

I am very specifically trying to make sure that I have enough set aside to buy a thing when I need the thing. I understand that "anything could happen." I'm looking for a general price range, so that I can target it and encourage my siblings to target it.

I have 4 pages and counting of general financial advice.

Again, if anybody can give me their best estimates of what college tuitions, new cars, home prices, and median income will look like in 17-26 years, that'd be cool.

 

[brydan]

Again, if anybody can give me their best estimates of what college tuitions, new cars, home prices, and median income will look like in 17-26 years, that'd be cool.

People are giving you basic financial advice because that's what you need to succeed, not a crystal ball. It's been said that investing is 90% behavior and only 10% head knowledge.

When it comes to housing prices, what you can afford is intricately tied to interest rates. My parents bought their first house at pretty much credit card rates. Even now they're low by historical standards and that has a major influence on what a person can afford. As college tuitions increase, increasing numbers of alternatives to higher education arise. As new car prices increase (also tied to low interest rates) fewer people buy new cars which puts downward pressure on prices. These things don't simply follow a straight line analysis.

If economics were to easy to predict economists wouldn't be wrong 50% of the time . That circles us around back to the beginning. Start following basic personal finance "rules" that people have suggested and the answers to these questions start sorting themselves out as your financial position improves over time.

 

[thedutchtouch]

Im not sure you will get a concrete answer. Partially because the statistics vary wildly depending on what you consider "good data". For example the link I provided earlier has college tuition climbing at 4.8% per year historically, and you're saying 10.8%.

I also can't give my own numbers because, well, life's changed a bit. When I was married we started 529s and I saved as much as I could toward retirement. Now I'm not saving as much and paused 529 contributions as well because I'm scraping all my pennies together to buy half my house from my ex (went a little wild with cathartic spending during the divorce this last year so that doesn't help either lol, some things may be in the classifieds soon). It's a short term stretch that will hopefully benefit me (and my kids) in the long run, treating the house as an investment.

I hope to have that all wrapped up soon and then back to saving for college and retirement directly and thankfully my parents are able to contribute to my kids college fund some as well (my dad's a true American dream success story but that's another thread entirely)

I plan to help my kids get their first cars, likely the same way my parents did with me- saving the truck I have now, so I'm 10-15 years it can be theirs and I'll get something new for me. Maybe I'll pick up a used civic or something in the next few years and give them that instead. Nothing flashy, just something relatively safe and reliable, that they can share with each other while in high school/college, like I did with my siblings (well the older one at least, younger brother got his own lol)

buying their first house I'm not so sure. My ideal plan is to give one/both of them this one (have it paid off by that point) and I move to somewhere in the woods with a small cabin and a giant workshop/barn and a few acres of deer woods away from people lol, but we'll see if that works or not.

Circling back to the divorce, I have no idea what their mom will contribute, and in my opinion she doesn't really have a solid grip on financial reality so I'm doing my best to cover everything I can myself. Makes the calculations even more fun.

 

[Nutterbuster]

. For example the link I provided earlier has college tuition climbing at 4.8% per year historically, and you're saying 10.8%.

Right. That's exactly what I'm digging for. I've read 6%, and I had a member PM me that his uni had gone up 8% annually.

I want multiple inputs so that I can figure a high-low range and form a general idea of what these things will cost.

Over what time period did your link calculate their increase? I couldn't find it. It seems that the further back you go the worse things look because of the 80s.

 

[TreeCreep]

Again, if anybody can give me their best estimates of what college tuitions, new cars, home prices, and median income will look like in 17-26 years, that'd be cool.

Fidelity and other sites offer a tuition / 529 calculator these should factor in inflation.
Fidelity example:
2024 avg Annual Estimate for private: $56190
2024 avg Annual Estimate for public: $24030

Respectfully, best you are going to get is “predictions” then.
The caliber of these predictions in an internet hunting chat; is a function of what it reveals about the subject, how it frames or reframes the topic, and maybe, it inspires a productive dialogue. Provided it’s a limited grouping of random persons that value recreational time over maximizing revenue.
Is inflation for any of your categories going to be 3% or 9% ?
Historically you already have an estimate to act on.

Anecdotally- I am touring colleges with my oldest. It’s tough to grasp compared to when I graduated in 2001, for similar state schools.

I once posted asking strategies to get from average hunter to mature buck killer.
Some well intentioned but misguided fellow suggested I watch Jeff Sturgis. Others had helpful general hunting strategy I could implement.

 

[Nutterbuster]

Let's reframe the question.

What did your degree, your first car, and your first home cost you when you purchased it, and what are those things valued at today? That's probably easier to get a concrete answer for.

 

[GCTerpfan]

Let's reframe the question.

What did your degree, your first car, and your first home cost you when you purchased it, and what are those things valued at today? That's probably easier to get a concrete answer for.

Degree - In State University tuition: $3,600/yr in 2000, up to a little over $4,000 before I was done in 2005. Current: $7,700.
First house - $105,000 in 2006. Sold by me in 2010 for $120,000 with some minor renovations. Sold again in 2022 with some additional renovations for $245,000
First car in 1997 was 5 yrs old Chevy Berretta with 100K miles. Purchased for $1,100. Estimated value today for similar car: $4,000??

 

[sureshot]

Assemblers on our line are currently making what an entry level (recent college grad) engineer currently make. Believe me, new engineers with their student loan debt are aware of that fact.

Skilled trade jobs are paying well and the huge rise in in college tuition the last 20 years isn't sustainable (in my opinion). Millions have huge student loan debt they can't repay and they can get the same pay with a job without a degree. The my kid has to go to college to be successful in life is no longer as widespread as in the past 10 years.

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[TreeCreep]

I’ll bite

Me
1984 AMC Jeep Cherokee with 85k in 1996. @ $4500 , rounded because #’s are blurry .
straight 6 and carburetor
1996 base Cherokee about $18000
2023 base new Cherokee -$37000 seems low, I rented one and that thing was a turd

my kid- 2023
2016 Jeep Wrangler sport with 100k -$21000

College 2x-3x what it cost 20 years ago ( 2x resident vs 3x out of state )

I made around $7 an hour at my high school age jobs. My daughter is around $20.


I’m curious to see your final thesis.
not being flippant, I enjoy your posts

 

[Horn]

First vehicle, 2004ish or so was a 93 F150, $3k. I'm going with no change here cost wise.

Apprenticeship = gas back and forth, pretty much all materials were provided. Finished in 2010, probably same value.

First job '05 was $8.50 an hour. Varied widely then and now even for apprentices

( I changed first job from 01 to '05)

 

[Nutterbuster]

First vehicle, 2004ish or so was a 93 F150, $3k. I'm going with no change here cost wise.

Are you saying there's been no change in value in a '93 F150, or that there's been no change in value to the cost of a 10 year old vehicle? Because if you know where to buy a 2014 F150 for 3k, I'll take 4.

As far as trade schools and apprenticeships, this is a whole nuther conversation, but what percentage of your field is women?

 

[Horn]

Are you saying there's been no change in value in a '93 F150, or that there's been no change in value to the cost of a 10 year old vehicle? Because if you know where to buy a 2014 F150 for 3k, I'll take 4.

As far as trade schools and apprenticeships, this is a whole nuther conversation, but what percentage of your field is women?

Sorry for the confusion. There's certainly been change in value, but cost for those older trucks is coming back up. I blame fellers like me who are nostalgic for them. In fact bought an '86 F250 for $3200 or $3500 in 2020 ( I think)

As far as Females in my trade, basically zero in my personal experience but take that with a few gains of salt. I intentionally work at tiny shops. There was one woman I had some classes with on my apprenticeship. I don't know if she stuck with it or what. Oh and after I had left a job I know one place hired a college age women, again I'm not sure how that played out

 

[neonomad]

Right. That's exactly what I'm digging for. I've read 6%, and I had a member PM me that his uni had gone up 8% annually.

I want multiple inputs so that I can figure a high-low range and form a general idea of what these things will cost.

Over what time period did your link calculate their increase? I couldn't find it. It seems that the further back you go the worse things look because of the 80s.

I skimmed a few resources, here’s one. I don’t think 5% is an unreasonable assumption. https://lifetimefinancial.com/the-lifetime-blog/estimating-the-future-cost-of-college

 

[Horn]

Probably only tangentially related but don't over look what we call Vo-tech or Career Center , a vocational school that you can do half the day at while still in high school, for free. Especially useful for those that aren't really college bound in their youth, even if it just ends up ruling a job field/ career out. That's worth the cost and you learn a skill while you're at it. I did it in my current field and it sure made that apprenticeship a cake walk, and put my foot in the door for my first job because I did well.

I often encourage older kids to take advantage of this, even if they're headed a different direction. Where I went offered office type jobs not just trades, like accounting. Its possible to get a deeper dive in some subjects there than you do normal high school, and that can be useful too.

The biggest benefit to me is that you'll always have a skill to fall back on, one that is probably in demand. Or a decent paying job to help get you going or pay for schooling or whatever.

Edit : careful with this idea. I did skate through my apprenticeship. My being cheap and unwilling to redo my apprenticeship classes kept me from actually getting an associates degree. I'm like ( was ) 5 or 7 credit hours short because I didn't take general Ed stuff, like 100 level English or civics. Tested out of or traded into harder classes than most for most of my actual classes due to my previous education/ work experience. The conversation about finishing the degree derailed basically because the college wouldn't let me have a degree for next to nothing ( 5k or so for the few things I needed, plenty of credit hours earned)

Sorry about the extra long post

 

[krub6b]

Let's reframe the question.

What did your degree, your first car, and your first home cost you when you purchased it, and what are those things valued at today? That's probably easier to get a concrete answer for.

First car I purchased was a 1993 S-15 extended cab that had all the miles on it(well over 200k) paid $1000 cash, a similar age Chevy colorado with 200k miles is valued at $5750 according to KBB.
When I started at University of Misouri-Rolla in 2005 it was roughly $15k a year for a full time engineering degree, current rates are sitting just under $30k.
Bought our house for a song in 2010 because it was foreclosed on, $36k. Last appraisal was $70k. Could most likely get more on the market.

Don't think even Dave Ramsey has a valid strategy for those kinds of inflation rates.....not sure how to set my kids up for success other than try and instill a solid work ethic, common sense and a better understanding of financial responsibility than I had at 18, or even 30, for that matter

 

[Gator]

IMHO you can not over save only under save. Nothing else matters unless you are starving in order to save.


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