Wednesday, March 25, 2009

Lil Green Baby College Fund

Have you started saving for your lil green baby's college fund? This tip was too good to not to pass along. (Thanks Moll!) Do it now! Go to CFNC (you do not have to live in North Carolina to use this, and it doesn't even matter where your child winds up going to college!) and set up a new529 Savings account. Most of the low cost plans are run by the nation's two lowest cost financial houses, Vanguard and TIAA-CREF. With these state-run plans you pay no commissions and management expenses around .50% to .80% vs. setting up your account with commissioned sales people, stock brokers, financial planners, or insurance agents. Most places that offer these accounts force you to pay large commissions as high as 5.5% to have your money put aside for your child. That means each dollar instantly becomes 94.5 cents. In addition, many plans have gigantic management expenses that destroy your child's savings. Those expenses are as high as 1.5% or higher. NOT CFNC, no sirree! Just the money that you start saving for your child, no hidden fees. Among the Vanguard plans you can choose a conservative, moderate, or aggressive route, mainly depending on the age of your child. The younger the child, the more aggressive you can be. It only takes about 15 minutes and $25 to set up. I elected to have the minimum ($25) drafted every month out of my bank account, but you can add any amount on your own timeline if that works better for you. Don't think you have enough money? Trust me, if I can do it, anybody can. Cut out one Starbucks drink a week and you have your $25 a month. You can even set up your 529 Savings Account before the baby is born, for you planners!

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