My wife and I have two children (and a third on the way) - and we think that it’s important to save for their college educations.

Our oldest daughter is eight, our son is four, and our daughter will be born in the next two months. We have been saving for our daughter’s education since 2006 and our son’s since 2007. Once the baby is born, we’ll begin saving for her college education, as well.

I’ve created a chart of our current plan -

Year	Child 1	ESA 1	Child 2	ESA 2	Child 3	ESA 3
2006	7	2000.00
2007	8	4160.00	3	2000.00
2008	9	6492.80	4	4160.00	Birth	2000.00
2009	10	9012.22	5	6492.80	1	4160.00
2010	11	11733.20	6	9012.22	2	6492.80
2011	12	14671.86	7	11733.20	3	9012.22
2012	13	17845.61	8	14671.86	4	11733.20
2013	14	21273.26	9	17845.61	5	14671.86
2014	15	24975.12	10	21273.26	6	17845.61
2015	16	28973.12	11	24975.12	7	21273.26
2016	17	33290.97	12	28973.12	8	24975.12
2017	18	37954.25	13	33290.97	9	28973.12
2018			14	37954.25	10	33290.97
2019			15	42990.59	11	37954.25
2020			16	48429.84	12	42990.59
2021			17	54304.23	13	48429.84
2022			18	60648.57	14	54304.23
2023					15	60648.57
2024					16	67500.45
2025					17	74900.49
2026					18	82892.53

Our plan assumes an 8% annual return on our investments. We make contributions to Educations Savings Accounts (ESAs). The annual limit for 2008 is $2000 per ESA, per child.

One of the unique things about the ESA is that, once a child reaches 18, no more contributions can be made to that child’s account.  For my daughter, I have 10 more contributions to make.  For my son, I have 15 more contributions to make.  For my newborn, I have 19 contributions to make.

Adding 15+10+19 = 44 contributions of $2000 between now and 2026!  That, my good friends, is $88,000.

We live in Georgia, where most students qualify for the Hope Scholarship - which pays for public education with proceeds from the lottery.  I have no idea if the Hope Scholarship will be available for my kids - but I do know that I want to have a substantial amount saved for their educations, just in case the scholarship is no longer around.

Clearly, even if we save the amounts indicated above, we’ll still have to include a ‘College Expenses’ category in our future budgets.  In other words, we’ll save for college in the ESAs, but we’ll also help our kids to pay for college expenses, after they’re actually attending.  Plus, we’ll expect our kids to work while at school, and we’ll expect for them to pay for some portion of their educations.

For much more about ESAs, checkout this Wikipedia article, this article from Fool, and this article from Saving For College.

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I’ve combed through the archives of the Money Blog Network - looking for articles about debt reduction -

Here are my favorites -

All Financial Matters suggests that we take responsibility for our financial situations. I could not agree more!

Consumerism Commentary suggests 6 steps for building a better debt reduction plan.

Five Cent Nickel suggests that you contact your credit card company and ask them to reverse your fees.

Free Money Finance reminds us of the dangers of co-signing a loan.

Get Rich Slowly suggests ways to curb compulsive spending. While not ‘technically’ about debt reduction - This post really hit home with me.

Mighty Bargain Hunter suggests that if you receive a financial windfall - put it to good use!

Wise Bread reminds us of the power of positive thinking. I actually bookmarked this post 10 months ago - I like the ‘upbeat’ nature of the post.

And, of course, I’ve written several posts about debt reduction, including this recent post about the basics of debt reduction.

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Calling all readers and personal finance bloggers -

If you could improve one area of your personal finance management, what would it be?

Would you do a better job of budgeting?

Would you save more in a specific budget category?

Would you spend less for certain items?

Would you keep better records?

What ONE area needs the most improvement?

Leave a comment and let us know!

If you have a blog, and you want to write a post about this topic - contact me, and I’ll link to your post.

Answers from other bloggers -

Wide Open Wallet would like to spend less on food.

Making Cents of Debt is working to stay on budget.

Cash Money Life needs to do a better job of organizing financial accounts.

Mrs. Micah would like to improve shopping habits.

Blunt Money is going to learn more about investing.

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Over the next few days, I’ll be analyzing our budget categories. Today, I’ll take a look at the ‘Automobiles’ category.

Cash	Gasoline	Gas for car
		Gas for van
		Gas for truck
Checking	Routine maintenance	Oil/Tire rotation car
		Oil/Tire rotation van
		Oil/Tire rotation truck
Savings	Insurance	Annual Premium
		Deductible
	Maintenance	Save for maintenance
	New Tires	Tires for car
		Tires for van
		Tires for truck
	Replacement	Save for newer car
		Save for newer van
		Save for newer van

I’ve listed these by priority. As I enter data for various categories, I start at the top and work my way to the bottom of the page.

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It’s hard to believe, but our baby girl is due to be born in less than nine weeks!

We have been working around the house, getting ready for her birth.

We have created a new budget.

We purchased a few new things for the nursery.

We cleaned out our closets and held a garage sale.

Finally, last week, I cleaned out our laundry / storage room (to make space for her new stroller) - and I found a few things to sell on eBay.

All of the auctions are scheduled to end in less than an hour.  Once the auctions end, I’ll pack the items up for shipping.  Once I receive payment, I’ll head to the post office and ship the items.

After all is said and done, I’ll make $75 for two hours worth of work.  Not bad, considering that the things I’m selling were ‘in the way’ in the first place.

• 13 Comments