As many of you know, I’m a big fan of Upromise.  Sign up for free, register your debit cards, credit cards, and grocery bonus cards, and you can earn cash rewards for your kids’ college.  Upromise encourages you to invest the rewards in 529 plans, but, I don’t use 529 plans to save for my kids’ college.  Instead, I like to withdraw my money from Upromise, once a year, and use the money to fund my kids’ Education Savings Accounts (ESAs).

From the Upromise site -

Can I withdraw company contributions from my Upromise account without transferring them to a savings plan, and if so, how?

You can withdraw your Upromise contributions at any time during your membership. To withdraw company contributions from your Upromise account, submit a letter in writing to Upromise requesting a withdrawal from your Upromise account. The letter must state your full name and exact amount that you would like to withdraw, up to total amount available in your account, pending contributions are not eligible for withdrawal.

For the protection of our members, we require that your letter either be notarized or contain a Signature Guarantee if the withdrawal request is in excess of $200. A Signature Guarantee is a guarantee you can obtain from a financial institution, such as your bank, that your signature is yours and that it is genuine.

Withdrawal letters should be sent to:

Upromise
ATTN: Customer Care
P.O. Box 55555
Boston, MA 02205-5555

Download Withdrawal Request Form (Direct Link Removed)

Checks are sent once per calendar quarter, so you should typically receive your check within 12 weeks of your request being received.

As you can see, Upromise makes it easy to get to your money, and then you can do whatever you want with it.  (They’ve even created a Withdrawal Request Form.  Print it out and mail it it in.  In about 12 weeks, you’ll have your check!)  Of course, you could leave your money in the Upromise account and invest it in a 529 plan.  Whatever you decide to do, it’s good to know that you can get to your rewards money, if you want.

Right now, I have more than $50 in my account.  I’m going to mail my letter Friday morning.  I’ll let you know when my check arrives.

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Just a quick reminder -

If you haven’t signed up for Upromise, now is the time! They have extended their free $10 offer throughout June. Several readers took advantage of this offer in March and April, and now they’ve extended it until June 30th!

Click here to read more about Upromise and the free $10 offer. Or, if you are ready, go ahead and click here to sign up for you free Upromise account and save for college while you shop.

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I like to create simple, easy-to-understand, financial goals. I have created a chart, outlining my ‘contribution goals’ for the next few months. I will make contributions to two Roth IRAs, two Education Savings Accounts, and a SEP-IRA.

(I also contribute to a 403b through work and my wife contributes to her pension plan. The chart reflects contributions to be made from ‘take-home’ pay.)

Contributions to the ESAs and Roth IRAs are made with ‘after-tax’ dollars - and grow ‘tax-free’.
Contributions to the SEP-IRA reduce current taxes and will be taxed when withdrawn.

Contributions in green have already been made.

Contributions in blue still need to be made.

I have already fully-funded Roth IRA #1 for 2008.

I am working to fully-fund ESA #2 for 2007 and the SEP-IRA for 2007 before April 15th.

According to the IRS website -

What is the time frame for depositing contributions into SEP-IRAs? IRS Retirement Faqs

Contributions for a year must be deposited by the due date (including extensions) for filing your Federal income tax return for the year.

Contributions (to ESAs) must meet the following requirements. IRS Publication 970

They must be made by the due date of the contributor’s tax return (not including extensions).

When Can You Make Contributions (to Roth IRAs)? IRS Publication 590

You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions).

So, technically, if I were to file for an extension, I could have a few more months to fund the SEP-IRA for 2007 - but, I’m not filing an extension, so my deadline will be April 15th.

Finally, while this chart reflects a goal date of April of 2009, I will try to fully-fund all of these accounts much sooner.

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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 -

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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Just a quick reminder -

If you want to make contributions to a Roth IRA, a Traditional IRA, or a Coverdell ESA for 2007, you need to make them before April 15th.

If you haven’t opened an account, and you want contributions to count for 2007, you have until April 15th to open the account AND fund the account.

Last year, my wife and I opened Roth IRAs in March, and fully-funded both of them for fiscal-year 2006. We even dug into our emergency fund so that we could ‘beat the deadline’. Why? Because, by design, these contributions are ‘use it or lose it’. If you miss a year, you miss a year, period.

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I recently opened a new checking account. I have a new debit card, associated with the checking account. I’ve been using the debit card for a couple of months, mainly for smaller purchases like gas and food. Well, I logged in to my Upromise account today - and I realized that I had forgotten to register my new debit card. I quickly grabbed my card and registered it. In 4 or 5 days, I’ll start earning rewards from Upromise, whenever I swipe the card.

I was reviewing my Upromise account - I’ve been a member since 2004 - and I have accumulated a decent amount of money. My parents and my wife’s parents have added their cards to our account - so our entire family is earning rewards for college.

So, if you have a Upromise account, and you have a new debit {or credit (boo!)} card, you might want to make sure that you have registered it with them.

By the way - I am a Upromise “affiliate” - so, if you don’t have an account with them and you would like to sign up for one, click this link - Upromise.  I’ll make a few bucks and you’ll start earning free rewards.

Oh yeah, I almost forgot.  If you don’t want to transfer your Upromise rewards to a 529 plan, you can get them to send you a regular old check.  Click here to read an article that I wrote about how to get Upromise to send you a check.

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