Married With Children

Taking advantage of two incomes makes raising a family much easier

lower, we can refinance.” There’s a risk that the mortgage rate will shoot up after seven years, but the Wilsons are willing to bear that risk because of their prospects for higher incomes and the possibility that they might be moving to another house.

Indeed, mortgage refinancing can help parents cut costs and put more money aside for education. “We refinanced our mortgage in early 2001 because interest rates dropped from 9.78% to 7.25%,” says Andrew Bryson, 41, an estimator and project manager for an electrical contractor in Toledo, Ohio. “We had seven years left on our old mortgage. Therefore, even though our new mortgage is a 15-year loan, we’re paying it off on a seven-year schedule. We want to be able to stop making mortgage payments then because our two children, now 15 and 11, may both be in college and graduate school.” Refinancing saved the couple nearly $54,000 over the 15-year life of the loan.

Speaking of school, don’t put off building an education fund for your children: the sooner you start, the better. That’s especially true if you think you might have to pay for years of private school before the first college application essay hits the word processor.

“We expected to send our children to private school,” says Andrew. He and his wife, Princess L., 40, a certified surgical technologist, have been preparing to pay school bills since the beginning of their 19-year marriage.

“We saved regularly through a credit union,” Andrew says. “At first we put in 5% o
f our income, but that has gradually increased over the years. We had a pay-yourself-first strategy: Before we paid any of our other bills, we would put money into the education account. That has paid off: Our two children are now in private school, at a total cost of $8,000 per year, but we’ve managed to stay ahead through our savings.”

The Brysons have been saving for their children’s education in their own name, a practice that is endorsed by their advisor, Toledo, Ohio, financial advisor Bill Harris. “If you use custodial accounts and place the money in the child’s name, you’ll enjoy some tax savings,” he says. “However, the money belongs to the children when they come of age, as early as 18 [in some states]. In addition, saving in a child’s name reduces the family’s eligibility for financial aid. When you save in your own name, you have more control and a chance to receive more financial aid.”

Now that the Brysons’ older child is in high school, larger school payments are on the horizon. “She wants to go away to college,” Andrew says, “and then to medical school. So we’ve begun to invest more aggressively, using a mix of mutual funds.”

There are other vehicles that can help accumulate cash for college. “We have been using U.S. Savings Bonds for an education fund for our two daughters,” says Keith Kountz. Savings bonds have many advantages: They’re safe, easy to buy, and yields will go up if interest rates rise. Taxes

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