Credit freeze is needed more than ever

Multiple companies are getting hacked daily (link to the table 2004-2024 breaches in Wikipedia). 

Just the recent AT&T breach - we are not current customers, but per reports, even the data of previous/old customers was taken. 

It is getting too much. 

Last week, instead just keeping fraud alerts, we changed the status to FREEZE at all three credit agencies (Experian, Equifax and Transunion). 

To keep a freeze is free and it doesn't need to be renewed yearly like the fraud alert. 

Also with a fraud alert it is still possible for some one else to open a new account in your name, but the freeze has to be temporarily lifted for a bank to be able to check the credit score to open a new account. 

Since we don't plan to open any new bank accounts or credit cards, it is best for us  to keep the freeze. 

The links to official credit agencies sites are below:

Transunion

Equifax

Experian

College account calculations - will $100,000 be enough?

 

This months our college fund 529 account reached $100,000.

Will that be enough for college? 

Our daughter is 14 years old this year. She will start college when she is 19, or in 5 years. 

Let's see the costs of the local college and project the costs with inflation 5 years forward. 

Current 4-year college costs:

Local college costs per year are $26,997 (including $9,674 tuition and $17,323 in books and on campus room and board). 

Taking out on campus room and board and leaving generous $5,000 for books ect, the college costs per year are approximately $15,000. 

For the four years of college it is $15,000x4=$60,000. 

Now the inflation needs to be estimated to get the costs closer to reality. 

Projected costs with inflation:

With recent inflation going crazy, I will project higher than historic inflation (using inflation calculator).

With 5% inflation in 5 years that will be $76,567

With10% inflation in 5 years that will be $96,630

Hopefully the inflation will not be higher than 10%. 

Looks like with 5% or 10% inflation in 5 years time the sum of $100,000 should be enough. I am stopping the contributions. The balance will still be invested as "aggressive growth" for now, since I don't feel that the market will go significantly down this or the next year. As soon as I feel "uneasy", I will move all to cash (the same as I did in 2022). 

As a reminder to myself, there is no tax benefit for contributing to this 529 plan since we live in a state without state income tax. However, there is still the benefit of growing and withdrawing tax-free for qualified educational purposes. 

If I withdraw to use on non-qualified expenses, I will pay both federal income tax and a 10% penalty on the earnings. 

Update 5/2/2024

The federal government only allows distributions to pay for tuition up to $10,000 per year to pay for elementary and secondary schools. 

There is NO annual limit for college expenses. 

Remaining funds can be rolled over into the a beneficiary's Roth IRA, up to a lifetime limit of $35,000.

The rollover amount each year cannot exceed the annual Roth IRA contribution limit, which is $7,000 for 2024. 

Cash flow challenge update 2023

 

2023 was OK. 

The cash flow was about $160,000. Had to pay a lot of taxes on that and managed to underpay in the first quarter. Of course there was a penalty, luckily only $58. But still, I need to be careful next time. No one can't get away from this type racket, but at least I will try not to get double racketed.