Saving for College: How a Young Couple on One Income Helped Their Three Kids Graduate Debt Free!

We became parents while we were still in college ourselves. Both of our parents had committed to paying for our college tuition and despite the little bump in the road with an unplanned pregnancy, continued to pay for our college so that we could graduate debt free. After graduation, we quickly saw how very beneficial it was for us to not be burdened with debt and we were able to start our life on a firm financial foundation. I chose to stay at home with our children {three of them all by the time I was 26!} and despite only having one income, we lived below our means, so that we could hopefully provide the same gift of higher learning for our own kids. This is a bit of the story on how we did that. We were able to turn financial limitations into financial freedom, not only for ourselves, but for our children as well. There wasn't any magic involved, just mindset, strategy, and steady action and sacrifice. I'm not sharing any magic formula, but instead, hoping you are inspired to plan intentionally not only for yourself but for the next generation.

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Saving for College: How a Young Couple on One Income Helped Their Three Kids Graduate Debt Free!

SAVING MONEY FOR COLLEGE SO KIDS CAN GRADUATE DEBT FREE


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I have always been good at stretching a dollar. I became even better when it was out of necessity. Despite getting pregnant years before either of us had planned, we didn't sacrifice the ultimate dreams we had for our family. For the first two years of our sons life, we were college students. We lived on a very modest stipend that our parents provided. They continued to pay the same amount they were paying when we were living in our respective sorority/fraternity houses, despite how our living arrangements {and marital status!} changed. We had $1200/month to live on {$600 from each set of parents} for our family of three. This included all of our living expenses as well as our health insurance since neither of us were covered under our parents insurance once we were married. Like I said, I was good at stretching a dollar!

Once we graduated, we decided that Mike would get a job and I would stay at home. At this point, even his modest starting salary as an engineer was more than double what we had been living on during college. After graduation we made a cross country move and living expenses on the west coast were quite a bit more expensive than they were in the Midwest.

There was a very clear plan in place for us to meet our financial and family goals and we had to continue to remind ourselves of those as we made choices in how we lived.

In our nearly 30 years of marriage, we have been able to do things that I know many people only dream of being able to do.

We became homeowners at 22 and 23 years old respectively. We paid off our second home loan in 10 years, and by the time we were in our early 40's we owned a home in the greater Seattle area free and clear!  We were also able to simultaneously save for retirement while also putting away money for our three children for college. This is all because we were able to live below our means so that we could make our goals. Here's how we did that.

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Mindset Over Lifestyle


A key lesson we learned wasn't about scrimping on lattes, but instead aligning money with purpose. We budgeted wisely so that we could prioritize our lifestyle, which included me being at home with the kid. I saw saving money as part of my full time job. We also started paying down our mortgage while saving any additional money for college savings and retirement. Nothing tastes as sweet as knowing you have a purpose for your long term goals, so we could easily delay things like new cars, vacations, eating out and new clothes.

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Every Little Bit Helps


We didn't start saving HUGE amounts of money for our kids college savings accounts. Since we were living on a very modest income {and only one of them!}, a lot of times, it was a few hundred dollars here and a few hundred dollars there. We had very generous family members who would often gift $100 for the kids birthdays. Instead of buying a Lego set, or other toy that would be ignored in a few months time, we decided that we would match everything we put into our kids college savings accounts. 

Initially, this didn't mean much to the kids, because they were too young to understand. As the kids got older they understood that their $100 investment turned into a $200 investment and they fully supported the matching gift. 

Start Early and Save Often


Compound interest is your friend! But it only works if you start early and save often. Again, every little bit helps. Knowing that at the end of our 18 or so years of raising these kids, there is a next step. This shouldn't be a surprise to anyone, however, I hear so often from parents who were caught off guard. It does go fast, I agree, but you should also start with a plan and use compound interest to your advantage!

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Staying Frugal Not Frustrated


Some people might feel constrained by being on a budget, I take it as a challenge. I like seeing how far I can stretch a dollar and finding new ways to do that. One of the big ways we were able to do that when the kids were little was by buying used for just about everything! I loved the hunt of finding something at a garage sale or thrift store at a HUGE discount that they were either wanting or needing. The biggest reminder for me is that the profit is in the purchase. I'll often use an item and then be able to resell it at a MUCH higher price than I paid for it. Not only do we get the enjoyment of using the item for free, we also then make money on it.

I know a lot of people feel the pinch of expenses in early childhood, but because I was able to buy and resell, most things we needed or used were free. I used cloth diapers for the younger two and was able to resell the diapers I had used on them for a profit! Most of the kids clothes came secondhand and was resold after they wore it. I had a keen eye for high price baby and kid gear and was able to buy it low and then resell it high.

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Being Frugal Means Freedom


Many people will never understand the freedom that comes with living debt free. Only about 30% of homeowners under the age of 65 own their homes outright. Many people wondered why we'd want to pay off our mortgage instead of investing more of that money in the market, but we were doing that as well! Once our mortgage was gone, we could then redirect thousands of dollars every month toward giving generously, investing, and building our kids' future.

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Buying Smart and Under Budget


In our home, I'm the dreamer and Mike is the realist. Thankfully, Mike often keeps us grounded and on track financially. We were able to buy our current home as a short sale in December 2010. We paid roughly 40% off market value. We snagged that bargain and that helped set the stage for long-term savings. We leveraged the equity gain from our first home to fund a substantial down payment, and while we initially had a 30-year mortgage, we were then able to refinance to a 15-year home loan mid-way through after interest rates went down. This meant we were then able to pay off our home in five more years, closing our mortgage in just a decade. We were both in our early 40's.

Many people shop for a home at the top of the budget that they are approved for. Banks know that you will forgo things like vacations and large purchases at the expense of your home. We knew we wanted a home that was well within our reach, and both times, selected a home that was FAR below the rate the bank had approved us for.

We also drive older cars. Currently, my car is 9 years old and Mike's is 14 years old. We maintain them well and drive them into the ground because there is no car that is as cheap as the one in your driveway! 

You can read more about how {and why} we paid off our home loan early here.

parents guide to saving money for college


Circumstances Change and We Shifted With Them


We weren't even in our forties when our oldest son went to university. We had money set aside for him in a college savings account, but we didn't have all of his college fully funded. Thankfully, around that time, my business started making more money and we were able to cash flow any difference so our lifestyle didn't change drastically. 

It is worth noting, that at the time our oldest went to college, my husband was still the soul income earner of our family. While his career continued to advance and he had received many promotions through the years, he was still not making six figures until after our son graduated. Many people think that they need a high earning job to be able to provide and save in the ways we did, and I want to note that we didn't have that, but we did manage to live comfortably.

We did have several very generous gifts given to us from family members and instead of spending them on new cars or vacations, we'd often set the money aside so that we could add more to our kids college savings accounts.

Give Them Choices


This is the best time to note that we weren't able to pay for ALL of our oldest son's college education. We set aside $120,000 for each child, which was the cost to fully fund and pay for room/board/tuition at the most expensive university in our home state of Washington for four years. Our son started looking at various universities all over the country {and actually some internationally}, and we {i.e. my husband who is the spreadsheet king of our family!}, sat down over coffee one afternoon and chatted with him about his college choices.

He chose a private university, that at the time, cost quite a bit more than what we had saved for him. Remember, I mentioned we didn't have the full amount of $120k saved in his GET or 529, but we had some, and we were planning on cash flowing the rest. He had been accepted to many colleges that were in the budget and would have been totally paid for, but after pouring over the spreadsheets Mike had created for him, he chose the private university that went WELL over our budgeted amount. He had secured a few scholarships that made a dent in the yearly tuition, but he still needed to take out a few loans to make up the difference.

He was willing to do that, and thankfully, he only had to take out minimal loans that he was easily able to pay off after he graduated. He also worked full time, making a really good wage on commission {selling cars!} and getting incredible experience that helped him land his first job out of college. He also took summer courses and was able to graduate a semester early, in only 3 1/2 years, which in hindsight was a blessing because otherwise he would have run up into the Covid year!

Our youngest son has chosen a path that is incredibly expensive. Flying airplanes isn't cheap, and on top of college tuition can easily double what it costs for a four year degree. We had to do something similar with him as far as spreadsheets and long financial talks about taking on debt. He had decided on a university that had an excellent program and by the end of his high school year in June, he was also awarded with what amounts to nearly a full-tuition scholarship that sweetened the deal. It's often unheard of for pilots graduating university without any student loan debt, but he will be able to manage it because of his scholarship.

And while we are talking about choices, our penny pinching daughter crunched the numbers too. Again, thanks to the spreadsheet we created with a realistic look at how much four years of college would cost and taking into account scholarships, she selected the least expensive university of the three! Getting a bachelors degree in nursing can be difficult and can often take longer than the four years, but our daughter was an excellent student and pushed through managing to graduate on time AND under budget. She even continued applying for and often getting substantial scholarships all four years through the university. We had money we had saved left over from her college and were able to turn that into a large cash deposit for her dream car because nurses need reliable transportation! And thanks to that brother of hers in the car biz, we scored a great deal!

Ways We Saved for College


Having graduated college ourselves debt free, we realized the firm foundation that it gave us as we started our family. We knew this was something that would be important for us to do for our children as well. We were committed early to funding their education so that our three children could start life unburdened by loans. Here are the various ways we saved:

GET {Guaranteed Education Tuition}-This is Washington State's pre-paid tuition plan 
WA 529- A tax advantaged college savings account also tailored to WA families


What is GET


Washington's GET offers a prepayment program where parents {and even grandparents and other family members} can lock in tuition credits at today's rates, even though the payment comes close to college time. The benefit? We pay today's rates despite heavy inflation when it comes to tuition.


What is WA 529


WA 529 is Washington's version of the 529 savings plan, allowing families to contribute after-tax dollars that grow tax-free if they are used for qualified education expenses like tuition, room & board, books, and more.

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benefits of a debt free degree



Benefits of a Debt Free Diploma

The payoff of our strategy? All three of our kids have been or will graduate debt-free which will allow them to:
  • Launch careers without looming monthly payments
  • Consider graduate school, entrepreneurship, or public service
  • Have freedom to quit a job they hate and make choices based on their happiness not their financial status
  • Build a stable future by owning homes faster and the ability to save for their own retirement taking advantage of compound interest early.
This kind of freedom is a priceless gift that we can give our children.

How You Can Do It Too!


Buy below market or refinance wisely! Buy smart and adjust your mortgage terms so you can shave years off your home loan.

Buy used and save the difference! This goes for anything from cars to clothes!

Target high-interest debts first. Don't dump money into a mortgage if you're drowing in credit card debt.

Visualize with amortization tools. This works for investments as well as with debts. Plugging in even small extra payments into a payoff schedule reveals just how much interest you'll save! Or putting in how much you are saving can help calculate the compound interest. It can be quite motivating.

Automate college savings. Set up automatic contributions to GET and WA 529. Contribute early if you can and lock in rates.

Don't think you're too late! If you have older kids and you think it's too late, it's not! Start planning now. You just might want to come up with a different strategy the closer the kids get to going to college.

Prioritize frugality not deprivation! You don't have to skip Starbucks; you just need to be intentional with your bigger expenses and with your mindset.

Combine College and House Goals


It's not an either/or scenario. We were able to do both simultaneously. As our mortgage balance declined, we were able to cash flow any of the gaps in the savings we had for college tuition. And now that college tuition is fully funded {our youngest still has two years left but it's fully saved in his college account!}, we are able to put more into retirement and investment accounts. And my favorite, I add more to my travel budget!

debt free degree helping kids graduate without debt while saving for college


Why It's Worth It


We have the financial freedom now that many people will never experience. Being able to control your money, not have your money control you, is one of the greatest gifts. With two kids already graduated from college, we've been able to see how they have been able to start their lives without being burdened by debt. And now in our late 40's with our mortgage and tuition done, we are able to look at wealth-building and charitable giving. Oh, and lots of travel!



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