How Loudly Does Fear Speak?
I’ve been waffling and waffling about opening 529s for my children. I have their college savings in two separate ING subaccounts at the moment (one for each of them), and my intention, I thought, has always been to open 529s for them once we got our own finances a little more under control and I could research different options for 529s. Well, how we handled the car repair saga showed me that although we aren’t at a perfect place financially by any means, we have progressed far enough that we can come up with solutions for whatever life throws us. And a few months ago, my home state changed the tax implications of our “home” 529 accounts so that it clearly makes sense to open 529s through our own state - we now receive a tax credit for up to $1000 for contributions, matched dollar to dollar, that comes right off what we owe in state taxes.
This past Christmas, I realized why I am still dragging my feet. Even though I don’t acknowledge it, this is how my fear for my children’s safety and continued health manifests itself. By avoiding opening 529 accounts. Bear with me, by the end, it will hopefully make sense.
Two weeks before Christmas in 2006, I got a phone call from my mother. My 5 year old nephew, her sister’s son, had inexplicably collapsed at home that morning, stopped breathing, and although he was resuscitated, he had not regained consciousness and was in a deep coma. For the next few days, he showed signs of recovery, but never came out of the coma, and subsequently, a few days before Christmas, passed away. After the fact, the physicians discovered that he suffered from something called Addison’s Disease, that was previously undiagnosed. He had had several illnesses in the past year that doctors had chalked up to flu bugs and things of that nature, and although in hindsight, there were signs, for all intents and purposes this really happened completely out of the blue.
I have a very small family, and we are all pretty close. The fact that my 5 year old cousin just… died feels unreal to me to this day, over a year later. In the past, I have been as close to my aunt as I am to my own mother, and I have scrapbooks in my upstairs craft room filled with pictures of vacations that my family took with hers and her children (she has another son who is now 12). Her children were both in my wedding, the youngest who passed away was only 10 months old at the time. I have the suit he wore to the wedding hanging in my son’s closet, and my son wore it to a wedding when he was that size.
I’m afraid. I’m afraid that one of my children will suddenly pass away too. I think every parent has this fear somewhere, regardless of their own history, but mine is manifesting itself as a refusal to solidly commit to their futures, I guess. And yes, I have shared this fear with their pediatrician, as well as with my own doctor, and if there was a genetic test for Addison’s disease you can believe I would pay for it out of my own pocket to know if my children have this risk too. But there isn’t, and all we can do is do blood tests once a year and keep an eye on them.
So I am at a crossroads. I know now why I haven’t moved forward, and by knowing I can acknowledge it and start moving forward. Except now that I’ve identified my fear, instead of feeling like I can set it aside and move on part of my brain almost validates this as a good reason to not open the 529s. If you don’t use them for education, you pay a stiff penalty on them when you withdraw the money, and beyond the idea that neither kid goes to college out of choice, what if? So at this crossroads I sit, and I’m not sure which way to proceed. All I know right now is that fear is not what I want to control my actions, yet I’m not sure how to escape it.
But escape it I will. This will be the year of the 529s. By the end of this year, I will open two 529 accounts, one for each child, and transfer the college savings accounts there. And I’m sure that you’ll all hear about it again along the way. Future, here I come.
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February 12th, 2008 at 7:58 am
That’s simply horrifying. I have six children and have woken up mortified of bad dreams when it involves something tragic. Sorry to hear about your cousin, I recently lost my grandpa just before Christmas as well. It’s painful, yet inspiring in some ways.
I also face the whole 529 dilemma. I grew up having to pay my own way through, but here I am with loans to pay off. I must admit a matching program would probably entice me to at least start something. Of course the odds are that at least one of my children will attend college, so I have less risk of losing my investment. Still, I think I’m gonna have to wait until some more debt is paid off before I can consider any kind of investing.
Let us know how it goes, the whole 529 thing is kind of a big unknown.
February 12th, 2008 at 8:19 am
What a poignant post. His death was so tragic, and shook us all.
It’s so hard not to let fear paralyze us. How wonderful that you identified the source of your fear - a very real one that many of us have. For me I need to have faith that my son’s future will indeed come. I’ve accepted that he may not use the pre-paid plan we have for school, whether the reason be a disinterest in or inability to further his education.
In that case I wouldn’t get any of the interest, but the security I have in knowing that his tuition is taken care of plus the joy I’ll have over eighteen years as I think about his future makes the investment a winner for me regardless.
February 12th, 2008 at 8:36 am
I am torn, I feel like this post was very soul-bearing and such, and I feel for you in that respect. Nonetheless, I think you are being silly to let something like that be so all-consuming that it would prevent you from considering the more likely fact that your kids will have a future.
February 12th, 2008 at 8:54 am
This was a really touching post. I just wrote the exact opposite post about my 529. For me, the 529 is a concrete step to being able to adopt someday. That is, my 529 is hope.
February 12th, 2008 at 9:08 am
Wow, I’m so sorry your family had to go through that. Tragedy has a way of messing with our brains, doesn’t it?
I know when both of our children were babies, I was constantly afraid they’d die in their sleep, because it took so long to get pregnant. I just couldn’t believe we were finally parents, and I was always afraid something would happen to take my kids away. Not rational, but that’s what a crisis will do to you.
Good for you for resolving to overcome your fear and move ahead!
February 12th, 2008 at 9:13 am
@ Brandon - of course it is silly (although I prefer irrational) to let something like that control our actions, I think that was my point. I only just recently figured out that my seeming inability to get organized enough to deal with the 529s was connected to what happened in our family. And honestly, had I not been part of it, I think I’d more easily have seen that.
Many times people let fear control them in irrational ways without even realizing it, which is why I decided to write the post and acknowledge it.
@dogatemyfinances - that is inspiring. I wish the best for you!
February 12th, 2008 at 9:23 am
Very sorry to hear this story.
I personally don’t think people should save for their children’s education until they get their own finances in order so I wouldn’t rush into it.
However maybe putting a small amount isn’t a bad idea.
Mike
February 12th, 2008 at 11:20 am
That is horrible; I hope you and your family are dealing OK.
As for the 529, think of it this way - you save for retirement, right? Well, you might not even get to use the money, but you still save it anyway. None of us know what the future holds, so all you can do is plan for what you want to happen…
February 12th, 2008 at 12:21 pm
Wow! Thanks for such an honest post. Realizing what’s holding you back is the first step toward moving forward. You’re on your way!
February 12th, 2008 at 12:31 pm
Wow. That is some story. I’m so sorry to hear of your loss and I can understand your fear. But look at it in a positive way. Instead of problems imagine they grow up to be bright young adults ready for college. Contributing now to their 529 plans will give them a gift of a better future. Even just a small amount can grow and help.
Another way to look at it: would you think that way about a retirement plan? Anything can happen to us between now and retirement but we put away money because really there will be no one else but ourselves to take care of us (at least not the government for the most part or our employers).
Take what you can and open up those plans! It’s ok to worry but don’t let it paralyze you! Good luck on your goals!
February 12th, 2008 at 12:38 pm
It sounds like you did a good job identifying your fears and their roots. Just putting a name to it is a good way to start getting past it.
I’m sorry to hear about your cousin…that must be particularly frightening with your own kids.
February 12th, 2008 at 1:14 pm
That is very sad. I’m sure your kids will continue to be very healthy!
Just as an FYI for anyone who is interested, I looked up the rules on 529’s and found this info:
What happens if the beneficiary doesn’t go to school, or there is money left over?
Three options. First, you can change beneficiaries as long as the new beneficiary is a ‘family member’ (as defined by law) of the original beneficiary. Second, you can leave the account unchanged in the hopes your child will later decide to attend college or pursue an advanced degree, or name their future child as the beneficiary. Or third, you can take a non-qualified withdrawal – pay taxes at the recipient’s ordinary income rate plus 10% penalty on the earnings potion only.
I would think that the tiny risk of not being able to use the money for college would be vastly outweighed by the huge likelihood that your kids will attend college. Plus, it’s not as if the money completely disappears if you don’t use it for college, you just have to pay some taxes on it (not fun, but not the end of the world either).
Good luck with those accounts!!!
February 12th, 2008 at 2:42 pm
I pray for health for your family, and that your children and grandchildren outlive you.
I don’t think it’s reasonable for 529 plans to be penalized in the case of the student passing. That’s not right.
Still, that’s not going to happen in your case. Your kids are going to college.
February 12th, 2008 at 3:05 pm
I don’t know how to escape fear. I can think of all sorts of logical and rational reasons why you shouldn’t let any fear of your children’s death stop you from opening a 529 plan.
Maybe you should open them and put them in your name for now. Cos, you need another degree, right?
February 12th, 2008 at 4:05 pm
I’ve been reading your blog for a couple months; today is my first time commenting. I just wanted to tell you how touched I was by your post. My son is almost two, and I’ve found that my joy in being a mom is accompanied by the fear that I couldn’t possibly go on if I were ever to lose him.
I’ve checked out a few personal finance blogs; yours is the only one I read consistently because the personal tone and honesty of your posts really hit home for me.
February 12th, 2008 at 6:22 pm
I can certainly relate to your fears. Unfortunately, we never know what life hold for us. In my 38 years of being a parent, I have learned to try to grasp each day and enjoy it. Hold your family close and prepare for the future with high hopes. Opening the 529s for your children is a wonderful gift to them.
February 12th, 2008 at 7:41 pm
So far I’ve only created a 529 account for my son (the oldest). I’m not sure if all states are the same but on our account we can transfer it into a different family member’s name once per year. I could even make it my own college account if I wanted to. Look into your state’s plan, because if it really got to that point, (heaven forbid) you could transfer the money to the other sibling.
At the age of two my daughter had a near drowning accident that she survived but with brain injury that left her with severe cerebral palsy-like symptoms. After that experience my motto is, “Any day not spent in the PICU is a good one”. Don’t let fear hold you back from relishing the present or preparing a wonderful future for your kids. Rachel will no longer have the need of a 529 account but she’s been busy teaching us so much more about life.
Our biggest lesson has been to prepare for tomorrow but don’t worry and fret about it, just put all your focus on today.
February 12th, 2008 at 8:33 pm
Sorry to hear about your cousin. That is very sad.
If the beneficiary of a 529 plan dies, you still have to pay the federal income taxes but the 10% penalty is waived.
February 13th, 2008 at 8:47 am
Oh yeah, I understand your motive. I just did not want the fact that you were being irrational/silly get lost in the likely sympathy that would outpour from the story.
Good job on facing your fear.
February 13th, 2008 at 9:19 am
@ Lily - that is good to know that the penalty is waived - I never even thought about checking into that. thanks!