Greedy When Fearful

American student debt has just hit a frightening new record of $1.3 trillion, with the average borrower (44.2 million Americans) leaving college with about $38,000 in debt. Add in another $10,000 of payments on interest alone over the next decade and it’s easy to see why graduates are living paycheck to paycheck.

Parents are also strapped for cash, and think saving for college is almost impossible. However, if you start early, I think you can pay for college simply by slashing (Jason Voorhees style), your cable bill.

In 2016, the average American cable bill is a freakish $125/month. One of the leading providers of cable TV is Comcast (CMCSA). By switching to Comcast’s lowest cost internet only plan (currently the Performance Starter for 10mbps) for $30/month, and investing the difference of $100/month (rounding up) into low cost Vanguard Index Funds, over 18 years, you can take a major slice out of the cost of college.  $100/month should grow into about $42,000 (going with an average return of the stock market, about 7%, which the market returned from 1950 to 2009).

This is what we will be doing for my 7 month old daughter, and I thought it would be fun to become Dr. Frankenstein on Halloween night and start the experiment.

For the next 18 years, until 2034, I will be updating this blog post (so set your Bookmarks!) with our progress of rolling our old cable bill into my daughter’s Coverdell ESA. What’s a Coverdell ESA you say?

Now, Dr. Frankenstein didn’t exactly follow the medical community when he practiced, and we aren’t going to either. Rather than use the scientifically proven index fund method, we are going to be using bolts of lightning, buying individual stocks instead.  There is more risk involved, yes, but the upside is much larger. Also, buying index funds is boring. I’m going to be involving my daughter in this process, picking out specific companies, which is a much better learning tool. She will not only see her money grow, she will know exactly what companies the money is in. She will learn some basic business knowledge along the way, and get a better understanding of how this crazy world works. If she doesn’t want to go to college, this money is hers. She can take it out and use it for whatever she wants (as long as she pays a penalty to the government).

Throw …..the third switch!

Our first investment is going to be a part of my family’s Halloween tradition. She is 7 months old now, so we have saved $700 to buy her first stock in graveyard and cremation company StoneMor Partners. There’s a duopoly in the death business, and when we drive by a graveyard, it’s very likely StoneMor will be the owner. “Did you know honey you own part of that graveyard? Give my creation…..life!!!!!”

We usually invest every $400-$800. Dividends are *always* automatically reinvested. So, this score card will be updated every four to eight months.

Happy Halloween!

Monty

18 Year Score Card (2016-2034)