Calculating How Far Your Assets Will Go
You may think I’m crazy, but this is where the fun really begins. Maybe it’s because I like solving puzzles, especially when I know they’re not impossible. Or maybe it’s just because I’m a numbers geek. Either way, the good news is that this is as big as this number will get. It will most likely only go down from here as you begin adding up what resources you have to meet this need, as well as developing a plan to make up for what you don’t have.
So now, on your College Cash Strategy Worksheet in Appendix B or a piece of scratch paper, you’re going to systematically begin listing the assets and financial resources that you have or can expect to have to offset the cost of college that remains after the first few chapters. Here are the things I want you to total up and begin subtracting to calculate your Unmet Need in Step #4 of the College Cash Strategy Worksheet:
1. Subtract any money you have specifically saved up to meet this person’s college costs. Is there money in savings bonds, Section 529 accounts, custodial accounts, mutual funds, or insurance contracts that you have earmarked specifically to pay for college costs?
2. Subtract any financial help you can reasonably expect to receive from anyone else, besides outright scholarships. Did your parents, ex-significant other, neighbor, and so on, promise to help pay for college? If they did, sum up what they’ve promised to pay across all years of college and insert it on that next line.
3. Total and subtract any formal scholarships or other financial funds you already know you’ll receive.
4. Subtract the total amount you’ve already added to your monthly budget to help pay for college. For example, some people know that they’ll be able to pay $250 per month out of their wages and income toward college expenses. Again, you need to be sure to calculate this number for the entire length of college, so you’ll need to multiply it by 12 months and then again by the number of years you’ll be paying for college.
5. Subtract all these things from your original cost calculation for all years of college. This is your Adjusted Need. Hopefully it shrank some, or even a lot, from where you started. But if it didn’t, don’t panic. The remainder of this book is about finding the funds you need to cover whatever unfunded amount still remains.
What’s left is the total amount of money you’re going to have to figure out how to scrape together. I refer to it as your Unmet College Cost, and it’s what much of the rest of the book helps you to systematically chip away at. But before we get to that, I want to make sure you’re strategic in how you use up the assets that you have, so that you minimize the costs of liquidating your college accounts, while maximizing your chances for financial aid.
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