Articles by mgedwards

Making sense of 529 plans

If you have young children like I do, you might be wondering what you should do about your children’s college education.  My son is still years away from going to college, but because the cost of a college education has skyrocketed in the past decade, we already need to start thinking about saving for his college education.  We checked out a variety of investment plans for our son and any other future children we will have.  The choices are complicated.  There are many different investment vehicles to consider, and there are many plan to choose from when setting up a college fund for your child.  You can open a traditional IRA or Roth IRA for them, you could set up a Coverdell education savings account (ESA), or you could open a 529 savings account.  Most people choose to open a 529 account because it has some excellent tax benefits.  We chose a 529 plan because it offers the greatest flexibility of any option.  For one, the capital gains on after-tax money invested is tax-free if the money is spent on the beneficiary’s (i.e. your child’s) education.  Secondly, you can invest up to $230,000 in a 529 account for each beneficiary.  Unfortunately, there are also a couple of drawbacks to consider when thinking about opening a 529.  First, the money you have saved in a 529 account will count against you when your child applies for need-based financial aid.  FAFSA will count your 529 portfolio towards your net worth when it calculates how much financial assistance your child needs.  Second, there is currently a sunset clause on 529s, and they are scheduled to expire in 2010.  Fortunately, the current session of Congress is debating whether to eliminate the sunset provision and will likely eliminate it in the near future. 

Choosing a college savings plan for your child is also complicated by the fact that there are many 529 plans available nationwide.  Each state has one or more 529 plans to choose from.  Unfortunately, not all plans are created equal.  It’s not enough to simply choose the 529 plan offered by your home state.  We used SavingforCollege.com to research the various 529 plans.  We were disappointed to find that our home state of Washington offers a mediocre 529 plan (high fees and low returns).  Alaska and New York currently offer the best plans as measured by minimum investment requirement, investment manager, portfolio options, management fees, account maintenance fees, residency requirements, and tuition benefits.  We chose the New York State 529 plan for our child because it offers maintenance fee free accounts with minimal required investment.  Its fees are a bit higher than Alaska’s, but it offers far more investment choices.  We also do not have to be New York state residents, and our son is not obliged to go to college in New York State when he heads to college.  Vanguard, a reputable investment firm, manages New York’s 529 plan.  If you are thinking about starting a college fund for your child, consider opening a 529 account with a state such as New York that provides maximum flexibility.

Dinner with an old friend

This weekend passed by much too quickly.  Why do weekdays pass by so slowly, yet the weekend whizzes by before you know it?  It’s a rhetorical question, of course.  Time really does fly when you’re having fun.  It’s a statement that’s more than a cliché.  Perhaps I need to enjoy my work more so it too will pass by quickly.  Of course I already enjoy what I do for a living immensely.  I think I have the best job in the world.  Still, working is never as much fun as having time off.  On Saturday morning I went into work for a few hours.  Much as I like my job, I can think of many other activities I would rather do outside the office—especially on a Saturday.  For example, I’d much rather meet up with old friends.

 

On Saturday evening, I had dinner with an old friend I never thought I would see again.  He is a Korean executive I tutored in English a couple years ago while I was pursuing my MBA at the University of Washington.  I tutored him for almost half a year in Seattle.  He was the first Korean to introduce me to Korean food, and for that I am very grateful.  We spent a lot of time doing numerous activities in the Seattle to help him improve his English.  We did a few of the things you must do when visiting Seattle, such as hiking and drinking coffee at Starbucks while watching the rain pour.  He told me many stories about Korea.  At the time, I had no idea I would end up living here and filed them in the back of my mind.  I still remember many of his stories and suggestions.  He returned to Korea in 2003.  When I arrived in Seoul, I E-mailed him to let him know I now live here.  His E-mail returned to me undeliverable, and I thought I would never locate him.  My wife, who still speaks Korean better than I, called him a couple weeks ago, and we finally reconnected.  He was pleasantly surprised to find out I was here and that I will be here for a couple of years.  He told me that he no longer works at his old company and now has a much better job with a smaller company.  Unfortunately, it’s located in Busan, and every week he has to commute back and forth between Seoul and Busan (about three hours by high-speed train).  He doesn’t want to relocate his family to Busan because his children are at a critical age when living in Seoul is important to getting into some of the best universities in Korea (most elite Korean universities are in greater Seoul).  It’s tough on his family, but he says it’s worth the sacrifice.  Knowing what I know about Korean culture now, I believe him.

 

We reunited on Saturday night for dinner.  I met his wife and children for the first time, and they met my wife and son for the first time.  We spoke both Korean and English.  My friend speaks excellent English, but his family does not speak it well.  My wife and I speak some Korean, and we tried to talk in Korean as much as we could.  Fortunately, my friend was a good sport and served as translator.  His family really enjoyed seeing our life here in Seoul in an American enclave.  They were also surprised to see some of the amenities we enjoy, especially our yard.  In a place where land is at a premium, having a lawn is a big luxury. 

 

I’m glad we were able to meet again.  We’ve decided to get together soon and will probably go over to his house for dinner.  In my relentless pursuit to meet and get to know Koreans, I’m glad I already have some good Korean friends in Seoul.  It is a challenge to befriend Koreans, and culture always seems to get in the way.  This is a good start.

Talent Show caps a long week

Tonight I performed two songs at our community Talent Show.  I performed a solo version of the Roy Orbison classic, “Oh Pretty Woman” and a duet of “Endless Love” by Lionel Ritchie and Diana Ross.  We did very well.  In fact, everyone who performed did a fabulous job.  My partner on “Endless Love” also performed a solo of a French song (she hails from Belgium and is fluent in French).  We made a couple mistakes during our rendition, but we got the crowd into our duet and had a lot of fun.  Preparing for two three-minute songs was a lot of work.  We practiced a couple of times together and worked out singing logistics.  We used a large karaoke machine and sang along to instrumental versions of the songs.  We didn’t win the competition, but I’m sure it was a crowd pleaser.  I’m so tired now that I will retire early tonight after I finish writing my blog. 

 

All in all, it’s been a long, long week.  It ended with the Talent Show.  It also included a presentation at Chung-Ahn University in Seoul and an important meeting with my section chief.  I put together a pitch to sell my chief on the idea of implementing a quality management system (QMS) and achieving ISO 9001 certification for our section.  Although it’s an office, it still functions much like what I affectionately call “a white-collar factory.”  The principles of operations management used in manufacturing can be modified and implemented in an office setting.  My chief agreed, and he gave me the green light to start working on implementing a QMS and pursuing ISO 9001 certification.  It will be a huge undertaking.  My goal is to achieve certification before I leave Seoul in 2007.  Implementing a certified QMS requires a lot of documentation, employee cooperation, and support from management.  The task will be daunting, but I think it’s achievable within two years.

 

CNN reported today that three members of a family in the area where I grew up were brutally murdered, and two children from the same family were abducted by an unknown assailant.  Coeur d’Alene, Idaho is usually a quiet, unassuming place.  This murder must be an extreme shock to local residents.  When I grew up there, I never heard of murders in our area.  Murders always happened in the big metropolis of Spokane, Washington (population 175,000).  It’s such a sad, sad story.  I’m so sorry to hear what happened and hope that police find the murderer and the abducted children before anything happens to them.  I have no idea why anyone would do such a thing.  My parents still live in the area, so this story hits close to home for me.

 

I often hear from many Americans about how dangerous it is living and traveling overseas.  For example, when I lived in Austria as a youth I wanted to visit nearby Zagreb, Croatia.  The Bosnian conflict had recently ended, and my family insisted that I forgo the trip because they thought that visiting Zagreb was “too dangerous.”  Perhaps, but sometimes perceptions do not match reality.  I respected their wishes and regretfully aborted the trip.  Danger is not limited to urban or war torn areas.  I feel much safer here in Seoul than I did living in the Washington, D.C. area, even though Seoul is more than twice as large as D.C.  I even feel safer here than I did in Seattle, which is a fairly safe American city.  I think statistics meted out my contention that sometimes living outside the U.S. is safer than living in America.  Coeur d’Alene used to feel safe, a place where you did not even have to lock your door.  Now my idyllic hometown has been shattered by a brutal murder and abduction splashed across headlines throughout the country.  It goes to show that danger can happen anywhere, at any time.  I think it’s best to live life with that thought in the back of one’s mind without letting phobia control of your decision making.  In 2001, immediately following 9/11 and before the Afghan War, my wife and I toured the Middle East on tour.  We seriously considered aborting the trip.  I am so glad we decided to go anyway despite tensions in the Middle East.  We met just four Americans during our journeys there.  Tourism was so depressed at the time that we felt like we had the entire place to ourselves.  I am so glad that at that time I did not let caution thwart our trip.  Live life to the fullest, I say.