My Kids’ Public School Is Going to Go Downhill. $450,000 Could Save Them.

Pay Dirt is Slate’s money advice column. Have a question? Send it to Kristin and Ilyce here. (It’s anonymous!)

Dear Pay Dirt,

My children have been going to a public city school for years. But the district has decided to change many things for the worse and our children will be forced out of the school that they currently go to (they just finished 5th and 2nd grade). One of the best school districts in the state is 15 minutes away, and we’re looking to either buy a house in that district or send the kids to private school.

We bought our current house over 10 years ago, and refinanced under 3 percent, so the payments are very low and we have considerable equity (250 percent). If we were to purchase a similar house, we would pay $450,000+ more than we originally paid and have a mortgage at the current high rates. I estimate we would pay $3,000 to $4,000 more per month in mortgage and taxes. Private school is expensive, and it would cost about $450,000 to send our kids there through high school.  We are lucky to have this as an option. I would like to do the private school route because it’s easiest (we like our house and neighborhood), but also, that seems like a crazy amount of money to spend on schooling. But compared to buying a new house, it doesn’t seem so bad?  Am I missing something?

—New House or Private School?

Dear New House or Private School,

It might help to break down each of these options in detail.

Let’s start with the big move. Buying a house in a better school district doesn’t just increase your monthly housing bill, it also means giving up a stellar mortgage rate. So the amount of interest you pay increases, too, and this could be tens of thousands of dollars over time. Also, there will likely be thousands of dollars in closing costs you’ll need to either pay upfront or roll into your new mortgage. On the other hand, you’ll build equity, and that equity might make up for those costs (or, it might not). The problem is that, even if you recover those costs over time, in the meantime, it reduces flexibility in other areas of your life: retirement savings, travel funds, emergency savings, and just having some financial breathing room in general. And unlike tuition, a mortgage doesn’t end when your kids graduate.

Speaking of tuition, let’s look at the cost of private school. Tuition is expensive, yes, but it’s also just one expense. It’s predictable and you don’t have to rearrange your whole life to make it work —at least not as much as you would if you relocated and bought a much more expensive new home. That’s stability, and it’s valuable, especially if you’re already happy where you are.

Put simply, a high mortgage is a long term financial constraint, but it’s also an investment. Private school is a long-term financial commitment, too, but it’s a specific expense that leaves you with more options for flexibility. You’ve probably already thought about alternatives, but it’s also worth looking into charter schools, magnet programs or other options in your area. I’m guessing those aren’t options for you, though, or you wouldn’t be stuck between tuition and a new mortgage payment.

There’s a non-financial part of this, too. You like your home, you like your neighborhood, and your kids have roots there. Stability is worth a lot, and uprooting your entire life to avoid a school change might end up being a more stressful disruption than you realize.

Before you decide, run a full household budget under each scenario—a good ol’ spreadsheet or online calculator can help with that. That way, you’re not just thinking about mortgage versus tuition, you’re factoring in opportunity cost, too: what you’d be giving up on retirement contributions, vacations, car replacements, emergency savings, extracurricular activities, healthcare, and so on. You might find that one option squeezes you in ways that you didn’t initially think about.

You’re not missing anything. You’re just in the position of having to compare very expensive solutions to a frustrating problem. Run the numbers, consider the tradeoffs, and think not just about the math but also the kind of constraint you’d be more willing to live with for the next 10 years or so.

Dear Pay Dirt,

My beloved mom is in her 70s and in fair health, but I am getting worried about what will happen when she dies. She does not have a will and does not seem open to making one. As far as I know: She owns a house with a paid-off mortgage that is worth about $1.5 million, has maybe a couple of hundred thousand dollars in savings and investments, and has assets (like art, jewelry, cars, antiques, etc.) that are worth in the tens of thousands of dollars (I’d have to consult an appraiser).

Mom has verbally told me what she wants to happen after she dies: She wants to let her current husband (my stepfather) live in the house for at least a year after she dies and then have it sold. My stepfather will get half the sale of the house and the rest will be split between me and my two sisters. She says she wants a couple thousand dollars to go to each of her two adult stepdaughters. My two sisters and I (I’m the oldest) will split everything that is left three ways (this includes taking the valuables we want from the house). Mom has also given me the sign-ins and passwords to all her financial accounts and has told me to make sure to withdraw everything from her accounts as soon as she dies.

This does NOT sound like a good idea to me, nor do I think it is legally feasible. I’ve tried to get mom to see a financial planner with me (we both have Bank of America so I think we could talk to someone for free there and I’m also willing to pay for an initial consultation with an estate lawyer), but she does not want to do that. I’m getting VERY worried here! Not to mention that my mom has two brothers and a sister, and I have no idea what she wants to leave them. Plus, I don’t totally trust one of my sisters not to say she deserves more money (she has a daughter and is angry at mom, our other sister, and me). Nor do I trust my other sister’s husband not to fight for more money. I will freely give up every penny from my mom’s estate to make sure things are fair and everyone is happy, but I’m not sure I’ll even have that option if mom dies intestate. I’m embarrassed to admit this, but I also don’t have enough money to bury mom on my own, and mom doesn’t have life insurance.

—Never Want Mom to Die, But

Dear Never Want Mom to Die,

It’s common for aging parents to resist setting up a will. The key is figuring out what’s behind her resistance. Is she avoiding the topic because it forces her to think about mortality? Does she not trust putting her assets in the hands of a third party? Does she just not think it’s necessary? Whatever the reason, her refusal to put anything in writing is almost certainly going to create conflict later.

The truth is, when someone dies without setting up an estate plan, the default laws of your state take over—not whatever she told you verbally. For example, in many states, a surviving spouse is entitled to a large share of the estate, regardless of what the deceased verbally expressed. In other states, children and spouses split assets in fixed percentages that can’t really be changed without a will. The laws vary, but the point is that absolutely none of her verbal instructions (letting your stepfather stay in the house for a year, giving small gifts to stepdaughters, and dividing personal property in a very specific way) will be enforceable if she doesn’t make it official.

Her wishes are not legally binding unless they’re written down, and you can’t legally withdraw her money after she dies using her passwords. That might even be considered fraud, despite the fact that you had her “permission” at one point or another. Try to have the conversation with her again, but this time, address her resistance and reframe the issue accordingly. For example, if she’s afraid of losing control over her assets, let her know that by not getting it in writing, she’s already giving up control because the state will decide for her. If she doesn’t trust the professionals, ask a trusted friend or a colleague for an estate attorney recommendation.

And speaking of professionals, an estate-planning attorney is going to be more useful than a financial planner at a big bank. She needs a basic will, a healthcare directive, and maybe a transfer-on-death deed. If she’s really resistant to seeing a lawyer, there are lots of DIY options: Nolo, Rocket Lawyer, and FreeWill, to name a few. It’s probably more wise to hire a professional, but doing it yourself is better than not doing anything at all, and you can go through the process together.

As for funeral expenses, they’re often paid from estate assets before any kind of inheritances are distributed. That doesn’t solve your planning problem, but it might help ease your fear about having to cover all of the costs yourself. Keep pushing your mom to get your mom to get her wishes in writing, because doing nothing is the one thing that will probably guarantee the outcome she doesn’t want.

—Kristin

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