Posted on 04/23/2014 2:28:15 PM PDT by Kaslin
I noticed that your Baby Steps list puts saving for retirement before saving for your kid’s college fund. Sending your kids to college would come first on the timeline, so what is your reasoning behind this?
Jen
Dear Jen,
I advise this approach because everyone is going to retire someday, unless, of course, they happen to die before reaching retirement age. Retiring and eating are necessities. College is a luxury. Lots of people succeed in life without going to college, and thousands have worked their way through college. I worked 40 to 60 hours a week in college, and I still graduated in four years.
Having a college fund set aside by your parents is really nice, if they can afford that kind of thing. But you can go to school by getting good grades, applying for scholarships, working your tail off and choosing a school you can afford. I believe in education, but there are lots of ways to get a college degree other than having your parents foot the bill. Besides, the last time I checked there weren’t any good ways to retire that didn’t include saving and preparing for retirement beforehand. I mean, you can always try to live off Social Insecurity, but I don’t consider that a plan.
In short, college funding is not a necessity. That’s why it follows saving for retirement in the Baby Steps. Should you try to save up for your kid’s college education? Sure, if you can. But there are lots of parents out there who won’t be able to pay a dime toward someone’s college education. And that doesn’t make them bad parents!
—Dave
Dear Dave,
I think I made a big mistake when I bought my car. I’m having a hard time affording the $500 a month payments, because I only make minimum wage at my job and work 35 hours a week. My boyfriend, who was supposed to help me pay for it, has moved out and left me. I owe $20,000 on the car, but I know it’s still worth about $19,000. What can I do?
Rachel
Dear Rachel,
Sell the car! You went car crazy and bought a vehicle that was way out of your league.
Right now, your entire financial world is wrapped up in paying for this thing. And depending on a boyfriend to help make the payments was a big mistake, too. When he left, so did the financial support.
At this point all you need is enough to cover the hole you dug. Go to your local bank or credit union and try to get a very small loan from them—about $3,000. I hate debt, but you really don’t have a lot of options here. Then, if the car will sell for $19,000, get it sold and use $1,000 to cover the difference.
After that, take the remaining money and buy yourself a little beater. I’m talking about basic, ugly transportation. The next step is to pick up a part-time job on the side, and work like crazy for a few months to get that loan paid back as quickly as possible. Don’t ever do this kind of thing again, Rachel!
—Dave
In the Obamaconomy people are lucky if they have the money to do either one.
Yes, and Cash for Clunkers dried up the market for reasonable entry level cars.
Saw an article recently which suggested one should shop for used cars well after tax season. The dumb money is eager to spend their tax refunds and used car dealers know it. Might be able to save 5 to 10 percent if one can wait.
They will be living with you into their 40s and beyond anyway. I say charged them rent instead of saving for and paying for their Kollege.
Rent? These kids aren’t qualified to work anywhere.
[eyeroll] BTW, what do her cow-orkers think about her showing up for her minimum wage job in a $500/mo car?
I was just talking about this with a buddy who, for a while, was the manager of a Planet Fitness gym. Nearly all his employees made near minimum wage and nearly all of them drove a much nicer car than he. I think it is common for the 18-25 crowd to live at home, buy an expensive car, and have just enough left over for gas, insurance, and drinking money.
The man is TOTALLY RIGHT. If your kid DOES NOT take his education enough to SACRIFICE for it, then let him wither on the vine.
Pay for him to learn SOMETHING USEFUL (as opposed to Art History, or whatever). So help him learn how to turn a wrench or do some spot welding.
If he doesn’t like that, let him go...completely.
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