MD Invest
Joined: 24 Jul 2006
Posts: 1
Location: Maine
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 Posted:
Sun Sep 24, 2006 2:02 am Post subject:
Invest in 457 or other investments |
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My wife and I have managed to eliminate almost all of our consumer debt, except our vehicle. I have 2 children; of which college is 6 years away and the wife and I are 40 years old.
I was wondering what the best strategy was at this point...take available funds to invest in my 457 program (not matched) and my wifes IRA and/or spread it out amongst a few investments including these 2 and a vehicle for college saving?
My thought is that if I sink all available funds in retirement vehicles we'll obviously have next to nothing saved for the kids college. However, by not investing at a greater clip in our tax deferred retirement investments we lose out on the tax advantages.
Any suggestions??
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TwoCents43
Joined: 27 Nov 2006
Posts: 6
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Mon Nov 27, 2006 2:56 am Post subject:
Re: Invest in 457 or other investments |
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| MD Invest wrote: | My wife and I have managed to eliminate almost all of our consumer debt, except our vehicle. I have 2 children; of which college is 6 years away and the wife and I are 40 years old.
I was wondering what the best strategy was at this point...take available funds to invest in my 457 program (not matched) and my wifes IRA and/or spread it out amongst a few investments including these 2 and a vehicle for college saving?
My thought is that if I sink all available funds in retirement vehicles we'll obviously have next to nothing saved for the kids college. However, by not investing at a greater clip in our tax deferred retirement investments we lose out on the tax advantages.
Any suggestions?? |
First, good news about your debt progress!
Next, you didn't share enough to give you an absolute answer, so let me answer this way considering these assumptions:
* You earn enough to meet your monthly expenses/commitments
* You have some extra left over
With these ideas in mind...take care of yourself first. I know, kids, it sounds cruel, but that is my advice. You need to figure out YOUR plan first. How much do you need to save each month to reach your retirement goals. Only after that, can you begin to concern yourself about your children's education. I know, but life is full of rough choices, but you may find out you have enough to do both.
Here is my suggestion:
1. Get a car plan going first - that means use extra cash to get debt free and then start saving on a 10-year cycle so you are paying cash for your vehicle in the future!
2. Get your retirement plan established - know how much you will need and that will tell you how much you need to save each month
3. Then start a college fund - then I think the state-run college plans are your best option
One more thing about college...since my advice seems to put your children last and they likely (and maybe even your spouse) are not to like that...let me explain MY situation. My child goes to a community college to get his liberal arts degree. Then he transfers to a state university for his 4-year degree. As long as he keeps his grades up, he can continue to live at home for those four years. Total cost in my state: $6,000 for the first two years and $14,000 for the last two years.
Grand total for college: $20,000 over four years....or $5,000 per year....or $1,000 per month...or $250 per week...or $8.50 per hour. See? Kids can live at home and work their way through.
Get THEM to start saving a portion now so that aren't faced with 40 hours per week. But my kid finds that he can work a second job during breaks and summer AND 40 hours per week and keep a full load. In fact, he has only left the house for ONE class in his first two years - all on-line courses.
Explain this as the WORST CASE scenario and then if you find you have cash after you plan for your life FIRST, then...you can try to help out. Besides, four extra years of homemade meals and laundry service isn't anything to sneeze at.
Let me know if you want some more feedback. |
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