Dave Says: Serious talk time: Family needs to pull together to make college dreams a reality – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

Log In

Reset Password
BERMUDA | RSS PODCAST

Dave Says: Serious talk time: Family needs to pull together to make college dreams a reality

Dear Dave: My wife and I make together about $100,000 a year, almost $50,000 in an IRA and no debt except for our home. The problem is I've had several health issues lately, and we've diverted a lot of money we'd put into saving and investing towards medical bills. We also have two children in high school who want to go to college. Do you think we should cash out the IRA to help send our boys to school? — Jeff

Dear Jeff: You guys make $100,000, and expenses at a good instate school would be roughly $17,000 a year. If I were you, I'd trim the household budget and make the children get to work. Look around and see what you can sell, too. There's no reason you all can't pull together and cash flow an education for these guys.

Providing an education for your children is a noble pursuit, but you're low on money right now because of health problems and medical bills. You didn't do anything wrong to create this scenario. It was just a case of life happening. So, you shouldn't feel ashamed to sit down with your children and say, “Okay, serious talk time. You guys know what's happened recently, so if you want to go to college, you need find a good, affordable institution and start applying for every available scholarship. You also need to plan on working after school and on weekends — now and when you're off at college — and saving money like crazy. Your mom and I will help out some, but we all have to pull together to make this happen.”

There's a better way to do this than borrowing money and going into debt. There will be times when it's not easy, but walking around with student loans hanging over your head — or nothing set aside for retirement — is no fun, either! — Dave

Dear Dave: My mom has about $35,000 worth of debt from a $17,000 car and $18,000 in student loans. She makes $20,000 a year. How can she get out of this mess? — Christina

Dear Christina: No one needs a car that's worth nearly all of their yearly income. That's just ridiculous. If you listen to me on the radio, I'm sure you've already heard me say what I'm about to say now — sell the car! That will get rid of almost half her debt, then find her a little $2,000 beater to drive until she can save up for a better car.

Remember this simple rule: Never buy a car that costs more than half of your annual income. Also, never go into debt to buy a car. Automobiles go down in value like a rock, and you never want that much money wrapped up in something that's depreciating.

We also have an income issue here. Your mom has to do something in the short term to get her income up and pay off debt. A part-time job nights and weekends would be a really good idea. Then, she needs to address her long-term situation with an eye towards a decent job. Whether it's more formal education or technical training in a particular field, she needs to find a career that will significantly increase her income. — Dave

Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: ‘Financial Peace', ‘More Than Enough', ‘The Total Money Makeover' and ‘EntreLeadership'. The Dave Ramsey Show is heard by more than six million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Providing an education for your children is a noble pursuit, but there are better ways to do it than borrowing money and going into debt.

You must be Registered or to post comment or to vote.

Published September 07, 2013 at 9:00 am (Updated September 06, 2013 at 6:06 pm)

Dave Says: Serious talk time: Family needs to pull together to make college dreams a reality

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon