Who first?

Question

I am 40 years old, I have two kids that under 10 years old, I can save $500 a month after save in my 401K,I won the home with $250,000 in mortgage and 25 year left to payoff, I have $100,000 in my 401K, I still work and my income was $50,000, should I use this $500 to save for my self first or save for the kids college?

Answer 1

I'm probably going to get hate mail for this, but financial advisors today are telling people to worry about saving for retirement. They say that with all the financial aid and loans out there today, kids can find their own way to pay for college.
I am just passing on what I have heard, not saying what you should do ethically.

Answer 2

Send it to your mortgage and then get a home equity line for education and other big ticket items that come up. This will help you to save thousands in interest charges. The way student loans are going, it may end up being a lower interest rate and because you have a home equity line, you will be sort of keeping your assets liquid. This solution will allow you to both save for yourself and your kids education. The downside: if your home drastically depreciates.....but if it happens to that extent, I'm betting everything (401K) else has depreciated in value as well.

Good Luck!

Answer 3

Do both! Max out your Roth( since that can be used for the education also) and then go with a low cost 529. You may get away with only 1 529 if the kids are more than 3 years apart.

Answer 4

Read the book "Total Money Makeover" by Dave Ramsey. In it you find the best answers to what you need to know. He has been doing this kind of thing for quite a few years and he knows what he is talking about. You can check out his website and email him the same question. But read the book and you will get some great info.

Answer 5

i would put the money away for a college fund. you never know, the kids may decide not to go or may get full scholarships. then you will have the money to play with. but you can't count on that.