<p>I think some of this discussion may be a matter of semantics. I’m not a big fan of debt but we will borrow to pay for child’s college. Why? Instead of putting money in a low-interest savings account we’ve used what would be our kid’s college fund to pay off all other debt. When our child enters college we won’t have a cent of credit card debt and our house and newish cars will be paid off. What we would have paid on a mortgage will go instead to pay down a low-interest home equity loan.</p>
<p>For what it’s worth, I agree with the OP. It sounds like she has a reasonable plan, but of course it won’t work if hubby isn’t on board.</p>
<p>I think this discussion is difficult to have in general. I think it requires doing mathematical projections of income, expenses, retirement needs, quality of life, etc. </p>
<p>If you can’t afford it, you can’t afford it. Life is tough sometimes. </p>
<p>Personally, I think it’s silly to talk about debt being bad on principle. I wouldn’t have any problem taking out a 30 year mortgage when I’m 52 if I could afford the payments and thought the house was a good value. Some people would even take out that kind of mortgage for an investment. Just a few years ago, there were places where that would have been an excellent investment. </p>
<p>I can do the math and calculate if taking on debt makes sense. I understand how to model probability and risk and I can calculate the likelihood of my being able to repay that without burdening my kids when I get old. </p>
<p>Not everybody can do that and sometimes they come up with principles that say debt is bad. They would be better off paying for financial advice from someone who could do the math, but that cost money too. </p>
<p>However, sometimes you do the math, and the debt is unaffordable and irresponsible. I understand that.</p>
<p>I’m taking out significant Parent PLUS loans for the first two years for my D. My financial situation has been complex, but I was never in a position to save for the kids’ college educations before, as a single mom. My income potential has increased significantly and I have numerous opportunities to keep making that happen. I have other significant expenses that are going away (especially my grad school tuition). Because of all this, I am willing to take out a certain amount in Parent PLUS loans but I also have a plan to get them paid them off within 5 years of their graduation while still maxing out my retirement contributions. My EFC is approximately $20K due to liquidation of some assets that were “one offs” from my usual income. Those extra funds were spent already on significant but very necessary home improvements that I couldn’t put off anymore. My EFC will be reduced the year my son starts school. It’s just a complicated situation. </p>
<p>My EFC was going to be around $20K no matter which school my D attended and other than community college, there just weren’t any schools that were going to be cheaper and keep her challenged academically. She probably could have gone to a local directional with an academic scholarship for less, but I didn’t feel it was right to penalize her because I liquidated some inheritance assets just as she was starting college. </p>
<p>I may even have her loans paid off before she graduates. I told her, when I first took the loans that once she was employed, we would discuss how much of them she would pay back, based on her salary and living expenses. I believe that she will only have to worry about her subsidized Stafford loans. That’s my goal anyway.</p>
<p>She’s also working herself and is looking into some internships for summer which should pay well. Her contribution should increase over time which I know will increase our EFC, but not as much as my “two time” inflated income for 2011 and 2012. </p>
<p>My new job allows me to finish grad school for free, after this term, put as much money into retirement in 3 years as I put in over 17 years with my last employer, and apply annual bonuses to the loans. Once both kids graduate, I want to do side work as a speaker or adjunct faculty to help pay off anything that isn’t paid off already and supplement my retirement.</p>
<p>When I think about how much money I’ll have when both kids have flown the coop, I have practically no expenses, and my income is at its peak, it blows me away. I’ll be doing catch up retirement contributions then. I also figure I only have to fund about 5 years of retirement. I don’t expect to live that long. People in my family just don’t.</p>
<p>We could have bought our new house with cash after we recently sold our family home for a nice profit. But with interest rates so low, DH figures he can make enough money by investing it to offset the rate. So far he has never made a bad investment for us-he invests it in the area in which he has expertise. So I agree that “all debt is bad” is not universally true. It JUST depends.</p>
<p>2016BarnardMom–and what happens if your employer walks into your office the day before your DD graduates and says, we are closing up shop, no need to come back tomorrow or if you live for 20 years after you retire??</p>
<p>Nrdsb4–apples to oranges–HAVING to take a loan is different then choosing to take a loan. Heck yes we took the 0% financing option on the car we just bought keeping our cash earning $$ for us. We will have DD take the max federal loans she can take, even though she doesn’t need them, and bank the dollars for use if she chooses to go to med school–which is the plan now. BUT, the difference being if something happened, the dollars are there to pay off those loans, today, now vs needing to pay on those loans for 10+ years.</p>
<p>As for the comment about being close to retirement, I’m going under the assumption that the OP did not have her child at the age of 12, I could be wrong, but most of us here are in our late 40’s or older just by default of having kids going off to college or in college.</p>
<p>Oldfort–pretty much every company will give you close to 100% for disability pay (private plans, not group plans). You CAN’T get more than 100% paid out though. Private plans will allow that in the case of a total disability or a presumptive disability. There are means tests involved in continuing to pay that rate on those plans, or any plans, and that is how they hedge against lifers on disability that don’t qualify.</p>
<p>^^^Well, I don’t think anyone can assume they have x years left to work just because they are healthy today. Certainly as a nurse, I have seen enough to know that you’re only healthy until you aren’t. Which can happen out of the blue…</p>
This reminds me of the old SNL episodes/skits “What if Eleanor Roosevelt Could Fly” and “what if Spiderman was stronger than Sperman”.</p>
<p>You can worry about the “what-if’s” til you are blue in the face. I am all, ALL about saving $$ and feeling secure and financially stable. But that said, its not the years in our life, but the life in our years that counts, if you know what I mean.</p>
<p>Steve… my new job is with a company that is supposedly “too big to fail”…lol. However, grad school and work experience have given me skills that are so marketable, I will just go into consulting and probably make more money. I know of many people in this field who are in their early 60s, got laid off, and had three job offers the next day. I know it sounds cocky, but Information Security experts are in high demand and increasing daily. I have worked really hard to get to this point. It has been a long road which I wish I had started earlier! I made a five year plan three and a half years ago and it has come to fruition more quickly than I ever imagined, even without finishing my current degree. </p>
<p>As long as I can work until my house is paid off, I should be fine. Once the house is paid off, I can live on almost nothing. I’m quite frugal with myself, but have poured my money into my kids (ECs, clothes, educational summer programs, Boy Scout camps etc.). Personally, I’m very low maintenance.</p>
<p>I’ll be surprised if I live to see retirement, frankly. I have a chronic illness that should allow me to work until I die, but I am at very high risk for a shortened life span. I do have very good long term disability insurance options with the new employer and purchase long term care insurance, just in case.</p>
And there are those who retire at 60 (or even earlier) and those who <em>choose</em> to continue to work, even if part time, into their 70s and 80’s. So taking a loan for whatever reason when they are in their 40’s or even 50’s may seem inconsequential, as they may feel retirement is 20+ years away (by choice).</p>
<p>Understand that I am not one who supports taking on debt, and especially debt that is clearly unaffordable. I just happen to have a diffferent perspective on this discussion.</p>
<p>I have been away from the insurance business for a while, that’s why I am hesitant to post what I knew before, but after doing some research I see not much has changed.</p>
<p>For a lot of us, our expenses really do go down once our kids are in college. I am no longer paying for various lessons - ballet, sports, school trips…Heck, even our food bills and transportation costs went down after our kids went to school.</p>
<p>It is great that we are sharing our views here, and there is really no right or wrong answers. People need to be educated about risk and rewards of their decisions. As someone who has been in the finance business for many years, I know there is more than one way to skin a cat, what may work 10 years ago may not be the best course of action today. Some may believe owning a home free and clear to be the best thing, but due to different people’s financial situation and where they live, renting maybe a better way to go.</p>
<p>oldfort–I work in the industry. I think referencing a “Disabilities for Dummies” is really not that accurate. Everything on there is VERY general and much of it just flat out wrong.</p>
<p>SteveMa - I am sorry, but your posts about LTD are very inconsistent, which didn’t make me think you were in the insurance business. Which part of Disabilities for Dummies is flat out wrong? I think they are right that no insurance would provide 100% of coverage.</p>
<p>oldfort–think what you want. My posts have been very consistent thanks. I think your understanding may be off, I don’t know. Straying WAY off topic now…</p>
<p>Both my kids took Staffords and will have ~$22,000 each in loans when they graduate. S1’s are $262/mo., S2’s may be slightly lower because more of his loans were subsidized. </p>
<p>They knew back in middle school they’d be expected to have significant skin in the game in return for the college of their choice. (OTOH, there are times I regret not pushing the full ride for S1 and the partial ride for S2 a bit harder…) They also work(ed) for spending and book money. S1 also had over $50k in scholarships and awards, which helped a lot. </p>
<p>We were able to get through six of eight years of UG without having to borrow – DH threw a chunk of salary into the EFC account every pay period, and I threw all of my income (PT) into it. We were able to fund mostly through current income because we anticipated large college bills long before we bought a house, did not have car loans or other debt, and never touched our home equity. Lucky we could do it, but decisions to live simply also helped us in that we were not tied to a big lifestyle.</p>
<p>What led us to tapping the home equity line for tuition was my medical issues from last spring. Without my income, we are short. We refinanced 10 years ago with the plan that our house would be paid off by the time we are 55 and that we would have access to equity if we needed it for college. We have decided to refinance again for a 15 year loan at 2.875%, with the intention of continuing our current payment, not the new, lower amount. This will enable us to pay off in eight years, and get us what we need to get S2 through UG. In any event, what DH and I will have tapped from equity is less than what it would cost for a kitchen reno.</p>
<p>No way would we do PLUS loans, and we do not cosign loans for the kids. </p>
<p>I used to work for a major benefits consulting firm. 100% disability coverage is almost unheard of. Employers want employees to have an incentive to return to work – and a disability payment that roughly covers basic expenses but not much else is a level that will “incentivize” people to get back to work. Of course, that assumes one can collect on disability insurance/ SSDI!</p>
<p>No private plans will give you 100% either. Individual plans also want you to return your job as soon as possible. By providing you with 100% coverage would give you very little incentive to go back to work.</p>