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Go back to school even if it hurts the budget?

Dear Dave,

I am 22 years old and my wife is 21 years old. We got married almost two years ago and bought a home six months later. We put $10,000 down on a $100,000 mortgage. We each have two years of college left and would like to go back and finish. We currently make $63,000 a year and degrees will really help us out. If I don’t get this degree, I will never make more than I make now, which is $45,000 (with a company car) as an independent insurance adjuster.

I could finish my degree over the Internet, finishing it entirely in the evenings after my job. My wife, however, would have to physically go to college because her teaching program is not offered online. This means that she will most likely have to cut back on her hours at work. Also, she would like to go on afterward to get her master’s degree, which helps in the teaching field.

If we go ahead with this, we will be really strapped financially. Apart from the home, we have no other debts. The house payment is $750 monthly. One set of parents has suggested selling the house and moving somewhere cheaper. This way, with a smaller house payment, we would have more money to put toward schooling. What do you think?

Ben

Lexington, Ky,

Dear Ben,

I am all for college degrees. I think that college is a great thing. Education is very important, but be careful not to confuse it with a meal ticket. The truth is that, as a 22-year-old guy, you are doing great in terms of your career. The attitude that says, “I will never make more without a degree” is a lie. You are at the very beginning of your career. Don’t limit yourself.

As for selling your house, don’t do it. With your income where it is, you can handle your current expenses, especially since you have no other debts. The smartest step to take at this point is for you to sign up for the classes over the Internet and get your degree while still working during the day. After you are finished you can take a night job so that your wife can take off work to finish up her degree.

The reason I think you should “go first” is because your degree program is offered online, which makes it much more convenient in terms of hours. It will also be cheaper in comparison to attending a college and will take less time than your wife’s completion of a master’s program.

I think that, with a little creativity, you can do this without having to sell your house. Try this for a year and see how it goes. If after the year you need to sell your home because you simply cannot manage, go ahead. Just give this time. Jumping in and out of houses is rarely a good idea. Finishing college in a way that is best for both you and your wife is a great idea, and it looks very possible from here.

Dave



Interest free credit card to transfer student loans?

Dear Dave,

I have a student loan with a balance of $20,000 at a 6.5 percent interest rate. I have the opportunity to borrow up to $1,500 for up to seven months “interest free.” After the seven months the interest rate goes up to eight percent, but I could definitely have the $1,500 paid off in less than seven months. This is offered through an interest free credit card. Should I borrow this in order to help pay off these student loans?

Tim

Fort Walton Beach, Fl.

Dear Tim,

The bottom line is that by doing this you are saving only $60 and you are putting yourself at tremendous risk. The $60 is nothing compared to the money you owe. You can’t play games to get out of this debt. It’s not enough money to fool with. I never recommend credit cards. Something will happen that you do not expect. They may back charge you at 18 percent. Whatever it is, you are taking a risk dealing with these snakes. They set a trap for their consumers; it’s a bait and switch! You can’t go into these things thinking you’ve beaten their system. They know what they are doing. If you follow your plan perfectly, you will save a little bit. However, you will have to read the fine print on the back of that credit application with a magnifying glass and then have two attorneys look at it in order to be only 90 percent sure that you won’t get ripped off.

Just stick with the student loan you currently have. Keep hacking away at it diligently and pay it off as quickly as possible. But don’t ever take out credit cards, because when you play with snakes, you’re going to get bit.


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