QUESTION: Kelly and her husband are having a disagreement about the order in which they should do the baby steps. Why does Dave tell people to save for college and retirement before paying off the house?
ANSWER: The reason I tell you to save for college and retirement before paying off the house is because I’ve counseled 72-year-olds who have a paid-for house with absolutely no retirement savings.
You only need to contribute 15% to your retirement, which should leave you plenty to save for college and pay extra on the house to get it paid off sooner. The average baby-stepper pays off their house, while funding their retirement and college savings, in seven years, after complete the first three baby steps.
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