Serious Talk Time

Jeff and his wife have $50,000 in an IRA. He's considering using the money in the IRA to send his kids to college. Dave disagrees that Jeff needs to cash out the IRA.

QUESTION: Jeff in Mississippi has two kids in high school. He’s had a lot of health problems and diverted money to that. He and his wife have $50,000 in an IRA. He’s considering using the money in the IRA to send his kids to college. Dave disagrees that Jeff needs to cash out the IRA.

ANSWER: We need $8,700, and you make $100,000, plus dorm, dorm food and used textbooks. It’s roughly $17,000 per year, and you’ve got a senior in high school. What I would do if I were in your shoes, I’d look around and see what I can sell. I’d put the senior to work all summer and put the senior to work while they’re in school. And I’d cut down your household budget and cash flow this is what I would do. I think you can do it.

Just because you don’t have any debt but your house doesn’t mean I want you to go into debt. I think I’m going to find a way to do this without borrowing money. It’s doable. It is not going to be easy, but neither is paying back student loans.

Providing an education for your kids is a noble pursuit, but you have a senior and you have no money because you’ve been having health problems. You didn’t cause that. You didn’t do anything wrong. Life just happened. I don’t think there’s any shame on you for sitting down with the senior and going, “Hey, real serious talk time here. You need to spend the summer applying for scholarships. I want to see 1,000 letters go out the door asking for scholarship money, and I want you to be working all summer and saving money like crazy and delivering pizzas and walking dogs and babysitting and whatever else needs to happen. You better plan on doing that while you’re in school. Let’s look at which schools we can go to the least expensive.” Then you guys roll up your sleeves and tear into this thing. Then you start looking toward the next one coming on with the same issue.

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