Finding A Goal For The Money In Baby Step 7
Beth and her husband are completely debt-free. They need a goal for their money now. They're floundering between building a dream home and putting more away for their kids' educations.
QUESTION: Beth in Columbus and her husband are completely debt-free. They need a goal for their money now. They’re floundering between building a dream home and putting more away for their kids’ educations. They make $92,000 a year. Dave doesn’t think there’s a wrong answer here.
ANSWER: There’s not a wrong answer. It’s what you guys want to do. Personally, I like the cleanliness of having the college education just done. We’re going to load up on it, finish it, and say this figure is the figure. At their age, it will grow to X from Y. We’re going to get it to a certain level knowing that by the time they’re 18, it’ll be worth X number of dollars. We’re going to have that as our lump sum, and once we reach that, then we don’t have to worry about college. It’s checked off. It’s off the list. Then, that frees you up to do whatever you want to do with money. That’s just really get in gear and attack and knock out the savings to build that dream house. I think that’s fun. What I’m saying is you might meet with your ELP or whoever is doing your investing for you and back into the calculation and say, “If we had $60,000 for this kid and $80,000 for this kid, we’d be done.” It’s going to grow to enough to take care of college by the time they go to college, and so we’re going to knock out that lump sum and then move to the next level.
There’s not really a wrong answer. If you keep saving for college, above that, you save up to build your dream house. That’s okay, too, if you want to do that.