School's on the Horizon
Erin's husband is leaving his full-time job in a year so that he can attend school full time. Once they complete Baby Step 3, should they move to Baby Step 4 or continue saving?
QUESTION: Erin in Baltimore says her husband is leaving his full-time job in a year so that he can attend school full time. They will go from an income of $90,000 a year to $40,000 a year. Once they complete Baby Step 3, should they move to Baby Step 4 or continue saving?
ANSWER: You need to save like crazy to be able to pay for school. You say that you have tuition assistance from your work and he has a veteran’s stipend. That’s great! If you guys will save like crazy to cover the deficit, that will work. You’ll have some out-of-pocket expenses that those things won’t cover. You have to get ready.
Let me tell you what you’re doing. You are in Baby Step 4 but you’re not investing in retirement directly. You are investing in your husband. That’s a great investment, by the way, provided he’s studying something that has marketplace application. I don’t want him getting a PhD in German polka history. Let’s have a job where we can get that money back.
As long as he’s doing that, this is a great investment and a great plan. So build your emergency fund and just keep piling up money to make sure he gets through school.