Courtney and I, well, we don’t like debt. We hate it, really. So when it was time for Courtney to go back to school, student loans were the last thing we wanted to do. So, we decided that we would need to cash flow the whole thing. That’s right, we were going to pay cash for college.
Sounds great, but how?
Then came some decisions to make. If we weren’t going to borrow money, how would we save up enough to pay for college? Well, we knew the following facts:
- We wouldn’t have to pay for college all at once. When a tuition or books expense was billed, we’d have to take care of just that term’s portion – not the whole 3 to 4 years worth.
- We knew that our income might not always be at the current levels. Income can drop, so we’d need an amount that would sustain our college spending for at least a year.
- We knew that some of the money would be reimbursed through Courtney’s employment.
We decided to make a fund that had a cap, something that balanced all of these factors without hindering our ability to build our retirement fund and begin to pay off our mortgage. That’s a lot to take on! You might be wondering how we can hit all these goals. Well, thanks to good old Dave Ramsey’s 7 Baby Steps, we’re able to. It took a lot of focus on lowering our expenses and saving up money.
After much discussion, we decided to maintain $10,000 in our college cash flow fund. At the same time, we are making sure that we are funding our Roth 401ks up to the match. However, if our college fund dips below $4,000, we will stop our Roth 401k contributions until we hit the $10,000 mark again. This ensures a constant flow of money toward the best investment one can make: college with a purpose.
We have calculated that $4,000 is the very maximum amount of money Courtney will need for one college term (including all tuition, fees, and books). It would surprise me if we ever paid more than this amount for one term. Having $10,000 in the college fund is a nice number to aim for, and will give us a huge buffer if our income dips.
You can read more about our decision regarding Dave’s plan over on our post on how we’re juggling the baby steps.
How are YOU paying for college?
The question now arises: how are you paying for college? Are you going to go the mainstream route and take out loans? If so, how do you feel this will benefit you? There are many plans available for saving for college. If you have young children, now is the time to start thinking about their education.
Let us know your thoughts in the comments. We value them, and are aiming to be more transparent with our finances for the benefit of all you subscribers here on The Christian Dollar. God bless!
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