Growing Up

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This is the hard part. The agonizing slow part. Socking away money to cash flow kids’ college — and we are smack in the middle of that — and still trying to pay off debt. I made a promise to myself back in December that I was going to get out of all this debt and stop incurring any more. And with our income it would be obscene to let the kids rack up student loan debt.

So we are on a budget. The fella is getting the message — don’t put the beer you grab on the way home on a credit card! — but he still uses credit cards for business expenses, eventually reimbursed, but this makes my bookkeeping self go crazy. (I have a separate corporate card.)

Saving to pay cash for college has seriously slowed down the debt payoff. But praise be that come July I can send a big fat payment to both kids’ colleges, including the small liberal arts college my youngest has just decided to attend. This is huge. I never imagined I’d be able to do this. I was in such denial I never even thought about how we were going to get the kids through college. What was I thinking? Why, I wasn’t even thinking!

Even with the slowdown, I think I can get us out of credit card debt by early 2020, less than two years from now.  And the kids will be debt free.

It is nice to finally grow up. Me, I mean, not them.

How to Cash Flow Kids’ College

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I am super obsessive. Too bad I didn’t use that superpower before to stop and attack my debt. But I’m doing it now. When I ought to be grading papers or making final revisions to my current book project or prepping class, I’m obsessing over schedules.

Good thing. Because before I had despaired over the possibility of getting my kids through college without debt, I have now figured out how to do it.

I’ve got our bare bones budget down to $6200 per month (half of that is our mortgage). Minimum debt payments add up at this moment to $2700 per month. That leaves about $2500 per month to put more toward debt or college costs. We’ve got consulting income that comes in every few months totaling $50k per year. I’ve created a schedule whereby we can cash flow college expenses of at least $20k per kid per year — above that they are on their own — and still pay off debt. I say they are on their own because there are scholarships available to them that make this totally doable. But if they want a fancier education, they can pick up the difference. I finally have the confidence in these matters to say that.

By every August and January, we’ll have put about $25,000 into a savings account for college costs. That will come from monthly deposits of $2,000 plus 4 of 5 consulting payments.

The more we get rid of debts, the more we have available to pay off other debts — hence the snowball metaphor. We can then pay off the next item on the list by April, which will free up another $400 per month, then we’ll be hunkering down to stash cash for the fall semester. Then we can pay off the next item by the following January, freeing up another $400 per month and then it all starts moving quicker, even while we’re stashing cash for spring and fall semesters. With two kids in college at the same time — and us having never prepared for this moment — this is a big deal. In two years, all the credit card debt will be gone, one kid should be out of college with no more debt (than the $11k he has already incurred), the other halfway there, and then we’ll have money to make major advances toward paying off the house and maxing out our retirement options.

The key to all this is first and foremost a solid budget that is well below our income. Second is discipline to stick to it like maniacs. Third is postponing contributions to retirement beyond what our employers already contribute. Then with good planning everything else can fall into place.