Weekly financial Q&A, with advice on getting new debt through schooling, summer work for college students and investing.
My wife wants to go back to school to complete her degree. Right now, we’re on Baby Step 2 of your plan, and we’re about 12 months away from being debt-free, except for our house. Should we work the budget to cash flow her going back to school now, or wait until we’re out of debt and have our emergency fund in place?
If you can find room in your budgetto pay for it, and all it does is slow down the getting-out-of-debt process a little bit, then I think it’s a great idea. The main thing is that I don’t want you taking on any more debt to make it happen. You guys can see light at the end of the tunnel right now, so I don’t want you taking a big leap backward by piling on a bunch of student loans!
Education with a purpose is a fabulous thing. I’m all about school and learning, but the idea of going to collegejust to collect degrees is a little silly. Knowledge—not degrees—is the currency of the new millennium. The more you know, the more tools you have in your belt. That’s why I still read like a maniac. It helps me stay up to speed with things I need to know to do my job better!
Count the company match?
You recommend investing 15 percent of your income into Roth IRAs and other pre-tax retirement plans. Should you count your employer’s company match as part of that percentage?
You can, but I’d prefer that you didn’t. Employers and employment situations can change at the drop of a hat. I’d rather see you put in 15 percent. That way, you don’t have to rely on someone else to complete your retirement savingsplan.
It’s not your employer’s responsibility—or any one else’s—to make sure you have money to live on in your old age. Stick 15 percent in there yourself, Ben. Then, if your employer does match workplace contributions, it’ll be that much sweeter!
Self-employment for the summer?
I’m a college student in Utah, and I compete with lots of other students for summer jobs. Do you have any suggestions for debt-killing work?
My best suggestion for debt-killing work in that kind of situation has always been self-employment. You’ll make a lot more money cutting grass, walking dogs or detailing cars. You can control your time, too. Plus, you’ll make a lot more per hour than you will at any mall job. By the time they take taxes and everything out of that, you’ll almost wish you hadn’t bothered!
A few years ago, I knew a couple of college guys who pooled their money and bought a pressure washer and some other equipment to start a business. They came to the house, washed and re-sealed our driveway, and I paid them a few hundred dollars apiece for the job. It took all day, but they walked away with their pockets full of money. You’d have to flip a lot of burgers to match that!
You can make some serious summer cash if you’ll look at yourself as a small-business owner and not someone’s employee. I’m not going to lie to you. If you take this route, you’re probably going to be involved in some pretty hard work. But the truth is, you’ll never make really good money without doing some pretty hard work!
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