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Monday, June 15, 2009
Dave Ramsey :: Townhall.com Columnist
Buying in Debt-Free
by Dave Ramsey
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Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


Dear Dave,

We have five kids under the age of five. We’d like for all of them to be able to go to college, but we’re not sure how much it will cost. Our household income in about $90,000 a year, and we have no debt except for our home. What’s the best route to go with our college savings plan?

Laura

Dear Laura,

Whew! Boy, you guys have got a house full and your hands full! You’ve also got a nice income, and that’s going to help a lot. Right now, the most you can put into an Educational Savings Account (ESA) is $2,000 per year. If you did this annually for each kid, you have a little over $100,000 per child when it comes time to send them off to college. Pretty sweet, isn’t it? That will buy a good education at just about any state school.

For the first $2,000, an ESA has more flexibility than a 529 plan. They’re very similar in how they act, but with an ESA you’re in total control of the investment. You can move it around, and put it into almost any mutual fund. If you use the ESA or a 529 for anything other than college you’ll get hit with a 15 percent penalty, plus the tax rate, so start brainwashing the kids now; it’s for college only!

- Dave

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About The Author
Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times bestsellers.
 
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(7 comments so Far)
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Reply # 1
Date: Jun 16, 2009 - 12:58 PM EST
Business
Dave,
I am a semi-retired (mostly debt free) commercial real estate broker & exchangor, that said, my advice to any entrapreneur is to first look @ whether he or she can start the business in question without buying someone else's. Most of the small business ops out there are cheaper if one has to buy (or already has) tools & buy or rent property and start their own. A good example is the illegal alien with a lawn mower that starts his own landscaping business out of a pickup truck, a plumber or carpenter or mechanic with a full tool box and a license. Remember You Are Only Selling Your Skills at the startup of any business. Check Schedule C's for taxes paid, not what he made or tells you he made, His BOTTOM LINE, is what should concern you and he should be able to prove it. Don't go along with handwritten income figures, demand an accounting.
Marty
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Reply # 2
Date: Jun 16, 2009 - 10:51 EST
essie
As a white, Christian male of European background with a few dollars in the bank I do not pay just for tuition! Yes, add room, board, books, fees, a car, car insurance and a million other unforeseen costs and it turns out that the tuition is a small percentage of that four year degree. You see, people like me get jack $hit help for our children's college education! Yes, in case you are wondering, that really pi$$es me off.

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