In Naked With Cash, seven anonymous Consumerism Commentary readers publicly track and analyze their finances on a monthly basis. For almost a decade, I tracked my own finances on Consumerism Commentary; now I’m sharing the benefits of public accountability with the participants. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.
LastDollar is on Team Neal, with Certified Financial Planner Neal Frankle. Get up-to-date on LastDollars’s progress by reviewing her update from last month.
LastDollar’s own analysis and comments, including her thoughts on education and college planning, are followed by feedback from Neal Frankle.
Comments and analysis from LastDollar
My son came home from the hospital halfway through June, which put an end to my five-hour daily commute and visit routine. I had hoped I would magically get back into the swing of our life routine, but I continued to struggle to fit in work, outpatient appointments, and stay focused for the rest of the month.
My son was home from the hospital a couple weeks and was then re-admitted in July. As if having a child in the hospital isn’t difficult enough, I have to deal with his clueless father, telling me that if I was a better mother none of this would have happened — and suggesting if he had physical custody our son would be fine. I find that particular statement hilarious, as he often brings the kids home early on an overnight visit or skips the visit altogether when something more exciting comes up. I can’t imagine him attempting a long term situation.
He is in denial that our son has a mental illness, much the same way he never accepted his own diagnosis years ago (which ultimately led to our divorce). He has left all daily care for our children, as well as education, health and life decisions to me to make, yet he is right there to tell me the decisions were wrong and he could have done it better. I basically just count him as another source of (small) income each week since I finally decided to have the child support unit set up the transfer of child support payments automatically to make sure we at least get the money.
College savings and finances. This month, Naked with Cash is talking about saving for college or paying off college debts. I’m attempting to do a little of both. I still have $12,450 in my own student loans to pay off, and have opened New York 529 accounts to start saving for my kids. I’ve come a long way with my college debt. I paid and borrowed my way through college on my own, with the exception of my first semester of college, when my parents bought my books and a few things for my dorm room.
I went to a state university the first year, and then transferred to a local private college for the last three years. Because I lived in the dorms at the state university, the price ended up being about the same per year between the state university and private college, but I lived at home most of my college years.
I worked full-time through college in order to pay living expenses. Those included a car, insurance, credit cards, loans used for college that were not student loans and therefore not in deferment, and then rent and utilities my last year of college when I moved out. I was trying to pay as much of my college expenses as I could when they were incurred in an effort to limit borrowing, so I can’t jump up and down and cheer about the whole “college experience.” I literally worked 40 hours a week, and fit in classes during the day and evening around my work schedule, and then studied or worked on papers in between.
I look back on it now and wonder why I did it. I’m honestly not using my bachelor’s degree. I couldn’t get a job in my field when I graduated; everyone wanted me to work more than 40 hours a week as an unpaid intern first, and financially that wasn’t an option for me. So, I started a business. I suppose what I learned juggling full time work and a full time class schedule came in handy when learning to start and run a business while being a full time mom, so it wasn’t a total waste. Just a very expensive lesson!
I kind of think college is only necessary for people going into a handful of professions — like those who want to become doctors, nurses, lawyers. I think most other careers are better suited to on-the-job training, but if my boys decide to go to college I will support their decision. That’s why I am trying to set aside a little money for them in the 529 accounts. I have only been doing $25 per child per month since becoming a single mom and having so many other, more immediate expenses to handle. I like the 529 because if only one child decides to go to college and the other doesn’t, you have the option of transferring the funds from the other account to the child going to college without penalty. I will likely never have the ability to save enough to cover the cost of their education entirely, but I hope to help them as much as I can to limit the amount of debt they graduate with.
Business. With everything going on with my son’s health, and having the kids home for our incredibly long 90 day summer break (as of August 1 we still have 40 days left of summer break), I haven’t had as much time as I would like to devote to my business. I feel like it is suffering as a result. My business partner and I have different strengths, and she’s holding up her end, but growth is basically at a standstill. Our biggest client dropped a large portion of their volume on July 1 through no fault of ours, and I haven’t had a chance to work on replacing that income. I’m also outsourcing and subcontracting more than I would normally which costs us more money.
Our school is sort of up in the air, as well, which is adding to the stress. They may or may not reopen in September! Talk about stress. I reported a few months ago that my children both attend a small private school. It’s not because I think I can afford that luxury, but because the public school refused to acknowledge and meet their special needs. I tried homeschooling but was unable to do that and work enough at the same time. I will follow up with the school as it is my hope I can use some of the special ed laws to my favor and show that the public school was unable to accommodate him, and therefore get some or all of the private school tuition paid for. My fear is the legal costs associated with attempting this.
Feedback from Neal Frankle, CFP
Thanks for your update. I admire you and empathize too. You are really carrying a heavy burden –- there is no point denying it.
On to the topic of college savings and finances. I wonder what the interest rate is on the student loan? If it’s above 4% I would probably focus my money on paying that off before attempting to save for college. The reason? The higher the rate on debt the more you “earn” by paying it off. In other words, paying off a 4% debt is like earning a guaranteed rate of 4% which is hard to find these days.
You had a smart strategy of trying to minimize your college expenses and working. Your children could do the same. Plus, there may be more grants and scholarships available for them than there were for you. This is another reason why I’d focus on the debt first.
I also support your belief that college isn’t for everyone. It certainly was a requirement for me in my profession, but many other people make far more money than I do and don’t have the degree.
I understand your frustration with the school’s unwillingness to provide your son with the support he needs. My wife worked in special ed and I know how important this is. All in all, I can say that you seem to be doing an amazing job and I don’t really have many recommendations other than try not to stress. If you are doing the best you can, what more can you do?
Feedback from Luke Landes
After asking the Naked With Cash participants for feedback about the series, I heard that at least some were interested in commentary from me. The experts generally cover everything, but I’ll add my thoughts as well.
You are in a tough situation. The very fact that you are surviving financially despite your many challenges attests to your strength of character. With special-needs children, a lack of support from their father and the public school system, you have the opportunity to show why personal financial success is more than just about personal choices. Sometimes, you have to make the best with what you have, and the opportunities that might be available to other people are not available to you. It’s the myth of equal opportunity.
But it’s always good to remember that things could be worse.
Faced with these challenges, you are making some great decisions. Any college savings for your children will help them in the long-run, and once school starts — and I hope the year will start with them placed in a school with the necessary resources and it doesn’t take much drama to do so — you’ll be able to focus again on building your business income.