Congratulations on both buying a home and your child's starting college.

While I feel that a debt free college education gives a young person an enormous advantage, you do need to put your own retirement first. I'm sure you don't want to be a burden to your child in your golden years.

Have you thoroughly explored every financial aid possibility? Will your child be working part time and summers? What contribution will he or she be making toward their education? How important is this to your child?

I know I'm not offering a lot of suggestions, but I think it's worth asking those questions. My sister and BIL refinanced their home three times to pay for their children's college educations. (None of the kids worked during college). Now, they are retired and have to sell the home because they can't keep up the payments.

I don't know about wisdom, but I will give my opinions. =0)

First I would take a look at my mortgage. If it is less than 5 years old you are looking at paying on it until you are 75-80. Is this the house you plan on living in for the rest of your life? The major bill in most everyone's life is their mortgage. It will take the most money per month. Your income will likely drop at retirement, will it be enough to cover your mortgage? Do you want to have such a bill on top of the other challenges of retiring?

Find a friend with a loan program (Quicken or something similar), or perhaps speak to your mortgage company and see how much extra you would have to pay each month to have your mortgage paid off by the age you want to retire at. Is it conceivable?

Now for the subject that always gets me into trouble... paying for your adult child's college education.

First, has your child asked you to help him/her?

Have the two of you sat down and talked about what is expected from each of you? Both what you expect and what they expect from you. Have you talked about how they will pay for college? Are they planning on getting a job while in college? To support themselves? Have they been saving? Have they applied for scholarships etc....? Have they talked to the guidance counselor? The college's financial department? Have they looked into scholarships offered by the school? the state? the career in which they wish to major? Basically has the young adult acted as a young adult and done everything they possibly could to cut their expenses, and round up all the income they can? Have you seen a written budget? At that point and ONLY at that point would I say "OK, now what else do you need?"

I would do a bit of research myself.... spend an hour or two looking for the obscure scholarships that they may qualify for. If they have their class schedule and know what textbooks would be required, I would look at the used book sites, and see if I could find them for less than the school book store. And right now at the beginning of the public school year, all the big box stores are holding their sales....notebooks for a dime, pencils and pens for the cheap, etc.... Not all of it transitions to college life, but much of the nuts and bolts are the same no matter your level. In a couple of weeks, when your child is at college and school has started, these things will go further on sale (due to the stores overbuying, and now not having the room to store them). You could buy extras and store them until the next term.

There are many, many, MANY ways to help your young adult through this transition that do not require a whole lot of money, but do require a lot of time.

You need to ignore "all the kids" and concentrate on YOUR kid. Have you taught him about budgets and money? Have you taught him to be frugal? How to spend money wisely? The dangers of CC's? The responsibility of getting and holding a job? The responsibility of paying your own way? The responsibilities of adulthood? If you have I think you are already ahead of many of those written about in the news. You have already succeeded in helping your child make it through college (and life) with less debt.

*****rant off******

For yourself..... unless you want to move in with your child (later in life) I would suggest getting a move on with your own financial security first. Besides paying off your mortgage, you have to have some income after retirement.... pension, IRA, retirement funds. The savings account for a new car is good, but you also need one for all those repairs that come up when you own a home (so that you are not paying interest on those repairs). You need money in the bank in case something happens and you can not work for a time. You have to figure out what YOU need to do first, to ensure that YOU are financially stable and can support yourself through your retirement. Then you will be able to clearly see what you can do to help your child through this phase of his life.

They say that in order to make your budget, you have to decrease expenditures or increase income. In retirement you usually decrease income (it's like a planned job loss)..... and a lot of folks don't seem to think about decreasing the expenditures, until it's too late.

Good luck!
Mil

I'm not a financial planner so take the following for what it's worth (not much).

I would put retirement ahead of your child's college and future car payments (take very very good care of the car you have) in terms of priorities. Students can repay their student loans; there is no retirement loan repayment program for you.

Like the others, I would advise you and your child to look and apply for every grant/loan/scholarship program that seems remotely applicable to his/her situation. There is a lot of money out there waiting for a student. Even if the grant is only for $250 or $500, apply - these small grants add up quickly.

I went to university with lots of students who financed 100% of their college education (no money from their parents). Oftentimes, this accomplishment appeared on their first resume (I guess it showed ingenuity and fiscal responsibility).

My parents could afford to pay for some of our college costs but not all. They said they would pay our living expenses but tuition was on us. This reasoning came about because our father worked at a university and dependents got tuition waivers. Needless to say, we all attended the university where he worked. By senior year, we were paying for our own living expenses so their college costs were pretty minimal. This was a natural progression because we were earning more and more money through part-time jobs.

My parents told us that they would NOT pay for graduate school and they expected us to get graduate degrees. We all did it. In the end, having to figure out how to pay for college was a GOOD thing, not bad.

A while back I worked for one of the most successful tech consulting companies in the world and still have many friends there. I was impressed by the strong corporate culture and emphasis on good business ethics. They used an extensive interview process (way before this was common) and placed a high premium on both problem solving and 'thinking out of the box'.

About 15 yrs ago (before I started with them) they turned their professional attention to their internal operations and revamped their hiring practices. They wanted to identify the characteristics of successful partners who were already with the company and had a proven track record - what factors did they have in common, which would give the company an idea of what to look for in new employees?

To their great surprise, they found that the most obvious common denominator of success as a partner (partners not only must know how to run large complex projects with multiple vendors, but also to sell future work) was not grade point average or what kind of school they went to (Ivy League, Big Ten, or local state university) - it was the extra-curricular activities and outside jobs the potential new employees had done while as a student.

In other words, students who had shown some fiscal responsibility for their own education, as well as showing an interest in more than just corporate business, were well-rounded individuals who were more likely to be successful in their careers.

Helping your children is one thing, paying their way is another. You don't have sufficient resources to do the latter. The fact that you are using equity debt to finance basic home repairs should be a red flag alert. Clearly, you don't have sufficient savings, so you need to build that up FIRST. Otherwise, you will continue to add to your mortgage debt for basic necessities, which is never a good idea.

This is another reason why I don't think homeownership is a necessity for everybody. Sometimes renting CAN be a good thing! I can only hope you will eventually have sufficient equity in your property so that when you retire you can see a true profit that will help in funding your retirement "nest egg".

It is difficult to talk to your kids about money but you need to do so. Your child needs to be proud of you for managing a difficult stage of life on your own, not ashamed because you both need to 'pinch pennies.' Sit down with a piece of paper and define your short- and medium-term goals. What will they realistically cost you? To paraphrase an old saying, how can you reduce minor expenses to Peter so you can pay extra to Paul.

If your employer offers a 401k invest as much as you can, definitely enough to meet the matching (if any). Use a lifecycle fund if they offer it and assume you will heading for a retirement date 20-25 yrs from now. They will do a better job of diversification than you will as a newbie. You are not chasing 'hot sectors', you are aiming for a steady long-term gain through an uncertain financial market quagmire.

As a very general guideline, in retirement you would be pulling out 5% of your retirement portfolio to supplement Social Security. Thus, a $500,000 portfolio will gain you $25K before taxes. You don't need to save the full $500K, since a diversified portfolio should double within 20 years' time. However, since inflation will chip away at the value of that portfolio, it would be preferable to contribute the very maximum that you can, over time.

You need to start saving now, because your compounding period gets shorter every year you delay. Wait another five years to start saving money, and you'll need to save 34% more because you've lost more of the compounding percentage.

Frankly, the best gift you can give your child is for them to know they won't have to take care of YOU, at a time when they should be concentrating on having kids and buying their own home! I can't tell you how many Boomers I know who are worried about their parents' finances and legal affairs. That's a legacy I'm sure you don't want to pass on to your kids.

Something else to think about (seems we keep having this discussion on this forum): if you don't have an emergency fund, don't pay extra on your mortgage until you do have one. An emergency fund is generally thought to be at least 3 months' living expenses, preferably 6 months. Pay yourself first, as they say. For example, if you had had such a fund, you wouldn't have had to borrow for the home repair. Yes, you're paying more in interest over the long run, but that's the cost of security. Find some calculators and run the numbers, comparing extra money put toward the house with extra money saved.

Thanks for your responses - lots of good food for thought. I do put down an additional $80/month toward the principal of the mortgage, and perhaps I should be trying to do more. I also had been saving toward the inevitable demise of my furnace/air, but had only saved about 1/2 of what was needed when the air went...thus the home equity loan. I had to take out a minimum loan amount, which was more than I needed...so I could take the left over money and put it right back toward the principal.

I think that teaching your kid about financial responsibility is an ongoing and individual process. My son is on the slow to mature end of things...and very much a procrastinator, so this has been and will be a slow (maybe painful)process. I put myself through college back in the day, but things are much different now. Financial aid is hard to come by, and some of the rules and regs just crazy. Kids can't claim independence from their parents (for financial aid purposes) until they are 24 years old or married; AND if they make over $3,000/year they lose $.50 of every dollar of potential financial aide money. There is little incentive for them to work a lot from that standpoint. He has been working part time and has managed to save about $2700 that will go toward college. I think I have more of an issue with him taking out large loans than he does - I think I graduated with about $4,000 in loans, not $40,000!

That said, I know that my retirement/mortage need to be a high priority. I'm trying to connect with a fee-only fiduciary planner to weed through this. I'm having a hard time finding someone that is not connected to a business or broker, and who will put my needs first.

>>I'm trying to connect with a fee-only fiduciary planner to weed through this. I'm having a hard time finding someone that is not connected to a business or broker, and who will put my needs first. A CFP (Certified Financial Planner), which is what you're referencing above, IS also a broker. However, since a CFP is licensed to do financial planning and a regular everyday stockbroker is NOT, the CFP has what is called 'fiduciary' responsibility to you as a client. In other words, they have a legal responsibility to handle your money properly, e.g., in your best interests.

You do not have to be afraid of a broker any more than you should be afraid of an insurance agent. In fact, most CFPs are both, because good estate planning requires a holistic approach to good financial management, which means a diversified portfolio of assets and adequate insurance.

Actually, without substantial liquid assets, I'm not sure why you need an advisor. You already know you're not saving enough money - if you have 20 yrs to retirement you should be saving at least $12K a year in retirement plan contributions alone, exclusive of your regular checking/savings accounts at your local bank.

Unless you have the assets, the only thing an advisor can do is tell you, "Yes, ma'am, you don't have enough money to do all three things: support your kid through college, pay off your mortgage before you retire, and save an adequate amount to supplement your Social Security. So why don't you pick the one thing you think is really important, and aim for that first, and let the other chips fall where they may?"

An advisor isn't going to tell you what to do with your finances. An advisor lays out a map for you to get from where you are to where you want to be - but it is up to YOU to decide what the goal is. No advisor worth his/her money will tell you what your goals SHOULD be. They know very well that life is a series of choices, some of them just happen to be worse choices than others.

If you want to educate your child, that's fine, but you run the sizable risk of having to work forever, which your future health may not support. Financial aid has always been a lot of paperwork, but spending the time to wade through the different options is something I think you can't afford NOT to do.

We have some younger friends where one of them has taken nine years to get through college - but she did it on her own, with excellent grades, working part-time and without a single loan. It's been hard on both her and her partner, but we just finished throwing her a huge graduation party and celebrating the great job she was able to find.

Interestingly enough, at the age of 28 she is extremely worried about her parents' finances. Seems they haven't saved enough for retirement and their financial/legal affairs are in a haphazard state. So I reiterate, the best gift you can give a child is to get your own financial and legal house in order. I know it's rough, and I wish you the very best of luck in deciding what to do going forward.

Many companies also offer tuition reimbursement programs for their full time employees. It may take a little longer to get through school, but your son would also be getting job experience which is often just as valuable (if not more so) than a college degree.

Also, put a call into your son's college financial aid office. I found out 2 years into college that there were a number of scholarships I qualified for but weren't widely advertised ($500 to help buy books each semester, etc.). It may even be best to set up a meeting with someone at the school.

My parents only required me to pay for 1 year of my 4, but they also told me that every scholarship I received would be used toward MY 25% repayment. This was a a HUGE motivator, especially when that book scholarship required me to get up and wait in line at 4:30am every semester (it was a first-come, first-serve scholarship for those not receiving aid). I think I researched scholarships much more studiously than had they not given me that incentive. I ended up getting more scholarships than my 25% so that helped them out quite a bit as well!

Also, you and your son need to decide on who will be contributing to his "spending money" fund. It was a big awakening when I blew my summers-savings in the first 4 months of college and mom and dad only offered their condolences. :) Got me looking for a "spending-money" job mighty quick!

I returned to college in my thirties (i.e. in the late 90's). At that time it was normal to graduate with 40K or more in student loans. This was at a medium/good quality public university. I would not worry about your son doing the same.

Also, student loans have EXTREMELY lenient and flexible repayment terms. For example your son can put off all payments if he is ever unemployed, for up to 2 years IIRC. And payments are adjusted for income -- I had a friend who was paying only $10 per month!

There are also non-monetary ways of "repaying" student loans, e.g. teaching (a degree in education isn't required).

Hope this helps :).

My son lived at home and went to the local community college for two years and then he worked for two years and now he is getting ready to work on his 4 year degree. We are giving him no financial help whatsoever. He is 24 now, so we didn't figure into his FAFSE report, so he picked up both no interest loans, work study, and grants. School will cost him every dime of the 26k he has saved over the last two years, but he should graduate without any loans. He doesn't feel hard done by.

It does sound to me that you are walking the line. Your retirement will be here before you know it ( yeah that thing about time flowing faster...) & you have to address that & your lack of emergency money (now that you had to do the A/C work). Have you also talked to your child about other options for his education such as community college, commuting, part-time studies while he works (I am another who had to do this & it worked out OK). I also agree that having to struggle a bit to get what he wants (college) really aids the maturation.
I agree you don't need a planner. Save the money & put it toward your debt.
Have you thought that maybe, you could talk to your son about how this is a team effort, & after you sacrifice some of your financial security for his education, he will sacrifice some to pay you back to help your regain that security?
I also am the sort who would always pay extra toward the mortgage & I also save for my next car (after driving all the value out of my current one). I guess you have to evaluate whether the extra payments will free up enough money soon enough to really pay off in the end vs. investing it now elsewhere. (That would depend on your interest rate).
Good luck from another 50+ single mother!

If your child is 18yrs. old and older, stop claiming him as a dependent. Without your support and salary, your child now have a better chance getting grants & loans.

This is the same process that many of my brothers, sisters, friends and myself had put ourselves through college.

Btw, this has nothing to do whether your child is seeking your house for boarding. He/She can still stays with you just as long as you don't claim him/her on your taxes and your health insurance.

That's actually not true now though it may have been at some other time. The Fafse requires the parents' information for any student under the age of 24 whether they support them or not, whether they claim them on their taxes or not.

It does sound like the responsible thing is to put yourself first. While your son may be a nice boy, he may not yet have fully found himself by the time you are ready to retire. So you cannot depend on him to support you nor would you want to be a burden. As someone said, there are no loans for retirement