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What To Do

Over at The Simple Dollar there’s a great discussion on Figuring Out A Debt Strategy After The Home Purchase and I wanted to weigh in on the comments but didn’t know if my comment was too long or what.  So here it is below.  Basically there’s discussion on what Trent wants to do now with his debt/money after he moves into their home.

My recommendations are listed here:

  1. Pay down the education debt normally.  Feel ok with debt that’s allowing you a better life – education.
  2. Pay your mortgage normally.  Did I read that right?  You want to pay off the mortgage?  That is a grand goal and can certainly be paid in 15 years.
  3. Too much in HSBC – 3-6 months total for the both of you or set an amount that the return will make the account grow automagically to your satisfaction.
  4. Lose the 529 plans for your kids.  It would be better to have an investment account at a brokerage with both your and your wife’s name on it called the education account.  If your kids need it then use it for their education.  If they don’t because of grants, scholarships, etc. then it’s your money or help them start a Roth IRA with it.  You owe your kids equality of opportunity and not money for all of them to go to college.  You never know what they’ll want to do when they get there.  Plus you really need to look at what the 529s do to your financial life when your kids reach that age.  There’s more than one way to pay for college, there’s only one way to pay for your retirement.

Of course, like Trent says, there’s more Personal than Finance in Personal Finance.   🙂 

{ 2 comments… read them below or add one }

rhbee June 25, 2007 at 10:05 am

Is there such a thing as over managing your personal finances? I know we are learning that it is prudent to leave your long term investments alone except for the once a year rebalancing but it seems to me that a constant reanalyzation (is that a word?) of your personal finances is also an ineffecient and possibly costly way of doing things. I know that personality plays a large part in this but I am definitely in a constant struggle with my partner over this. I can’t (wouldn’t) change her for the world but sometimes she and the other personal finance bloggers I read really drive me crazy.

That said, I agree with your analysis of the 529 situation. I was watching a Cosby rerun last night, and its topic was that their son was trying to bargain with them for the money that they would have spent on his expensive college education to be given to him as a small business loan. Planning for someone else’s future is quite often a wasted activity.

Bill Stevens June 25, 2007 at 11:19 am

Thanks for posting. You’re the first!! I wish I had a prize for you. 🙂

I think as long as your partner and you agree on how the money should be handled and you’re not having major money issues then yes there could be over management if it’s affecting your daily life and relationship in a bad way.

But on another note, you don’t want to become reckless with your money and you want to always communicate with your partner about it, even when it’s painful. You want a budget so you know what’s coming and going. You also want that savings and retirement.

I have two daughters in their twenties, one is getting married and one has had a long term boyfriend. The boyfriend doesn’t want to talk too much about money because it’s a problem. He’d rather have fun and spend it. So, that’s reckless. But very common.

This sounds like the beginning of a good article.

Thanks,
Bill

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