Preparing for life beyond college

Wednesday, October 3, 2012
 | 
Dave Ramsey - Guest Columnist
http://www.daveramsey.com

Dave Ramsey column head

Preparing for life beyond college

Dear Dave,

I'm in college with a full scholarship. I work part time and should be able to graduate with no debt. What can I do now to best utilize the money I make?

Tyler

Dear Tyler,

You're in a fantastic position right now. First, I think your main goal is to study hard and be 100 percent certain you're graduating on time with no money issues. The next thing is to make sure you have plenty of cash on hand to make the transition to the real world. In a case like this, transition can mean anything from moving to a new city to simply finding a different place to live. You're coming to a time in your life where you really can't have too much cash saved.

If it were me, I'd just save every penny I could and drop it in a savings account. You can worry about investing and growing your money later, after you've settled into your new life and have some stability. Just think how cool it would be to graduate with $20,000 in the bank. Then, when you change gears and move out into the real world, you can do some really cool things with the money that's left. Set three to six months of expenses aside as your emergency fund, then you can even begin to think about buying a home and investing in Roth IRAs and other pre-tax retirement plans.

But your biggest investment right now is making sure you finish school and have the cash on-hand to transition smoothly afterward. And you're in a great position to make that happen!

- Dave


First the baby or the debt?

Dear Dave,

My wife and I are following your plan. We want to start a family, but we're still in debt and still owe about $8,000 on our car. Should we pay that off and fully fund our emergency fund before we think about having children?

Robert

Dear Robert,

When two people who are married and love each other very much decide it's time to share that love with a family, then it's time. You've done a great job of managing your money, setting goals and formulating a game plan, so there's no reason to wait.

If it were me, I'd begin aggressively paying down the car now. Then, when the doctor confirms she's pregnant, you can temporarily push the pause button on your Total Money Makeover. If you haven't managed to pay off the car at that point, use the money you were putting toward it to build up a big cash pile of savings, and go back to regular payments on the car after the baby comes.

By doing this you really lose no ground on your get-out-of-debt plan. You're just redirecting your resources in case you need additional money down the road. But who knows? It may take you guys a while to get pregnant. And if that happens, you could have the car paid off and plenty of opportunity to save up more before the little one arrives!

- Dave


Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: "Financial Peace," "More Than Enough," "The Total Money Makeover" and "EntreLeadership." The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

This column is printed with permission. Opinions expressed in 'Perspectives' columns published by OneNewsNow.com are the sole responsibility of the article's author(s), or of the person(s) or organization(s) quoted therein, and do not necessarily represent those of the staff or management of, or advertisers who support the American Family News Network, OneNewsNow.com, our parent organization or its other affiliates.

We moderate all reader comments, usually within 24 hours of posting (longer on weekends). Please limit your comment to 300 words or less and ensure it addresses the article. Comments that contain a link (URL), an inordinate number of words in ALL CAPS, rude remarks directed at other readers, or profanity/vulgarity will not be approved. More details

SIGN UP FOR OUR DAILY NEWSBRIEF

SUBSCRIBE

VOTE IN OUR POLL

Do you believe Donald Trump fooled evangelical voters during the GOP primary?

CAST YOUR VOTE

GET PUSH NOTIFICATIONS

SUBSCRIBE

LATEST AP HEADLINES

Trump says he was surprised by Paul Ryan's rebuff
Trump returns to campaign trail, targets Clinton on coal
Canadian convoy begins, hoping to flee wildfire zone
Latest: Police identify suspect in fatal school shooting
  Voters punish the Labour Party in Scotland

LATEST FROM THE WEB

Surprise, surprise: Man wanted for recording girl in Target fitting room
Sometimes there is no lesser of two evils
Johns Hopkins psychiatrist: ‘Transgendered men don’t become women,’ they become ‘feminized men,’ ‘impersonators’
Poultry vs. Pinhead: New York City's mayor says boycott Chick-fil-A
Precious snowflakes targeted black cartoonist for criticizing Black Lives Matter

CARTOON OF THE DAY

Cartoon of the Day