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My current financial state...

April 1st, 2008 at 08:33 pm

Screwed! Well, not totally, yet, but I sure feel like it. I am realizing that I can't use my 401k for the kids' college costs because withdrawals go against my income, so I would qualify for no financial aid at all if I do that. And I can't borrow the whole thing, especially for 7 years in a row. And to make a sad story even sadder, it looks like my FICO score went down recently after I had to refinance some expiring 0% debt to a promotional 1.99%. BoA juggled the credit limits on three CC accounts I had with them. They said it wouldn't adversely affect my FICO score, but something sure did last month - not sure how much lag time is involved, it could also have been financing $10k of college costs on a credit card back in January.

So if anyone can see any bright lights at the end of the tunnel for me that isn't a train, please let me know! Thanks.

8 Responses to “My current financial state...”

  1. nance Says:

    I think that taking money out of a retirement fund before you are 59 1/2 results in a big penalty, too. I'd probably let the kids get student loans, and try to help them pay them off in the future.

  2. Ralph Says:

    I think we need to get her credit rating up before we do that, nance. When we applied for a private loan from Chase in January the rate was going to be about 10%, I assume because she has no credit history. So I just bailed and took a 7% for the life of the balance offer on one of my credit cards. Of course that leads to a $300 monthly payment, so I can't do that too many more times, to say the least. I need to seriously talk to her about transferring to a more reasonable school. She agreed to take the difference between teh State U and the private college she really wanted to go to in loans, but to see her graduating with that much debt at high rates makes me sort of ill. I don't think she fully appreciates the anchor that is. In hindsight, I really screwed up by not more or less forcing her to go the the State U.

  3. merch Says:

    I think it's fair for you to say that you'll pay for the state school and anything above that she can get a loan for. She cold also work part time to close the gap.

    The real issue I think is that your financial foundation is crumbling and the price of college is putting further strain on that.

    I think you need to start cleaning up the CC and paying them off and start getting an EF together. This will also help your FICO score, where you might be able to start getting low cost loans to help with college, but I won't recommend this.

    I feel that you need to get your financial house in order, you will be better able to help your family. If you don't get your house in order, I feel your going to be killing yourself trying to keep afloat.

    Also, you don't want to be a burden on your kids when you retire and I feel that's more important then paying for school.

    Those are my thoughts. Best of luck but you can do it. It just prioritizing the most important things in your life. Mine are needs (shelter, transportation, electricity, etc.), not being a burden on people (debt, retirement, emergency fund), paying education, charity, and lastly building wealth.

  4. Broken Arrow Says:

    Well, it's nice to hear from you, but... these are not happy news, and I am sorry to hear that. No real advice I can give beyond what you haven't already heard. Please take care.

  5. crazyliblady Says:

    I would echo what other posters have said. You shouldn't raid your retirement fund for your kids' college education, because you worked hard for that money and would pay a substantial penalty for removing your money early. I put myself through undergraduate and graduate school through grants, scholarships, and loans. It took me 7 years to pay the loan off, but I did do it, and I am glad I take out the loan. I fully appreciated exactly where my education was coming from because I paid for it. You can go to the library and find information about scholarships your kids may qualify for. Scholarships are not always merit or need based. There may be other criteria.

  6. davera Says:

    Ralph, if your finances are stretched so thin, and your daughter is a good student, might she now qualify for needs-based grants from the private college's financial aid program?

    Surely it's worth another visit there to explain the situation, including the fact that she may have to transfer to a lower-cost public school. They may be able to help identify some other sources of funds such as grants, work-study options, or programs with partial tuition waivers.

    Perhaps you have already appealed to them, but this is a ray of light I see in the tunnel.

  7. terri77 Says:

    Did she not qualify for federal loans or have you maxed those out?

  8. Ralph Says:

    terri,

    She only qualified for a $3500 Stafford loan that was part of the college's "financial aid" package, a pretty bogus practice on their part. davera, I can try, but I doubt that I'll get far.

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