You are borrowing for college no matter what!

I speak with clients on a regular basis that tell me they have cash saved up for either some or all of the college costs for their children. As a society, we have been taught that paying cash is the smartest thing to do. However, this may or may not be so. It all depends on the alternatives.

I tell clients all the time, “You are borrowing money for college – no matter what” “You are either borrowing from someone else, or you are borrowing from your own retirement”

Make sure you work out the opportunity cost of where you are borrowing from and work out where to efficiently place the money.

Too many times, clients tell me that they are paying cash because they are earning so little on their cash that they have. Just because most people are not aware of safe alternatives with decent rates of returns on their money that they want accessible, does not mean that they do not exist. Be careful before you just pay cash for large expenses because it could be extremely costly.

One family that I recently worked with budgeted for $150,000 for college for 3 children. A 1% difference in borrowing rate or rate of return would have cost them $33,000 of retirement money just when they would need it.

“You are borrowing money for College – no matter what”.

“You are either borrowing from someone else, or you are borrowing from your own retirement”.

Talk with one of our expert advisors if you would like to plan for your unique most efficient way.