would you use college fund?

[Happiest mommy]

Hello all I have a wwyd question we need $6,000 to be totally out of CC debt soon we will be recieving heating bill which are always around $300-$500 a month I have been snowballing the CC bills until now but with the heating bills I will not be able to continue to this, DH sugested taking out what we owe from our DD's college fund he says we need it now and our priority should be to be debt free now, I feel so bad taking out that money even tho I feel he is right we SHOULD concentrate on the now and worry about college fund later we would still continue to contribute that would not stop so wwyd

 

[luvmy3]

What type of college fund is it? Is it an account in your child's name, or is it money in your own savings that you have set aside? My answer depends on the answer to that.

 

[TnTWalter]

If it is just a mutual fund or savings account and there aren't taxes or penalities, then yes but if it's a 529 or UGMA or something in child's name, I would make sure to check how much you would lose in penalty, etc.

Trish

 

[Disneycrazymom]

Is it for the DD that is 5? Will you be able to keep the credit card paid off or will it be just as high in a few months? Is the college fund tax deferred? Do you have a financial planner?

IF the credit card debt will not return and you are able to live on what you make. This is a one time thing and the debt is not occurring over normal living expenses. If that is true then I would take the money out and pay off the cards. Then I would find a good financial planner to help you plan for college for your kids, as well as your retirement, and emergency fund. Because your DD is so young you have time to recover and getting a fresh start can be very encouraging. But ONLY do it IF you can change what caused the debt.

 

[libraryfreak]

If it were only a question of math, i.e. you are paying 25% interest on your credit card verses earning 4% (if you're lucky) in a savings account, then by all means go ahead and get rid of the CC debt.

But if it were only a matter of math, then you might not be in CC debt. Did you get into debt because of overspending? Then you absolutely have to change your habits. And thats harder than it sounds. If it was because you were laid off, medical bills, or some other reason that was a temporary problem, then I would be more comfortable telling myself that once my CC debt was done I would then snowball the college fund back to where it was.

And like pp said too, it depends on if the money is in a 529 plan or just set aside.

 

[luvmy3]

If it is just a mutual fund or savings account and there aren't taxes or penalities, then yes but if it's a 529 or UGMA or something in child's name, I would make sure to check how much you would lose in penalty, etc.

Trish

If its any UGMA, its the child's money not the parents. Legally they cannot take it.

 

[Happiest mommy]

sorry I was not clear it's not in their names its a separate account no penalties, yes this would be a one time thing definetly was not for overspending we are VERY frugal it was due to some very unexpected home bills and medical there would still be money left there so we would not be using all the money.

 

[mrspaha]

As long as these savings have no penalty or tax consequences, I would most definitely use it to pay off the credit card debt. With the interest on cc's, I think it's essential to pay off as much as you can as quick as you can. I know you said you are frugal, so continue along that path and try to replenish your savings on an ongoing basis.

 

[finz2left]

Suze Orman would say TAKE CARE OF YOURSELVES first -- debt free, savings, retirement ALL come before college funds.

 

[sk!mom]

sorry I was not clear it's not in their names its a separate account no penalties, yes this would be a one time thing definetly was not for overspending we are VERY frugal it was due to some very unexpected home bills and medical there would still be money left there so we would not be using all the money.

In that case, it's your money that you had earmarked for a specific purpose but now need to reallocate. I see no problem with taking money from there to pay off the debts. To make yourself feel better, maybe set a repayment schedule of extra contributions to the college fund to pay it back.

 

[luvmy3]

In that case, it's your money that you had earmarked for a specific purpose but now need to reallocate. I see no problem with taking money from there to pay off the debts. To make yourself feel better, maybe set a repayment schedule of extra contributions to the college fund to pay it back.

ITA

 

[At World's End]

Can you stop contributing to the college fund for a time and use that money instead to pay off the cc debt? Or if you do borrow the money from the college fund, stop contributing and build up an emergency fund so this doesn't happen again. Once the emergency fund is established, then continue the contributions again. If you never end up needing the emergency fund, it can always be used for college.

 

[Happiest mommy]

Thank you all for your replies I feel better about making this decision

 

[Jitzy]

Don't feel guilty about using that savings for things that your family needs. It is more important to save for your future than your children's.

Also, don't save so much for their college education that it hurts you financially now. There's nothing wrong with saving 25 - 50 or so a month. When the kids get to college that's enough to help them but it also requires them to put more effort into getting good grades and looking for scholarships and grants.

 

[cm8]

Don't feel guilty about using that savings for things that your family needs. It is more important to save for your future than your children's.

Also, don't save so much for their college education that it hurts you financially now. There's nothing wrong with saving 25 - 50 or so a month. When the kids get to college that's enough to help them but it also requires them to put more effort into getting good grades and looking for scholarships and grants.