Should We Pay for Our Child’s College Education?

Parents tend to have a strong opinion on whether or not they should pay for their child’s college education. So it should have not been a surprise that my husband and I had vastly different opinions on this topic.  

It is no secret around here that my husband and I are huge supporters of the Dave Ramsey plan. We have implemented it in our life over the past four years. In Dave Ramsey’s “Baby Steps,” saving for college is baby step number five, between saving 15% for retirement and paying off the mortgage early. These three baby steps are tackled simultaneously.

We have been on these baby steps for THREE YEARS!!! Throughout the majority of this time we had no intentions of saving for college for our maybe, someday child. However, we definitely had many “what if” discussions.

Should We Pay for Our Child's College Education

Difference of Opinions: Should We Pay for Our Child’s College?

My husband believed the child should pave his/her own way and earn/work hard for everything they receive, including a college education.

I wasn’t so sure. That weight of having nearly $50,000 of student loan debt hanging around my neck. You know the one we just paid off six months previous. Was still very fresh in my mind. I knew I wanted something better, something different for my child.

Our differing viewpoints made sense from where our young adult lives had led us. My husband joined the military at 18 years of age and started with literally nothing, financially speaking. He has worked and paid for absolutely everything in his entire adult life.

I on the other hand entered college at the ripe age of 18 years. I received many academic scholarships and grants to help pay for college. As well as savings, summer jobs, and a part-time job during college. My parents did help financially by covering my car and health insurance. My dad had an unfortunate work-related accident my freshman year of college, leaving him permanently unable to work. Meaning my parents were in no position to help pay for my college expenses.

I completed my Bachelor’s degree owing less than $10,000 in student loans. However, I immediately began graduate school and racked up $50,000 of student loans!!! Could have I lived more frugally and came out with less student loans? Absolutely! However, I could have also lived irresponsibly and easily ended up with $80,000+ too!  

Changing of Opinions

I agreed with my husband’s view that children should work and earn things they receive. However, I also believed that I had worked for and earned my degrees. However, I did so by also accumulating debt. A burden I would not wish on anybody, especially my own child.

Over many conversations during the next few years our opinions became closer to the same. I frequently reminded my husband of the student loan debt that burdened our first year of marriage. He frequently reminded me that things are appreciated more when it is earned.

I emphasized that a good portion of my college was paid by grants and scholarships that required a “financial need.” A criteria that our child will definitely not meet considering our incomes and assets. I also shared that the cost of a bachelor’s degree is predicted to be $100,000+ by the time our child is college age.

We slowly over many months and discussions, agreed on a middle ground. We would expect our children to save for college and work part time and summer jobs while attending college. We would cover the “big” expenses, such as tuition and rent. Our child would be responsible for books and all other living expenses (utilities, food, car, etc.). Of course we will set guidelines and expectations in order for us to continue to help financially.

Yes, eighteen years is a long way down the road, but at least we have a plan. We will not wake up on his 16th birthday and say “oh no, he is serious about attending college. How are we ever going to pay for it?”

College Savings Options

Now that we are committed to paying for some of our child’s college education expenses. What are our options and what option is best for our situation?

Education Savings Account (ESA)

An ESA is a tax advantaged savings account for education expenses. Meaning you do not pay taxes on the earnings of the account as long as the funds are used for educational expenses.


  • More variety in investment options
  • More control over those investment options
  • Can be used on educational expenses from kindergarten to college
  • Can be transferred to a family member


  • Contributions limited to $2000/year
  • Income Limitations for Contributors ($110,000 single, $190,000 married (2016))
  • Must be used before beneficiary is 30 years of age
  • A 10% Tax Fee + Income Taxes on earnings if not used on qualified educational expenses

529 Plans

A 529 Plan is also a tax advantaged savings for educational expenses. There are several different types of 529’s so you need to be diligent and fully research the 529 plan you select. They range from pre-paid tuition to investment options similar to an ESA.


  • No income restrictions for contributors
  • No time limitations for beneficiary to use funds
  • The maximum yearly contributions is much higher than an ESA
  • Some have state income tax advantages


  • 529 plans vary significantly in investments, fees, and rules. You must completely understand the 529 you are purchasing.
  • Limited control over investments
  • Can only be used for college expenses
  • Excessive contributions can have gift tax implications

Roth IRA

A Roth IRA (Individual Retirement Arrangement) is a tax advantaged investment account generally used for retirement savings. You contribute after tax dollars and do not pay taxes on distributions. An account that was established 5 or more years ago would be eligible to use contributions (not earnings) for educational expenses. Or if you are 59 ½ years of age you can use the distributions as you please.


  • If your child does not attend college or does not need assistance with paying for college. You can continue to invest this money for retirement.
  • No age or time limitations to use for educational expenses
  • Roth IRAs are not included as an asset on the FASA application.


  • Only what you contribute can be used for educational expenses, not earnings from your investments.
  • A Roth IRA can be a significant instrument to retirement investing and you are “unplugging” this investment. This could hurt you at retirement time, BIG TIME!
  • Income limitations for contributors ($117,000 single, $184,000 married)

GI Bill for Military Families

There are two different GI Bills that are transferable to children, the Montgomery GI Bill and the Post 9/11 GI Bill. Under the Montgomery, full-time students currently (2015/2016 school year) receive $1789/month for all college expenses. Under the Post 9/11, full-time students currently (2015/2016 school year) receive 100% tuition coverage at eligible schools (or a set maximum for expensive private schools), basic allowance for housing (BAH)(E-5 with dependents at school’s zip code), and a yearly books and supplies stipend (up to $1000).


  • Could potentially cover all educational expenses of a 4-year degree with the 36 months of benefits
  • Can be partially used by different family members
  • You do not pay (monetarily) for this benefit. Leaving more money in your budget for retirement investing.


  • This is a military benefit which may be altered or taken away from service members in the future. There is already talk of eliminating the transferability of the Post 9/11 GI Bill (in particular the BAH) to spouse/children possibly in 2017. If you plan on using this method to pay for school. Your best bet is to get a partial benefit transferred NOW! In hopes that the government will at the very least allow those already enrolled to be grandfathered into the current benefits.
  • Children must use the benefit by the age of 26 years (Post 9/11) or 10 years after the service member leaves active duty (Montgomery).
  • Service member must commit to 4 more years of service to transfer benefit (Post 9/11).


Our Plan

Our initial plan was to use an ESA for college savings. However, thanks to Jen over at Pay Yourself First and the VA representative at the Bundles for Babies class I attended earlier this month. I was encouraged to research further into the benefits of the Post 9/11 GI Bill. My husband currently had the Montgomery GI Bill.  

After research and several questions it became quite obvious that we were better off transferring my husband’s Montgomery GI Bill to a Post 9/11 GI Bill. My husband already was committing to another 4 years of service because it was required for him to accept his next assignment after England. So, once our baby boy is born. My husband will transfer partial benefits to baby to make him eligible for future transfers of educational benefits.

There are of course the “what if’s.” What if my husband needs his GI Bill benefit to finish his own education? What if the government takes away some of the benefit? What is our plan B?

We have a couple of ideas.

Our first thought is to focus on retirement. If we heavily invest for retirement over the next 18 years. It will not be a big deal to dramatically decrease our retirement contributions for 4 years while we cash flow a portion of our child’s college education.

We have also thought about investing into an ESA. If we have more than one child or my husband needs to use his GI Bill benefits. We will need some type of investment college savings plan.

There would be a penalty for not using this money for educational expenses, but it is not too horrible. Say we invested $36,000 which resulted in $40,000 of investment growth for a total of $76,000. The tax fee is 10% of the earnings, being $4000 with this example. The $40,000 would also be held for income tax. So let’s say our son pays 25% income tax when he distributes the ESA. That would be an additional $10,000. So, he would still end up with $62,000. Sounds like a great down payment on a house to me!

OR if our son has children or a spouse before the age of 30 he could transfer the ESA into their name. They could use it for college expenses and not be required to pay the taxes and 10% tax fee. How great would that be? Paying for our grandchildren’s college educations! Sounds like we just might change that family tree after all! 🙂   

The good news. We have plenty of options and we have a plan.

What do You Think?

Do you plan on paying for your child’s college education?
How will you pay for your child’s college expenses?


You May Also Enjoy:

Student Loans I Owe So its Off to Work I Go Greatest Weakness Became My Greatest Weakness The Most Should You Pay Off Your Mortgage Early

40+ Veterans Day Freebies and Discounts

40+ Veterans DayDiscounts & Freebies

I would like to take a moment to thank all veterans for selflessly and honorably serving our country. I would also like to thank those companies who are honoring our veterans this Veterans Day! THANK YOU!

40+ Best Veterans Day Freebies and Discounts for 2015!

If I missed your favorite, be sure to let me know in the comments!

  • All deals were verified with company’s website or social media.
  • Please call your local store/restaurant to be certain they are participating.
  • Please click on the links provided for further information for each deal.


Red Robin Logo

Restaurant Freebies

Red RobinFREE Red’s Tavern Double Burger with Bottomless Steak Fries (Nov. 11) Veterans & Active Duty.
***Red Robin is also honoring its military Red Robin Royalty members with a 20% discount at participating restaurants throughout the holiday season (Nov. 12-Dec. 31).

Chili’sFREE entree from Veterans Day Menu (Nov. 11) Veterans & Active Duty.

ApplebeesFREE entree from Veterans Day Menu (Nov. 11) Veterans & Active Duty.

Olive GardenFREE entree from Veterans Day Menu (Nov. 11) Veterans & Active Duty.
***Family Members dining with Military Member receive 10% discount on meal.

Texas RoadhouseFREE lunch from Veterans Day Menu (Nov. 11th (llam-2pm)) Veterans & Active Duty.
*** Includes Free Beverage (soda, tea, or coffee)

On the BorderFREE Choose 2 or 3 “Create Your Own Combo” (Nov 11) Veterans & Active Duty.

IHOPFREE Red, White & Blue Pancakes (Nov 11) Veterans & Active Duty.

Golden CorralFREE dinner (Nov. 11th (5pm-9pm) Veterans, National Guard, Reserves, Active Duty.

California Pizza KitchenFREE entree from Veterans Day Menu (Nov 11) Proof of Service.

Denny’sFREE Build Your Own Grand Slam (Nov 11 (5am-Noon)) Veterans & Military Members.

HootersFREE entree from Veterans Day Menu with beverage purchase (Nov 11) Military ID.

BJs Restaurant & Brew HouseFREE entree (up to $12.95 value) (Nov 11) Military ID.

Cheeseburger in ParadiseFree Veterans Burger & Fries with beverage purchase (Nov 11) Military ID.

Claim JumperFREE Meal from Veterans Day Menu (Nov 11)

Little Caesars PizzaFREE $5 Hot-N-Ready Lunch Combo (Nov 11 (11am-2pm) Veterans & Active Duty

Outback SteakhouseFREE Bloomin’ Onion & Beverage (Nov 11) Veterans & Military Personnel
***If you are deployed, sign up HERE to get a rain check on your FREE Bloomin’ Onion.
***15% discount to military personnel & their families (Nov. 12th- Dec. 31st)

StarbucksFREE Tall Hot Brewed Coffee (Nov 11) Veterans, Service Members, Spouses.

Tony Roma’sFREE Half Rack of Baby Back Ribs (Nov 11) Veterans & Active Duty.

TGI FridaysFREE lunch (Nov 11 (11am-2pm)) Veterans & Active Duty.

Buffalo Wild WingsFREE small order of wings (traditional or boneless) & fries (Nov 11) Veterans & Active Duty.

IKEAFREE entree (Nov 8th-11th) Active, Reserved, or Retired Service Members

Krispy KremeFREE doughnut & small coffee (Nov. 11) Veterans & Active Duty.

Ruby TuesdayFREE appetizer (Nov 11)

Black Angus SteakhouseFREE Bacon Cheeseburger & Fries (Nov 11) Veterans & Active Duty.

Retailer Freebies

Great ClipsFREE Hair Cut or FREE Hair Cut Card to gift to your favorite veteran. (redeemed by Dec. 31st)

Sports ClipsFREE Hair Cut (Nov 11) Veterans & Active Duty.

7-ElevenFREE Car Wash (Nov 11) Veterans & Military Personnel.

MeinekeFREE basic oil change (Nov. 11) Veterans.

Alfred AngeloFREE Wedding Gown (must have appointment schedule on Nov. 11th)


Retailer Discounts

FTD20% Discount + 5% donation of proceeds to the USO (up to $10,000). Offer good for anyone.

Dollar General11% Discount in store and online (Nov 11) Veterans, Active Duty & Family Members.

World Market20% Discount on entire purchase (Nov 11) Active Duty, DOD, Reserves, Guard, Retirees, Veterans and Military Spouses.

Bed Bath & Beyond20% Discount on entire purchase (Nov 7th-11th) Active Duty, DOD, Reserves, Guard, Retirees, Veterans and Military Spouses.

Lowes & Home Depot – Extend the 10% Discount to all Veterans (Nov 11)

Travel Discounts

Red Roof Inn15% Discount (Month of November) Valid Military ID.
*** Cyber Monday Deal: (Nov. 30th 12AM EST) 30% Discount for everyone.

Knott’s Berry FarmFREE Admission + 1 Guest + 6 Discounted Tickets (Nov 1st – Dec 20th) Veterans, Retired, Active Duty.

LEGOLAND FloridaFREE Admission + 6 Discounted 50% off Tickets (Nov 1st – Nov 22nd) Veterans.

Westgate ResortsFREE 3-day, 2-night vacation (Nov 11) First 2,500 veterans of Operation Iraqi Freedom, Operation Enduring Freedom and The War on Terror to complete the form on Nov. 11th 9am EST.

National ParksFREE admission to over 100 National Parks (Nov 11)

Mount Vernon FREE admission (Nov 11) Active, Former, or Retired Military Personnel.

Harley Davidson MuseumFREE admission (Nov 11) Veterans, Active Duty & their Families.

Birmingham ZooFREE admission (Nov 9th -11th) Veterans, Retired, Active Duty & their Dependents.


You May Also Enjoy:

10 of the Biggest Financial Mistakes Military Life and Money Financial Success Stories Military Family's Budget November Baby Budget

Military Saves Week

I apologize for the radio silence on my end over the past week. I have been in an end of winter/ a few more weeks left of my husband’s TDY funk. I have a difficult time writing when I’m in one of these mind sets. So anyway, I apologize and I cannot wait for spring (and my husband to be home)! On to what you came to read…

Military Saves Week

If you are a military member or a military family member, are you aware that next week is Military Saves Week? February 23rd-28th, mark it on your calendar! If you are NOT a military family, you are NOT off the hook it also happens to be America Saves Week, check out the link for further details!

What is Military Saves Week?

Military Saves is an off-shoot of the non-profit America Saves. This non-profit teams up with the Department of Defense to increase financial literacy and to encourage military members and families to set financial goals and save money year-round.

Military Saves Week, is a dedicated week in February that many military installations participate in to encourage military personnel to take a pledge to save and attend financial literacy classes. Last year, 419 military installations participated in Military Saves Week, so chances are your installation is participating!

How do I Participate in Military Saves Week?

The best way to participate is to attend a financial class offered during Military Saves Week. At these classes, you will be able to make a pledge to save, receive a free credit check (if you want it) and learn some valuable financial information.

How do you find out if your installation is participating? Visit your local Family Readiness Center/Group’s social media page or track down their monthly newsletter to find out what classes they are offering this year! Or just give the friendly people at the Family Readiness Center/Group a call and they will be more than happy to chat with you about the available classes.

If you see a class that interests you, call to reserve your seat! There are some installations that offer free lunch or treats as an extra incentive to attend.

If your installation does NOT participate in Military Saves Week. Bummer! However, you still can participate. Visit the Military Saves website and take the Pledge to Save. When you take the pledge you can opt-in to a monthly or quarterly newsletter full of articles with financial tips and information. The website is also full of financial resources and information. Take a look around.

If you are struggling financially or could use some personal financial guidance make an appointment with the financial advisor/counselor on your installation, it’s FREE! Also, contact your local Family Readiness Center/Group and encourage them to participate in Military Saves 2016!

Possible Topics of Financial Classes

  • Managing Debt/Debt Pay-Off
  • Retirement Planning
  • TSP Investing
  • Establishing/Maintaining Credit
  • Home Buying (My thoughts: Should a Military Family Buy a Home?)
  • Budgeting
  • Tax Preparation
  • Dealing with Financial Crisis
  • Emergency Fund
  • Marriage & Finances

*Classes are offered through out the week and hopefully at convenient times. Often during lunch or early evenings after work.

Benefits of Military Saves Week

  • Military Personnel take a pledge to increase their financial security
  • Free Credit Checks
  • Free Financial Classes on a Variety of Topics
  • If your installation does not regularly have a financial counselor on staff, on occasion one is brought in during this week for one-on-one appointments.


Will You be taking the Pledge to Save and Participate in Military Save Week?



You May Also Enjoy:

The Best Method to Pay Off Debt Should we travel while in debt? Create a Budget that Works for You

Military Life & Money: Financial Success Story of Jennifer & Michael

We are beginning a new monthly series today and I am so excited to finally share with you the very first edition of “Military Life & Money: Financial Success Stories.”

This year, I wanted to bring more focus on community and inspiration to Budget Loving Military Wife. I could not think of a better way to do this, than to introduce to you, military personnel and  their families who are doing AMAZING with their finances!


Today, I have the pleasure of introducing you to Michael and Jennifer and their two adorable children. Michael and Jennifer are in their 20’s and have been married for six years. They currently live in the United Kingdom, where Michael serves in the U.S. military. Without further anticipation, here is Jennifer to tell you their story.

Financial Upbringing

I have always had a very strong work ethic and my own method of saving. My first job was when I was 16 years old, working in fast food. I typically worked 25 hours per week and brought home around $150 each week. I always stashed away half of it into my savings account.

At 18, I began college. I received four scholarships and did not need to use my own money to pay for school. At this time, I was still working in fast food, but was now a full-time employee and student.

Money has always been a huge source of security for me. Growing up my father talked about money 99% of the time so I grew up with a high awareness that money was “important.” Paying off a house in 15 years and paying cash for cars was “normal” in my house.


Marriage and Family Life

I married my husband when I was 19 years old. At this point, I had saved up $7000 and had no debt. However, my husband had a car loan of about $8000.

My husband deployed that same year and we paid the car off during his deployment. The following year, I left work to focus more on my marriage and school. I graduated in 2012 with a B.S. in Accounting from a state university.

Before moving to the United Kingdom, I worked for a few years and had our first child. Now we are living overseas, where I am a stay at home mom, and we have added another child to our family.

Staying home has been a big adjustment. I went from working full-time while living in the states to moving to a foreign country and entertaining kids all day.

I am very grateful for the opportunity to spend so much time with my kids. However, I do miss working and it stresses me out that I am not financially contributing to our net worth. I really enjoy working and saving for our financial goals.

Managing Finances Together

When my husband and I married, we immediately combined our finances and worked as a team. Although, I had to kind of “drag” him in my direction as he was pretty reluctant to saving.

I remember when we hit $20,000 in savings, he asked me “when are we going to have enough?” I looked at him and said “it will never be enough.” “What more do you want/need? We eat out, we buy things, what do you feel you are missing out on?” He had no response. LOL. After that, he has pretty much been in the same boat, when it comes to saving for our future.

Today, we continue to work as a team. However, we have discovered that working within our financial strengths works best. My husband does a lot of the research that goes into picking our investments. He has been pretty good (or lucky) at it so far.

I mostly manage the finances, but I always discuss things with my husband. I really enjoy working with numbers and creating budgets and seeing how much we can save. My husband just likes to see the results.

IMG_3190 copy

Budget Struggles We Conquered

Our biggest budget struggle was getting rid of bad habits like eating out all the time and buying groceries we never ate. It was just wasteful. We had to learn how to plan meals and buy groceries around the meals we planned. We had to stop buying just whatever we thought looked good at the store.

Another struggle was being shy about investing our money into anything other than a savings account. We just started some CDs, mutual funds, and stocks last year. We were so nervous about losing our savings!

In actuality, we were losing more money by not investing it into something. We are still shy investors, but we are getting our feet wet. This process has been difficult for us because we do not want to lose anything. But without risk, there is no reward.

Our Financial Success Story

Our income has ranged between $40,000 and $80,000 each year. We are 26 and 29 years old, we have no debt, and have a net worth of $138,000. Of that, $110,000 is liquid and the rest is in retirement accounts.

Reason for Financial Success

We pay ourselves first. This has been the biggest factor in our personal financial success.


My motivation for financially security is having the ability to make our own choices in life. Frequently, income guides people into certain career choices. However, I want us to do whatever makes us happy, even if that is working at Walmart.

I hope our children learn from our example. I hope they see that it does not matter how much money you make. What matters is how well you manage your money.


Our Financial Goals

This year our goals are to increase our savings to $33,000 for retirement, $76,000 in our future house fund, and $15,000 in our investment accounts.

Our long-term goals include purchasing a ($150,000-$200,000) house with CASH! We also want to max out our retirement contributions each year, send our kids to college without student loans, and work because we want to, not because we have to. We would also like to own a business some day.

Finances as a Military Family

Our military lifestyle impacts our finances greatly. I left my full-time job for this last PCS move, which has cut our income significantly. This overseas PCS was very costly. Expenses included everything from vehicle light conversions, tv license, emissions tax and 220v appliances. All were not reimbursed. We also sold one of our American cars and bought a U.K. car.

We had about $6000 worth of moving expenses on a credit card and we had to pay it off before we received reimbursement. All of these expenses occurred suddenly and the military does not always do a good job with providing good expense estimates. Having extra savings made this PCS less stressful, especially since it took time to get reimbursed (3 months!).

Although rare, another financial stress my family deals with because we are a military family, are government shutdowns. When our pay was threatened, there was a lot of stress placed on us even though we had months worth of an emergency fund established.

Another financial obstacle that impacts military families is spouse employment. While not impossible, it is more difficult to find a job when you are a military spouse. A lot of employers will not even consider you because you will most likely be in the same place for only a couple of years before you move again. I do not volunteer this information in interviews for this reason.

Biggest Financial Obstacle for Military Families

Moving is such a huge obstacle for military families. You can not prevent it, but you need to always be prepared for it. Having money set aside for moving really helps out. While most of the moving expenses are reimbursed. Reimbursements take a long time. You typically end up paying these big bills out-of-pocket and eventually, (maybe months later) you are finally reimbursed. If military families are not prepared for it, they could find themselves into a financial mess.

Advice to Families Who are Struggling

1) Create a Plan & Budget
2) Pay Yourself First!
3) Cut Back on Things You do Not Need (Cable, Eating Out, Shopping)
4) Get Rid of Debt (Sell a car if you do not really need it)
5) Do not Accrue New Debt.



Thank you Jennifer for sharing your family’s financial success story with us today! Your family is truly an inspiration and I wish you the very best in your financial journey and reaching those amazing goals! Be sure to follow Jennifer and her family’s financial journey at Paying Yourself First.


Wow! Can you believe how amazing this military family is at achieving financial success? In their 20’s, with a modest income, but they have a net worth of $138,000 and their goal is to pay CASH for a house! How truly inspiring!



P.S. Are you a military member or a military family who would like to share your financial success story to help inspire us at Budget Loving Military Wife? I would LOVE to hear from you! Please email me at BudgetLovingMilitaryWife(@)gmail(dot)com. I cannot wait to hear from you!

 Optimized-military (1) Optimized-Military

You May Also Enjoy:

10 of the Biggest Financial Mistakes How to Budget for a Temporary Duty Assignment Deployment