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The Simple Dollar

Minivans a good family-car buy?

Minivans aren't cheap, but they may be worth it for your family (Question #4). Also in today's Reader's Mailbag: saving for school (#1), splitting mortgage payments (#6), and finding a credit union (#8).

By Guest blogger / January 4, 2011

When making any new or used car purchase, it's important to do your research. This particular line of minivans, the 2011 Toyota Sienna, was recalled on Dec. 13 because of a switch bracket on the brake lamp. It's illegal to sell a recalled product, but it's much easier to research first than to try to sue later.

Photo illustration / Jae C. Hong / AP / File


Q1: Saving for education
Currently I am 26, my husband is 27. We both work but he is in the construction industry so is laid off usually every winter. He does a paper route and collects unemployment, so he still brings in about $35,000 a year, often more. I make $30,000 a year, plus I have a weekend job (tipped) where I bring in maybe $500 a month. I have ten percent going in a Roth, by husband has 6 percent going into a Simple IRA. His retirement balance is about $6,000 while mine is $12,000. Because I am somewhat unimpressed with our retirement account provider through my work, I have a seperate Roth with Vanguard that is holding steady at $7,000. We have $130,000 yet to pay on our mortgage. We have no children but would like to start trying in a year or two. My question is this: I have $12,000 in a savings account (ING) that I’m saving for tuition. I am in a Master’s program for Public Relations – it is a two year program that will cost me about $50,000 when all is said and done. I’ve already paid the first semester ($7,000). I’ve received one $3,000 scholarship but my work is not contributing at all. I believe my job prospects will improve vastly when I have my masters, however I have never taken out a student loan and don’t want to. It may be a possibility to borrow money from my mom to pay tuition. Should I knock down our retirement contributions so I can pay for tuition as it comes, or just keep saving and hope we can scrimp enough to pay tuition each semester? I hate to stop contribution to retirement at the pace I’m at – I am so proud of our retirement savings. I am fine paying our minimum mortgage as we started at $150,000 just five years ago and have paid an extra thousand or more each year up until now.
- Jill

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It seems as though you have a clear goal and your only real concern is whether or not you should redirect your retirement savings into additional savings for this goal.

The first thing I would suggest is to figure out whether you’re on par with regards to your retirement savings at this point. I would use a retirement planner and make sure that you’re at least somewhere in the ballpark of where you need to be for retirement.

If you’re doing well for retirement, I would cut back on the retirement savings and redirect the money into educational savings. If you’re not doing well, I would take the slow route, maintaining your retirement and looking for other ways (more earnings, perhaps?) to bolster your education savings. Either that, or bite the bullet and use an educational loan.

You may also want to consider a 529 savings plan for your college savings. If you use the earnings in that account for educational purposes, you don’t have to pay taxes on the accrued interest.

Q2: Consolidating private student loans
I currently owe approximately $120,000 in private student loans from college and graduate school. I am looking to consolidate them to get control of the monthly payments (right now, it’s around $1500 a month). I also two small government loans, but I do not want to consolidate them with these. The only information I’ve found is Chase and Wells Fargo are possibilities, but I will never go with them, they’ve been a nightmare to work within the past. I’m considering a loan from my credit union, but my credit score is not good. I do not own a house and I am single. I make a little over $50,000 a year between my main job and a part-time job. Are there any other options out there to consolidate other than Wells Fargo and Chase, and are they safe? Or does the credit union have a potential option?
- Pam

I’m afraid that if you have a poor credit score, you haven’t got a very good chance of reducing your interest rates lowered via a private student loan consolidation.