School’s on the horizon
My husband will be leaving his full-time job in a year so that he can go back to school full-time and finish his degree. We’ve both agreed this is what we want to do, but it means that we’ll go from a yearly income of $90,000 to $45,000.
Dear Dave,
My husband will be leaving his full-time job in a year so that he can go back to school full-time and finish his degree. We've both agreed this is what we want to do, but it means that we'll go from a yearly income of $90,000 to $45,000. We'll have tuition assistance from my job and his veteran's stipend to help pay for things, plus we're debt-free except for our house.
But in this scenario, once we complete Baby Step 3 should we move directly to Baby Step 4 or continue saving?
Erin
Dear Erin,
I think this is a good plan, as long as the two of you are on the same page and you're willing to save like crazy for the next year and beyond. Even with help from your employer and his stipend you'll still have some expenses, so you'll have to be ready.
Once you complete Baby Step 3, which is having three to six months of expenses set aside as an emergency fund, Baby Step 4 is usually starting to invest 15 percent of your income toward retirement. In this case, while he's finishing his degree, you're not investing for retirement directly but you are investing in your husband and your future together. That's a great investment, by the way. As long as he's studying something that has marketplace application, you're setting the stage for him to make back the money put into his degree and much more.
If that's the plan, and he's not off pursuing a Ph.D. in something like German polka history, you two are making a great investment. So work hard now, cut all the corners you can and pile up money so you two can get through his time in school!
-Dave
Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids and is out now. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.