Dear Dave,
My husband wants to leave his job next year. He wants to go back to school full-time and finish his degree. It wouldn’t take him long to complete his studies, and we’ve both agreed it’s the best thing to do for our family. The only drawback is once he begins school, our yearly income will fall from $100,000 to about $50,000. The good news is we’ll have his veteran’s stipend and tuition assistance from my job to help pay for things. During all this, once we complete Baby Step 3, should we move on the Baby Step 4, or keep saving?
— Courtney
If you go back to school, make sure the degree is practical and marketable
Dear Courtney,
As long as you two are completely in agreement about this plan, and you’re willing to save like crazy for the next year and beyond, I think it makes sense. But listen carefully to this next part. You’re going to have some unexpected things pop up along the way. That’s just how life works. I’m not trying to discourage you, but I want you to understand that even with your husband’s stipend, and help from your employer, you’ll have to stick to a budget and be smart with your money now more than ever before.
Later, 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 for retirement. In your case, however, you’re not investing directly for retirement at that point. But you will be investing in your husband and your future together as a family. And it’s a great investment if he’s studying something that has practical marketplace application. Because that means you’re setting the stage to make back the money you put into his degree and have a bigger income for years into the future.
Again, as long as he’s not off taking stupid courses like left-handed puppetry or pursuing a Ph.D. in the history of German polka, you two are making a great investment for the future. Do everything you can to save and pile up money—that includes him doing something to bring in a little cash on weekends when he’s not in class—so you two can pay the bills, he can get through school and together, you can make this dream come true!
— Dave
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