You have a child that you know will go to college in sixteen years and it will cost you $50,000 per year for 4 years ($200,000). For now lets forget about interest, you have two choices:
- Put aside $10,000 for the next 20 years
- Pay nothing the next 16 years then pay $40,000 per year the last 4 years
You can go with option 2 and pretend that you have alot of “free cash” and worry about the $200,000 bill in 16 years. Obviously I am exaggerating, but this is pretty much the way we are handling the current OPEB “tuition” bill.
A better idea would be to make it part of your budget now and starting putting $10,000 per year away today. Will it be tough to do now and have to make some tough budget adjustments?
Yes it will, but it will be much tougher to do later.
