Weird dilemma

[gayl]

I have a HUGE dental bill coming up. 5k. Ouch. Do I (1) stretch out paying 1/2 of grandson's student loans, (2) take it from IRA, or (3) skip a cruise?

1- he owes 16k (yep, finally admitted what he owes). His share of rent is $600 & he'll make only $25 hr on graduation. No matter what I'm starting his ROTH
(2)- I'm turning 69 (ouch ..... been FIREd since 2004 and this'll be the 2nd time I've withdrawn funds from IRA) Taking SSA next year
(3)- I want to travel b4 cruising means sitting in a chair watching the world go by. I tend to do 4 international & 1 domestic trip a year so skipping 1 shouldn't kill me

WWYD?

I have no debt. I've never had debt after recovering from my son's death. It was one of the things the psychiatrist recommended -- limit stress in all its forms (and yes, debt is stressful)

 

[frayne]

My first pass would be to skip the cruise and in light of the coronavirus, it might just be a good fit, time wise as well.

 

[USGrant1962]

It depends. Hows that for an answer?


It depends on how much is in your IRA - if it is more than you'll ever spend than #2 seems right.

If your IRA is not too big, then #1 seems reasonable ($16K of loans with a ~$50K salary is not particularly burdensome). Great that you are helping but needs to be balance with your needs.

 

[Brat]

I would skip the cruise and international travel this year.

Consider helping the grandson with the school debt, ~$2,000 per year. That shouldn't break the bank or remove the incentive for him to learn to manage debt. You could match his payments, for example.

One thing you could do is to review your estate planning and provide for the grandson's remaining school debt in those documents.

 

[gayl]

Between IRAs, brokerage, and savings I only have about 800k. But my pension covers my monthly needs / wants + travel and has a 4% max COLA

He already knows grad school is on him. That's why he's doing a gap year. And he's planning on working thru that. (16k is what he'll owe after BA)

 

[cathy63]

I'd stretch out the loan repayments. If he has 10-yr loans of $16K, his payment should be around $200/mo, which is only one day's work at $25/hr; and the first payment may not even be due until six months after he graduates. You can let him handle the responsibility for this year and make a lump sum payment for him next year.

 

[Sunset]

I would stretch out paying off the student loans (which are really his responsibility anyhow). By stretching them out, you show it is a BIG thing to have debt and takes time to work off.
Besides, I think he should contribute some to paying it off ($50 to $100 per month), so if it takes 4 years to pay off and he pays in a bit each month, that would be a good learning experience.
He needs to learn via experience that debt is repayable, and not free.

He will be earning a gross of $50,000 if working full time, plus whatever benefits he gets, so frankly he can afford to pay some of it off.

If you paid it off in one payment, you are teaching that, you are available to pay off the next thing too, like a car loan, etc...

Enjoy life, and take the cruise/holiday as life is short, and you are right, you won't be able to travel forever.

 

[Teacher Terry]

I would skip the cruise in light of the virus.

 

[JillPill]

Why do you want to pay grandson's debts? I think that sets a terrible precedent for him. His student loans are very very manageable given his income. Let him pay his own way... it will pay off tenfold in the long run IMHO and based on my work with parents and gparents who are losing their homes to foreclosure because they insist on paying the bills of grown working children.

 

[GravitySucks]

No withdrawls in 16 years.
I'd take care all of them this year and get it off your plate and enjoy the cruise.

 

[38Chevy454]

Why do you want to pay grandson's debts? I think that sets a terrible precedent for him. His student loans are very very manageable given his income. Let him pay his own way... it will pay off tenfold in the long run IMHO and based on my work with parents and gparents who are losing their homes to foreclosure because they insist on paying the bills of grown working children.

X2, $16K of debt on a $50K/year income is not out of line for him to make the payments. Your savings is how you want to spend it, but it seems dumb to not do what you want in order to give him money. $600 rent is not a stretch for his income either. He won't have much left over to save, and if you want to contribute towards his Roth now, that is nice to do.

As you said, age catches up and if you don't travel when you can now, it could be not able to travel later. It seems that you are good financial shape to withdraw some from the IRA if you want, as you will be getting a big boost in a year with SS starting. Your IRA should be up nice in value, take some money off the increased values.

 

[gayl]

No withdrawls in 16 years.
I'd take care all of them this year and get it off your plate and enjoy the cruise.

No. I took a little out a few years ago but stuck it in the brokerage. I needed to pay more to IRS and wanted it to look like I contributed all year so 90% to IRS + 9% to FTB. Miss figured and got it back.

The 8k was money promised to him years ago that he's sort of unaware of. It's in my name but tracked separately

 

[gwraigty]

Would you like to be quarantined on a cruise ship? If not, skip the cruise right now. Can you make interest-free payments on that dental bill? BTW, $25/hr. isn't chump change, especially if it's a full-time job.

 

[calmloki]

A suggestion: $5000 is a big chunk. Consider that it is also about the standard amount of spending required to get a ~$500 cash bonus from many credit card companies. If you have a business (like selling on Ebay on occasion) here's a sample: https://www.capitalone.com/small-bu...1ea8658061034f1b11_S5696-17-2&applicantkeyid=

So 10% off your dental bill? OTOH, my dentist offered 10% off if I paid with cash or check vs. using a card, so that might be a worthwhile question for his business manager.

 

[badatmath]

I'd skip the cruise (virus); skip the loan and put money in his Roth if you want to be nice. It would be a nice suprise.

 

[gamboolman]

Skip the cruise.
Working offshore for years.....I've sent ms gamboolgal and the kids on cruises...
But I will not never pay to be on the ocean.
And with the dam Corona .....
Skip the cruise, and it ain't even close hombre....

 

[Sunset]

OP - Taking a River cruise would be fairly risk free as far as virus imprisonment, probably the same risk as staying in a hotel.

 

[gayl]

Thanks

I'll ask about a discount if I pay upfront. But meanwhile:
(1) match SL & Roth deposits for 2 years instead of front loading
(2) take 1/2 from IRA
(3) limiting travel is my last option.

 

[gayl]

Thanks

I'll ask about a discount if I pay upfront. But meanwhile:
(1) match SL & Roth deposits for 2 years instead of front loading
(2) take 1/2 from IRA
(3) limiting travel is my last option.

Unable to edit: so I go to the kid "I'm not going to front load your Roth, I'm going to match you for 2 years" He's delighted he's getting another 3k now and is starting on his 2020 ..... yeah I raised him

 

[pb4uski]

I'd let grandson be responsible for his own student debt.... $16k of student debt when he'll be making $50k a year once he graduates is very modest. Dont deprive him of the satisfaction of paying off his own student loan debt.

If his job doesn't offer matching then perhaps you can incentivize him by offering to match whatever he puts into retirement savings.

As others have said, you may be pushed into 3 if the coronavirus results in less cruises.

But why haven't you withdrawn from your Roth... or at least be doing Roth conversions.

 

[gayl]

I'd let grandson be responsible for his own student debt.... $16k of student debt when he'll be making $50k a year once he graduates is very modest. Dont deprive him of the satisfaction of paying off his own student loan debt.

If his job doesn't offer matching then perhaps you can incentivize him by offering to match whatever he puts into retirement savings.

As others have said, you may be pushed into 3 if the coronavirus results in less cruises.

But why haven't you withdrawn from your Roth... or at least be doing Roth conversions.

So I'm thinking of paying off just the 3 smallest loans, leaving him the largest 2. Part of the money was set aside for him by other family members, I just control it. And yes, I want him to experience paying off debt and compounding investments. I learn more by doing than reading. He might be the same

I haven't withdrawn much because I didn't need it

 

[CaliKid]

My first pass would be to skip the cruise and in light of the coronavirus, it might just be a good fit, time wise as well.

I agree. All things considered it's a good year to skip the cruise.

 

[gayl]

A suggestion: $5000 is a big chunk. Consider that it is also about the standard amount of spending required to get a ~$500 cash bonus from many credit card companies. If you have a business (like selling on Ebay on occasion) here's a sample: https://www.capitalone.com/small-bu...1ea8658061034f1b11_S5696-17-2&applicantkeyid=

So 10% off your dental bill? OTOH, my dentist offered 10% off if I paid with cash or check vs. using a card, so that might be a worthwhile question for his business manager.

THANK YOU! It's now 4500. 500 off.

 

[calmloki]

Excellent. It warms my heart to see less spent for the same result. Increased value. Glad either the card or the question worked for you.