What Is The Best Option For College Savings? — Transcript

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1. 0:02layna
2. 0:03starts off this hour in Little Rock
3. 0:06Arkansas hey Lena welcome to the Dave
4. 0:08Ramsey show how are you doing today
5. 0:10better than I deserve how can I help
6. 0:13I have a question for you I have
7. 0:16listened for a long time and I've never
8. 0:18heard this question asked so I figured
9. 0:21I'd have to ask you myself
10. 0:23we argue with our first baby in July and
11. 0:28we are currently on baby step 3 being me
12. 0:36although we don't own a house we kind of
13. 0:39a house that we have a mortgage on and
14. 0:41we are working to get back up to our six
15. 0:45months emergency fund after we had to
16. 0:48buy a new AC and heater system okay and
17. 0:51so we're just a few thousand dollars
18. 0:53away from that so we'll be doing step
19. 0:56four next doing that right but what I'm
20. 1:00wondering for our baby that's due in
21. 1:02July do you believe in higher education
22. 1:07leavers on college degrees I just don't
23. 1:11necessarily know what that's going to
24. 1:12look like in 18 years and so I would
25. 1:15like to save for college with higher
26. 1:19education but I want to know if there is
27. 1:21a different type of savings account that
28. 1:24you would use other than an ESA that is
29. 1:28only limited to college does that make
30. 1:31sense yeah no there isn't because the
31. 1:35only one that grows tax-free is the say
32. 1:39or the 529 they're basically a wrong i
33. 1:41right so here's your numbers okay if you
34. 1:44put in two thousand dollars a year for
35. 1:4618 years you put in thirty six thousand
36. 1:47dollars if that grows at a typical
37. 1:49mutual fund rate eighteen years later
38. 1:51that 36 thousand will have grown to over
39. 1:53a hundred and twenty eight so you have
40. 1:55roughly a hundred thousand dollars worth
41. 1:57of growth in that account that is going
42. 2:01to be taxable if it's in a different
43. 2:02kind of account and so this is a twenty
44. 2:05five or thirty thousand dollar
45. 2:06discussion we're having so I'm gonna
46. 2:10take that risk I don't know what college
47. 2:12is going to look like in eighteen years
48. 2:13either
49. 2:14I sure hope it is different because
50. 2:18guaranteed a federally insured student
51. 2:21loans have been done away with I think
52. 2:23we ought to stop guaranteeing loans for
53. 2:26students because it's a wrong call it's
54. 2:28it's hurt more people than it's helped
55. 2:30and the government should get out of the
56. 2:32business of hurting its own people and
57. 2:33so anyway that's just an opinion but I
58. 2:36don't know what's going to happen I know
59. 2:37that there's a 1.6 trillion dollar
60. 2:39problem on the horizon that somehow is
61. 2:42going to be addressed so but all of that
62. 2:44to say I suspect that let's say let's
63. 2:49say Elizabeth Warren became King Queen
64. 2:53okay if she became Queen and just waved
65. 2:57her wand and did away with college cost
66. 3:00to the individual and the government was
67. 3:03going to raise taxes to end pay for
68. 3:04college which is her wish okay
69. 3:07socialized college which i think would
70. 3:10be a disaster but that's what she wants
71. 3:12to do so let's just say that that
72. 3:13happened okay and you had the money in
73. 3:16this account I suspect part of the
74. 3:19legislation for changing our whole world
75. 3:21would involve freeing up that money for
76. 3:23you I don't think they're suddenly going
77. 3:26to penalize you because you saved for
78. 3:28college I don't know they might they're
79. 3:31liberals you never know but it's not
80. 3:34it's kind of you know brain disease so I
81. 3:36don't know but the we'll see what would
82. 3:38happen but you know the I'm gonna save
83. 3:42for college with what I know with what's
84. 3:45in front of me right now if I'm in your
85. 3:47shoes I've got six grand babies under
86. 3:50the age of five
87. 3:51all of them have es A's thank you so
88. 3:57that's you know because I don't know I'm
89. 3:58with you I don't know what's gonna
90. 3:59happen I think there's you know there's
91. 4:02crap on the horizon without a doubt if
92. 4:04something's gonna change because we got
93. 4:06too big a problem to not address it it's
94. 4:08gonna cave in on itself if they don't
95. 4:09address it so they're gonna have to
96. 4:11address it but the policy wants that be
97. 4:16what they're going to do with us regular
98. 4:18people who knows but in the meantime the
99. 4:21ESA I'm gonna load that sucker up or the
100. 4:24529 in the 529
101. 4:27you only do the kind where you control
102. 4:29your investment options not where
103. 4:31they're Auto controlled for you and it's
104. 4:33not prepaid college it's saving for
105. 4:36college in mutual funds that you select
106. 4:38and they don't get moved unless you move
107. 4:40them that's the proper kind of 529 and
108. 4:42that's all you can do with an ESA so
109. 4:44awesomeness