Repaying personal loan, planning for child’s college, retirement?

Hi Terry:

I listen to you every Wednesday on WGN and am always so impressed. My question is I took a 3 year $15K personal loan out through Discover and only have about $1858 to pay back. From my salary I was putting savings away as well as paying this loan back. I have about $12K in savings but was wondering would it have made a difference if I pay back the remaining loan in one installment or make the 3 1/2 payments of $500 that would clear out the loan.
Also, I’m a single parent make about $65K a year, and have a sophomore in H.S. and am trying to put as much away as I can. Do I have her take out college loan and if so what website would you recommend? I want to help pay for college as my parents paid my tuition but am also trying to put away for my retirement. I am 53 years old. I do have about $110K stocks/bonds with Wells Fargo and about $25K in cash with them. Any advice would be appreciated.

Terry Says:  OK, this is really a big picture issue, which would benefit from a financial planner (fee-only) taking a look at your entire situation, including how you are investing your assets.  What really puzzles me is why you took out a 3 year loan, when you seem to have so much liquidity in your account with Wells (unless it is in a retirement account).  And you don’t say what interest rate you are paying on the loan.  Surely it is far higher than the rate you are earning on your savings.  So if it’s possible to pay it all back (without touching retirement assets) I think, generally speaking, that would be the right move to do as soon as possible.

It looks like you’re doing a great job of saving — and parenting.  I want you to be very careful about committing to student loans — either as parental loans or as federal or private student loans.  They typically carry very high interest rates, and cannot be refinanced, and cannot be eliminated in bankruptcy.  For years, I have been recommending that parents of high school students start this discussion in the sophomore year — the issue of how much college costs, and how to best deal with those costs.  For example, attending community college for two years and living at home (ok, no one likes that idea) is a huge money-saver.  Then he/she can graduate from that dream college without huge loans.

I recommend going to FINAID.org to start reading about all the possibilities for financing college, and the ultimate costs.

And for you, I recommend heading to www.feeonly.org, to search out financial planners in your area to help you look at the big picture.  Or contact Ellen Rogin, one of my favorite financial planners who specializes in women in your situation.  Go to www.EllenRogin.com for contact info.  She gets my gold star!