Pay for college or retirement - why choose?

Buy a piece of real estate for each child and avoid the dilemma...

I watched this story on the Today show today. (If you are on an ipad, you may need to
click here).

Visit msnbc.com for breaking news, world news, and news about the economy

It's a debate on how or if  you should fund your child's education or your retirement fund.  I submit to you that you can do both!

This has always been a sore topic for me. I am first generation Italian.  I am the last of 5 children.  I would have loved to go to college.  But, my parents worked very hard, my father was a steel worker and my mother was a seamstress in a factory. Although I wouldn't consider us poor, I certainly wouldn't consider us rich. I didn't want to be a drag on them - they were in their late 50's and early 60's when it was time for me to go to college.  For some reason, the State of New York said they made too much money in order for me to qualify for any tuition assistance. 

My only choice was to get loans, etc.  Initially, I was unwilling to do that, so I went to school with benefits from my employers.  I would get reimbursed for tuition if I did well and it took me about 4 years to get a 2 year degree.  I earned one year of credits over several semesters of night school.  Then one year, I got layed off from my job and went to school full time. I did take out a loan for tuition and I paid it off over several years.

As I got older, I started hearing about parents who felt compelled to pay for their kids' education.  They would do a cash out refinance to take equity out of their houses to pay for the education. Or they would contribute to one or more financial plans available to save and have enough money when the child needed it. They would even borrow against their retirement fund.  All kinds of things. 

Did you ever consider buying your child a rental property?

It makes sense.  You don't have to invest a lot.  If you buy it when your child is very young, you'll have more time for the mortgage to be paid down and the equity to build and, if we ever get back to normal appreciation, it WILL appreciate in value.
Today, it makes more sense than ever.  Houses are incredibly cheap.  Imagine buying something for around $50K +/- $10K.  You can certainly rent it for $600/mo +.  When the child needs the money, sell it or do a cash out refi at that time and keep the asset and keep collecting rent.

See:  Give your kids a chance and be sure to check out homes for sale using the tools on the side of this blog post or click here for homes under $60,000.