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Returning to School

Dollar Stretcher (featured column)
by Gary Foreman

Q: My husband and I both work full time, but my husband has returned to school to become an X-ray Technician. He works for a major airline and his income has been cut several times now. We struggle to make it on both our incomes. Our two biggest expenses are the mortgage and daycare. Chuck insists that he will have to work full time in addition to going to school 5 days a week.

The school program is designed as a Monday - Friday 8am - 5pm program. Essentially, it is a full time job. I don't think that he could work full time and go to school full time and still be of any help with our daughter or the house. He has given me 8 weeks to prove that we can live with only half of his income.

In the last 2 weeks, we have cut a lot of expenses. We reviewed our insurance policies and lowered our 401K. It still isn't enough to make up the difference. We have about $2500 left on one car and about $3000 in credit card debt. We also have about $10,000 in savings, $6000 of that is set aside for his tuition. We really don't want to touch the savings since it is earmarked for education. Our monthly grocery bills are about $150.  Where else can we start looking to cut expenses? - Rebecca

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A: Looks like both Rebecca and Chuck are right on this one. She's right that if he goes to school full time and works full time, he won't be much help with the house and daughter. He's right that they probably won't be able to make it on one and a half salaries without some severe cost cutting.

So let's take a look at the different options that are available to them. First, Rebecca doesn't say how long the course is. Most are two or four year programs, so they'll need to be able to live with their strategy for awhile. No matter how they handle it, Rebecca and Chuck are going to have to adjust and make sacrifices.

Is it possible to cut their budget enough to live on one full-time and one part-time income? If they're already struggling on both full-time salaries it's unlikely that they can make it on less than that. Especially when you add in the cost of education.

Cutting back on groceries and other items is a good idea. But, even in the unlikely event that they cut grocery spending by 50%, it wouldn't be enough to bridge the gap. Budget cuts will need to be dramatic. And, probably in the areas of housing or transportation.

One way to save money would be to move into a cheaper apartment and rent out or sell their home. That's a big sacrifice, but could cut expenses significantly. A quick comparison of apartment costs to their current housing expenses will give them a feel of how much can be saved.

Another way to save would be to sell one vehicle. The cost of car payments, insurance, depreciation, gas/oil and other maintenance items make owning a car expensive. So eliminating one car could be significant. Sure, it's going to be inconvenient. But perhaps a carpool, moped or bike could make it possible.

If they must have two cars, they could trade one for an older, small car. That would keep costs to a minimum. Collision insurance could be dropped. A small car would use less gas. They would also eliminate the car payment and might even end up with some cash from selling the newer car.

Chuck may have already checked out scholarships available to him. If not, he should investigate the websites that list scholarships. A couple to check are scholarships.com and finaid.org.

Using part of the savings account to pay off the credit card balance is probably a good idea. They'll save a little interest each month. And, when an unexpected expense arrives they can use the card to cover it.

It is quite possible that Rebecca and Chuck can't cut expenses enough to live on one and one half salaries. In that case they'll need to decide whether to use student loans or a home equity loan to borrow the shortfall, or to have Chuck keep working full-time while Rebecca takes the lead at home after work.

Rebecca and Chuck are to be complimented for recognizing a shaky career path and trying to do something about it. The transition to a new career will not be easy but should pay dividends for years. According to the U.S. Bureau of Labor Statistics, about 1/3 of the fastest growing job titles are medical related. Hopefully that will give Chuck a good career path for years to come.

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