DEAR DAVE: An insurance salesman told me it's better to use a life insurance policy for college savings rather than a 529 plan because the child can use it for anything instead of just college. Is that true?
DEAR RUSTY: Of course that's what he told you. He's an insurance salesman!
He was right on one point. If the kid doesn't go to college, the savings inside an insurance policy can be used for anything. But here's the catch: There won't be much waiting for you, because you saved it inside a life insurance policy. The returns stink! Savings inside a life insurance policy won't get you anywhere near the cash you'd have by investing in a 529 plan.
If you're going to save for your kids' college fund, there needs to be lots of talk around the house about actually going to college. It's not really brainwashing them so much as it's letting them know the importance of a good education. And they need to know, on no uncertain terms, that the money you're saving for them is for one thing: college.
What you experienced, Rusty, was an insurance salesman trying to sell insurance. Stay away from it when it comes to saving up for college.
DEAR DAVE: Is it a good idea to sell your car in order to get one that gets better gas mileage?
DEAR TREY: Only if the other car is really cheap, or cheaper than the one you're selling. I think it's funny when people run out and upgrade on their $7,000 car to buy a $30,000 Prius to save gas. Think about it. That's an extra expenditure of $23,000 to save gas. Where are you planning on driving, to the moon?
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