Join “Utah Saves Week” and Start Saving for an Education
Saving is a critical piece in a family’s overall college financing strategy. Every dollar saved in advance significantly reduces the cost of college if paid by debt. Previous generations have funded higher education through current income by cutting expenses or by taking out loans. With tuition rising faster than inflation, it is no longer realistic for most families to cut expenses enough to cover college costs. Not only do loans cost more over the long run, recent market conditions have resulted in a drastic reduction in the sources available for private education loans. Investing early helps minimize future reliance on loans and regular investing over time can help lessen the impact of college costs.
Assuming an even 7% interest and borrowing rates, the cost of borrowing versus saving is 7:1. To accumulate $10,000 in 10 years at 7% interest, a family needs to save $58 per month. In contrast, to repay $10,000 over 10 years at 7%, that same family would need to pay $116 per month. Over ten years the real cost of borrowing rather than saving is $116 – $58 = $58 x 12 months x 10 years, or $6,960.
Utah Saves Week (Feb 25 – March 2) is a great opportunity for individuals and families to reduce debt and start saving, or start saving more. Start saving today by visiting www.utahsaves.org and taking the saving pledge.
Preston L. Cochrane, President/CEO, CPFC
AAA FAIR CREDIT FOUNDATION