debthaven
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Post by debthaven on Jun 15, 2020 16:23:03 GMT -5
Sorry we posted at the same time. :-)
I don't like the balloon payments AT ALL.
At that price I think I'd go for the 10Y refi ... it will save you 400/mo, and you'll gain time because your 12.6K savings will go MUCH further.
But I'd ALSO accept partial extended CS from Ex 1, AND ask for a raise (or a promotion). Ex 1 is paying you 1K per month now. Even if you halve that and split it with DS1, that would be an extra 250/month for you.
I can PROMISE you that keeping the house is important to DS1's stability through his college years. If you didn't want to keep it, fine. But since you do, that's a valid argument IMO.
Last thought: would either of your neighbors be interested in buying the back 25% of your land?
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Lizard Queen
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Post by Lizard Queen on Jun 15, 2020 16:30:45 GMT -5
She said the closing costs on the 10 year Rapid Refi were $500-$700. 10 year - $907/month 15 year - $660/month then 36K balloon. 20 year - $545/month then 55K balloon. The 15 year looks the best to me, just eyeballing it. Saves a decent chunk monthly over the 10 year, and the balloon seems manageable for you.
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Deleted
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Post by Deleted on Jun 15, 2020 17:12:55 GMT -5
Without prepaying? I don't know what the 30 year rates are, but assuming it is exactly the same as what I'm paying and there are zero closing costs (that won't happen). This is where I'd be with my mortgage balance January of 2023 (the 29 month mark) Current loan - $60,912 (could pay off with Roth contributions which are a little over 63K) 30 year loan - $89,154 Those are your balances, but if things have gone perfectly, you still have your Roth and your $12k. You're still close to paying off your mortgage just with a little wiggle room if things don't work out. But, I could pay it off in 29 months with the current loan. Even if I saved the 12K I couldn't pay it off in 29 months with the 30 year. It would be nearly 90K and I'd only have 75K.
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pulmonarymd
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Post by pulmonarymd on Jun 15, 2020 17:13:43 GMT -5
Even the 10 year gives some relief, but if she is willing to use the Roth, why not do the 20 year, pay an extra $100-200 a month, and have a smaller ballon at the end. Gives Roth more time to grow as well, and get the greater relief if things get tight
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Deleted
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Post by Deleted on Jun 15, 2020 17:15:36 GMT -5
Even the 10 year gives some relief, but if she is willing to use the Roth, why not do the 20 year, pay an extra $100-200 a month, and have a smaller ballon at the end. Gives Roth more time to grow as well, and get the greater relief if things get tight If I'm going to pay extra may as well go the 15 year right off the bat no? The interest rate goes up with each extension.
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phil5185
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Post by phil5185 on Jun 15, 2020 17:18:52 GMT -5
""Before food, clothes, childcare, private school, spendy cat food, farrier bills, gas, piano lessons...etc...etc...
This is why I want no mortgage. """
The only way that you (or anyone else) can have no mortgage is to pay cash. That means that you must allocate money from your holdings and spend it on real estate. Eg, if you saved up $95k and spent it on your mortgage, that is $95k that is gone from your holdings. ""Amortizations over 10 years require 10 year balloon.'' I would avoid that, it is high risk - if the 10-year pay-off sneaks up on you, you can be forced into making a poor decision to raise the money (BTDT, had to sell a truck).
"""but I normally get a big tax refund in March that could carry me a few months."" lol, if you hadn't over-withheld for the past 12 months, that money would already be in your checking account, wouldn't have to wait for a refund. As for the trying to shorten the term of your loan to 'save on interest', you are focusing on the wrong calculation. Eg, when I refi and borrow an extra $50k out of a house, the payments go up by $268/m. So my interest cost is $47,000 for the 30 year period (almost as much as the $50k loan). I put the $50k into an 11% fund for 30 years and grow it to $1,145,000. At the end of 30 years, I have the paid-for house and I have the $1.1 million (minus the taxes owed). But all the while that I'm doing this, if I run into hard times (siding for the house, yada) that fund is available to draw on. And I don't have to count on 11%/yr return - a 9% or 10% return for 30 years is OK too. But the cost that is unimportant and almost gone from the math, is the $47,000 for interest - it make no sense for me to try to whittle that down by shortening the term of the loan.
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debthaven
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Post by debthaven on Jun 15, 2020 17:22:07 GMT -5
If I'm going to pay extra may as well go the 15 year right off the bat no? The interest rate goes up with each extension.
Nobody knows what interest rates will be in X years, if you need another extension.
IF you think you could make it work with the cheap 10Y refi, I'd do that.
I'm guessing the balloon payment is going to bug her even more than the mortgage, but I could be wrong LOL.
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pulmonarymd
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Post by pulmonarymd on Jun 15, 2020 17:24:05 GMT -5
Even the 10 year gives some relief, but if she is willing to use the Roth, why not do the 20 year, pay an extra $100-200 a month, and have a smaller ballon at the end. Gives Roth more time to grow as well, and get the greater relief if things get tight If I'm going to pay extra may as well go the 15 year right off the bat no? The interest rate goes up with each extension. You seem awfully close to the edge for a few years. The lower payment allows you to pay less if need be, but you can choose to pay more. The other way you are locked into the higher payment Just to give you an example of the things your kid can do to you- Both my middle son and my middle nephew were arrested during college(typical idiot stuff they do). Need to hire a lawyer for case. My son missed train day before thanksgiving one year. Spent all day talking to him and trying to get him home since my wife was sobbing. Don’t know how many mattress pads we bought, always seemed to lose them on the way. Security deposits if they live off campus. Money seems to find a way to be spent. You will want to visit him and take him out to eat, and might want to stay over. The lowest payment buys you some breathing room for unexpected expenses. You have done an excellent job given your circumstances. Leaving money invested is more valuable for your future goals, imho. If you have “enough” it allows you to take care of you for a change, since I expect you come last at the present.
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Deleted
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Post by Deleted on Jun 15, 2020 17:32:02 GMT -5
""Before food, clothes, childcare, private school, spendy cat food, farrier bills, gas, piano lessons...etc...etc...
This is why I want no mortgage. """
The only way that you (or anyone else) can have no mortgage is to pay cash. That means that you must allocate money from your holdings and spend it on real estate. Eg, if you saved up $95k and spent it on your mortgage, that is $95k that is gone from your holdings.
But, I'm not interested in my heirs getting millions when I die. If I use the 11% assumption I'll have way more than I need. According to my Phil Script, a lump sum investment of $525,000.00 bearing an annual return of 11% could grow to $2,262,981.51 in 14 years! EITC, child tax credit, dependent care credit, saver's credit... I withhold almost nothing. Only on bonus checks that I can't control mostly.
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Deleted
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Post by Deleted on Jun 15, 2020 17:50:27 GMT -5
If I'm going to pay extra may as well go the 15 year right off the bat no? The interest rate goes up with each extension. You seem awfully close to the edge for a few years. The lower payment allows you to pay less if need be, but you can choose to pay more. The other way you are locked into the higher payment Just to give you an example of the things your kid can do to you- Both my middle son and my middle nephew were arrested during college(typical idiot stuff they do). Need to hire a lawyer for case. My son missed train day before thanksgiving one year. Spent all day talking to him and trying to get him home since my wife was sobbing. Don’t know how many mattress pads we bought, always seemed to lose them on the way. Security deposits if they live off campus. Money seems to find a way to be spent. You will want to visit him and take him out to eat, and might want to stay over. The lowest payment buys you some breathing room for unexpected expenses. You have done an excellent job given your circumstances. Leaving money invested is more valuable for your future goals, imho. If you have “enough” it allows you to take care of you for a change, since I expect you come last at the present. As has been the case in every stage of parenting for me thus far, I suspect I have no idea what I'm in for. However, there is a lot of college savings in addition to the scholarships and grants. It FEELS like I shouldn't have to worry about that kid and his expenses. I've already sat down with him and told him he'd be on his own for his personal spending, although I will continue to cover car insurance and his cell phone. I'm not sure if I'd hire him a lawyer or not.
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justme
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Post by justme on Jun 15, 2020 17:50:41 GMT -5
How much money are you needing to free up?
ie the difference between the 10 year and 15 year would more than pay for the balloon at the end of the 15 year. $44k w/o any interest for parking it in a savings account. If for some reason you did need the ~250/month you'd have your Roth as backup for the balloon payment. Of course it comes with slightly higher interest rates too.
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pulmonarymd
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Post by pulmonarymd on Jun 15, 2020 18:01:18 GMT -5
You seem awfully close to the edge for a few years. The lower payment allows you to pay less if need be, but you can choose to pay more. The other way you are locked into the higher payment Just to give you an example of the things your kid can do to you- Both my middle son and my middle nephew were arrested during college(typical idiot stuff they do). Need to hire a lawyer for case. My son missed train day before thanksgiving one year. Spent all day talking to him and trying to get him home since my wife was sobbing. Don’t know how many mattress pads we bought, always seemed to lose them on the way. Security deposits if they live off campus. Money seems to find a way to be spent. You will want to visit him and take him out to eat, and might want to stay over. The lowest payment buys you some breathing room for unexpected expenses. You have done an excellent job given your circumstances. Leaving money invested is more valuable for your future goals, imho. If you have “enough” it allows you to take care of you for a change, since I expect you come last at the present. As has been the case in every stage of parenting for me thus far, I suspect I have no idea what I'm in for. However, there is a lot of college savings in addition to the scholarships and grants. It FEELS like I shouldn't have to worry about that kid and his expenses. I've already sat down with him and told him he'd be on his own for his personal spending, although I will continue to cover car insurance and his cell phone. I'm not sure if I'd hire him a lawyer or not. Easier said than done. I have done many things I never thought I would. Never paid for spring break or “fun”. But they wind up in the ED after a night of drinking. My youngest wound up in the ED because his roommate had a hard time waking him up. Alcohol level was 0, he was just really tired. Had a copay. Do you make him pay it? You really don’t want to discourage the roommates behavior, that is how you keep them safe, but if you make him pay, next time they may not call an ambulance. Hard decisions, but easier for me given my income, compared to yours. A $500 ambulance/ ED copay blows your current budget. This is a difficult phase with the kids, and you want them to graduate and get a job. Knowing where to daw the line is tough
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pulmonarymd
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Post by pulmonarymd on Jun 15, 2020 18:05:11 GMT -5
As far as the lawyer, yeah that’s tough. We have gotten really tough, and kids don’t get a break for being stupid anymore. My son got arrested for a D and D on election night. He wasn’t drinking so they changed it to disturbing the peace. If you read about the IVA police riding around and broadcasting from the police car after trump won and their antics that night, I have a hard time criticizeing him for saying something back.
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Deleted
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Post by Deleted on Jun 15, 2020 18:28:39 GMT -5
As far as the lawyer, yeah that’s tough. We have gotten really tough, and kids don’t get a break for being stupid anymore. My son got arrested for a D and D on election night. He wasn’t drinking so they changed it to disturbing the peace. If you read about the IVA police riding around and broadcasting from the police car after trump won and their antics that night, I have a hard time criticizeing him for saying something back. I was mostly kidding. I'm sure depending on the circumstances I would help him out for a lot of things. His dad would probably be fine with tossing money his way now too.
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Deleted
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Post by Deleted on Jun 15, 2020 18:30:27 GMT -5
How much money are you needing to free up? $900/month for the short term.
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oped
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Post by oped on Jun 15, 2020 18:42:27 GMT -5
College is so expensive. I know he got great scholarships and grants... but he’s going to have to work to maintain grades to keep them and probably to take advantage of the resources he has available at the school.
It seems counter intuitive, but in some ways I give more financial support and am more likely to intervene and offer help now than in high school... but I’ll be damned if anyone is wasting more money than I spent on my first house ... they are there to work, keep scholarships, make connections... make that $$$$ degree they are getting count.
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pulmonarymd
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Post by pulmonarymd on Jun 15, 2020 18:54:34 GMT -5
As far as the lawyer, yeah that’s tough. We have gotten really tough, and kids don’t get a break for being stupid anymore. My son got arrested for a D and D on election night. He wasn’t drinking so they changed it to disturbing the peace. If you read about the IVA police riding around and broadcasting from the police car after trump won and their antics that night, I have a hard time criticizeing him for saying something back. I was mostly kidding. I'm sure depending on the circumstances I would help him out for a lot of things. His dad would probably be fine with tossing money his way now too. No, I realize that. It just is interesting the predicaments they get into, and what you wind up doing. Sometimes need to eat your words. No offense taken.
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gambler
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Post by gambler on Jun 15, 2020 19:07:20 GMT -5
I guess I did not get to point. If child is not 21 and going to school parent can be made to pay. . Kid never amounted to much working in Wal-Mart as check out clerk after 10 years
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bobosensei
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Post by bobosensei on Jun 15, 2020 19:16:45 GMT -5
Something to do with FAFSA. I think it looks back 2 years right now. So aid for this year was based on 2018 taxes. Graduation in 4 years so that would be on 2022 taxes. Yes, except graduation in 4 years would take us to using 2021 taxes. Freshman year - 2018 taxes Sophomore - 2019 Junior - 2020 Senior - 2021 I added a year on for good measure in case he has to go 5, but I'm rethinking that one. Please rethink it, at least what you tell him now. When I was in college I knew I had financial aid for 4 years so I knew I had to graduate in 4. I went to an expensive private school and my mom had an EFC of 0 and had nothing saved for me so I KNEW I only had 4 years. I did a couple summer sessions because financial aid paid for them (when I say paid I mean allowed me to take loans), if they hadn't I wouldn't have. In hindsight I wish I hadn't done that. This is similar to what a student might do if they know parents will pay for a 5th year. If he has it he may find a way to need it, at least subconsciously. If you do find the money to pay for a 5th year don't make that public until after the 5th year is over. Let him think he only has 4 years covered now. That is more than most get. I'm not saying don't give him five years, but just don't tell him - yet. And as far as the dorm goes most include a communal fridge and microwave. At a minimum let him rely on a community microwave, and offer to split the fridge with his dad if you want to. You can get them cheap. But this where I would have him start making the decisions. Whatever is available that he can use he can take ex. if he has a full sized bed he can take the full sized comforter to use and his pillows. Send him with a cup to fill at the water fountain. If he has a laptop now he gets to take it with him. Then there is x amount of money you are willing to contribute then tell him that. This isn't mom found a microwave for 20 and a fridge for 30, and because she has 50 to spend and things a microwave and friger are imporant that is what he gets. This is mom has 50 to spend, here is what mom recommends you need, how do you want to spend it? He wants to spend 50 bucks on something you don't think is a good idea, let him learn the lesson. Then in second semester he wants a fridge, well too bad that is on him and he learns a 50 dollar lesson. This is much better than learning a way more expensive lesson later on.
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bobosensei
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Post by bobosensei on Jun 15, 2020 19:19:58 GMT -5
I would think FAFSA would have zero impact even if you child support stopped. Then it would be from your exes income, so a wash on the total dollars. How would a refinance impact FAFSA? You still owe the same amount you are merely choosing different payment terms. Again, I would opt for the refi to a 30 yr, and pay it off as quickly as you figure out your new "normal" income and budget (which I know you already do a great job in regards to budgeting) Someone may have said this already, but for example, if she pays 8k in interest now she might be able to itemize. If she refis and ends up paying 6k in interest maybe she has to take the standard deduction instead and ends up having a higher AGI which causes a higher expected family contribution for college.
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bobosensei
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Post by bobosensei on Jun 15, 2020 19:36:16 GMT -5
Well, I don't like the 30 year option at all, but because EVERYONE else seems to think it's the best route, I took the step to email my CU to find out current rates (they'e not advertised online right now due to market volatility), and I kind of explained the situation a little with where I was at loan-wise now, and what I was looking for. And she got back to me already. 2.975%, and closing costs would be approximately $2800 Check out better.com for a refi, they were way cheaper in closing costs than the credit union was for me. And after I lost my job 3 days before closing they refunded the 550 downpayment I sent them. As soon as I am employed again I'm going back to them for a refi.
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mary2029
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Post by mary2029 on Jun 15, 2020 19:38:11 GMT -5
With those options, I think you would be most satisfied with the 15 year. I agree that you've been close to the edge for years, so the $660 payment would be way better than the $907 one and your ROTH will likely take care of the balloon payment.
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Deleted
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Post by Deleted on Jun 15, 2020 19:48:01 GMT -5
College is so expensive. I know he got great scholarships and grants... but he’s going to have to work to maintain grades to keep them and probably to take advantage of the resources he has available at the school. It seems counter intuitive, but in some ways I give more financial support and am more likely to intervene and offer help now than in high school... but I’ll be damned if anyone is wasting more money than I spent on my first house ... they are there to work, keep scholarships, make connections... make that $$$$ degree they are getting count. If he loses scholarships and grants that would be bad. He does have skin in the game in that his grandparents gifted him a sum of money in an UTMA about equal to the 35K I put in his 529. That money is his for anything, but he doesn't really know that. I told him we'd split the costs every year between the 529 and the UTMA and he knows anything left in the UTMA is his upon graduation. It's pretty much why he chose MN over Iowa State. That 24K difference over 4 years meant a lot more when 12K of it was coming out of his stash. I'm also seriously considering having him take out the subsidized loans every year too and just setting the money aside in case something bad happens and he does need a lot for a 5th year but can only borrow $6500 that year or whatever it is.
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bobosensei
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Post by bobosensei on Jun 15, 2020 19:52:18 GMT -5
when I refi and borrow an extra $50k out of a house, the payments go up by $268/m. So my interest cost is $47,000 for the 30 year period (almost as much as the $50k loan). I put the $50k into an 11% fund for 30 years and grow it to $1,145,000. At the end of 30 years, I have the paid-for house and I have the $1.1 million (minus the taxes owed). But all the while that I'm doing this, if I run into hard times (siding for the house, yada) that fund is available to draw on. And I don't have to count on 11%/yr return - a 9% or 10% return for 30 years is OK too. But the cost that is unimportant and almost gone from the math, is the $47,000 for interest - it make no sense for me to try to whittle that down by shortening the term of the loan.
Phil is right, but maybe you are thinking would I really have 1.1M at the end. But think of this, what if you get laid off. Do you want your 1300 a month mortgage payment plus responsibility of everything else or do you want the 30 year payment of much less that as long as you can keep your job you can pay extra on the principal to make it equivalent? Because I can tell you from my perspective of making 85k a year and having a 280k mortgage (and no kids), after I lost my job I wish that my house payment was as low as it could possibly be. I'm a few months away from tapping savings, a few more from tapping brokerage unless I do a forbearance. In this situation I'd happily take a longer mortgage term for the opportunity to pay less now that i need it with the idea that once I am back to work I can prepay principal if I really want to. Take the 30 years when you have the extra money pay on the principal if you want, if you really want security take the security of knowing you can fund yourself in an emergency longer due to lower payments. And also I think you are a great mom. I can tell because you are worried so much about all of this. No matter what happens I think you and your kids will come out ahead of the game. Way to go mom!
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azucena
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Post by azucena on Jun 15, 2020 19:59:35 GMT -5
I guess I did not get to point. If child is not 21 and going to school parent can be made to pay. . Kid never amounted to much working in Wal-Mart as check out clerk after 10 years I think you missed the point. Your kid, you pay. Your income counts against any financial aid package. Unfortunately you sound just like my dad and then he wondered why none of us gave him the time of day.
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Deleted
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Post by Deleted on Jun 15, 2020 20:05:59 GMT -5
I guess I did not get to point. If child is not 21 and going to school parent can be made to pay. . Kid never amounted to much working in Wal-Mart as check out clerk after 10 years I think you missed the point. Your kid, you pay. Your income counts against any financial aid package. Unfortunately you sound just like my dad and then he wondered why none of us gave him the time of day. Actually, with FAFSA, only the custodial parent's income is counted. Some private school's count non-custodial income but none of the state schools do.
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azucena
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Post by azucena on Jun 15, 2020 20:28:19 GMT -5
Well I went to private school 20 yrs ago. The gist of my point stands though.
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gambler
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Post by gambler on Jun 15, 2020 20:49:38 GMT -5
I do not mind paying at all. The point was she might be able to extend her child support payments
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Deleted
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Post by Deleted on Jun 15, 2020 20:58:18 GMT -5
I have no interest in forcing him to pay for college. If he wants to help he's free to, if not, that's fine too. Really, he helped by paying child support all those years. That's where the college savings came from anyways.
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Lizard Queen
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Post by Lizard Queen on Jun 15, 2020 21:02:47 GMT -5
I can see both sides of the child support after 18/high school. If parents are still married, they aren't compelled to continue to support their kid, though many(most?) choose to.
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