College Crisis Survival Tip:
Cash Flow Management
Whether the issue is a pandemic, loss of a job, a health care recovery issue, or college; managing cash flow can make the difference between getting the right help and support versus just “settling for” or throwing up your hands in defeat. Once you have a path for recovery, being able to survive with your basic needs comes into play very quickly. We go “all in” while we are finding a solution, only to wake up having to pay for it. Most of the time, paying for it comes with additional pain.
We have students and expect them to go to college. Often, we think that it will “Just Happen” on the payment end of things. We think that:
Most families believe these will happen and that their children will do ok, however, it is not that simple. Mom and dad will pay for the lion’s share of an undergraduate degree for their children.
Now comes the harsh reality of getting an acceptance letter, a final award letter and the sinking feeling that most of the solution is cash flow or parent loans. It is not what was hoped for or even close to being affordable. The 5 phases of grief come into play and we often hover around anger and denial for a long time.
Families have this incredible feeling of “Let’s rally the troops” and they cut costs, initiate an extreme budget, couponing, stop vacations, using mattress money and every other way they can imagine solving this problem. It is unrealistic to think you will not have debt to pay for something that you have not been able to save enough money for over 18 years. Let me say that differently, if you have not saved $100,000 per student over the last 18 years, what makes you think it is reasonable to pay $100,000 over the next 4 years to get through college?
Most families cannot do that. Then they panic, settle for and start lowering their expectations. You do not need to go to a 4-year school out of the gate, try a community college, go to the commuter in-state school, do only web-based programs, and more. Few will change the course. After all, your child earned their way on and you told them they could go for the past 18 years. You decide you will “just figure it out, we always do and it always works out,” right?
Here is the silver lining. Acceptance has set in. The Ah-ha that the student can manage to get through college in 4 years, at the right school, have a plan for their student loans, and graduate. Yes, even if mom and dad are not prepared to pay cash for it, they can use debt to manage. There is a huge sigh of relief.
The Solution- Cash Flow Management. We can deep dive into mom and dad’s economy and find the most efficient way to pay for the oldest child. Then, layer on each additional student in a systematic way. When we help manage cash flow the big picture still stays intact, the younger children still get to go to school, the amount of debt accumulated is not ideal, but not scary and there is an end game solution. When we put a cash flow management tool in place with a strategy you can move forward with clarity. It will save the day and keep your life plan on track.
Many families who do not have a cash flow management plan end up with a ton of unmanageable debt and never really recover. This is all solved on the front end. You can even get more efficient as you plan years before your child even enters college. If you reduce what you pay before you get in, you can manage cash flow much more efficiently.
There is a solution. It might not be obvious, but it works. During a crisis, managing cash flow can shorten the pain and help you thrive and survive on the other side.