College Tuition Looms for Stuggling West Virginia Family

Saving for retirement has the upper hand in my household vs. saving for the children's college fund.

I am 39, a workforce analyst for a Fortune 500 corporation and married with two kids in Harpers Ferry, W.V. And because of a tough economy, my income in the low 30s and a wife unemployed for more than a year, we are subscribing to the pay-ourselves-first philosophy. Therefore, our children's college funds are taking a hit.

Our retirement plan

I plan to work for another 26 years and retirement is still a long way away. My portfolio consists of my current 401(k) plan, in which I have roughly $12,000 saved. I also have another $10,000 in other 401(k) plans. Through payroll deductions, I contribute roughly $2,600 into my 401(k) plan annually at 4 percent to take advantage of my employer's matching program.

My portfolio also includes stock -- about $4,000 now -- purchased at a discount rate through my employer. Our home, which we also consider as part of our retirement portfolio, should be paid off before I retire. We could live at the home and not pay a mortgage payment or sell and buy something less expensive and put the rest of the funds in our nest egg. Having the money invested through payroll deductions is great as the money is regularly invested and not seen.

Our children's education funds

I have two children, Ben, 13, and Evelyn, 3. Ben will go to college in just five years, and his college funds are very limited. I haven't been able to open the accounts for him like I would like. We fought to get him into the best school programs, and we hope that his extracurricular involvement (band and football) will help him compete for scholarships. I am hopeful we can open a savings account for his education, but he will have to finance most of it.

Evelyn has more time -- 15 years before college. We have a savings account set up for her, but not much has been set aside. Her grandparents have already created a retirement plan for her, so she has an early jump there. Unfortunately, our budget is stretched too tight right now to make our own monthly contributions.

Future Plans

We are hopeful my wife, who was a victim of the mortgage industry meltdown, will re-enter the workforce soon and our financial position will improve. Our goals are to contribute regularly to the children's college funds. Education is important in our family. I have two degrees I was able to finance mostly myself -- with a little help from my parents. This will probably be the route for our children's higher education.