Michael from South Carolina asked "The Ramsey Show" whether it was worth it to withdraw from his children's 529 college savings accounts to speed up his debt payoff.
"I would not crack open my child’s piggy bank to essentially make my truck payment," co-host George Kamel said after diving into the details.
But Tim's question highlights a challenge many parents face: balancing near-term financial pressure with long-term goals for their kids.
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A Major Debt Turnaround — With One Big Question
Michael shared that he had turned around his finances in the past year after taking Dave Ramsey's Financial Peace University. "It has completely changed the way I look at my finances," he said, adding that he had cut up most of his credit cards and used extra income to chip away at balances.
In January, he owed about $90,000 across 10 credit cards and two vehicle loans. Ten months later, he has reduced that amount to roughly $65,500. But he was still searching for ways to pay off his debt even faster.
Michael told the hosts that several years ago he had opened 529 plans for both of his children, contributing about $4,000 to each. After his older child completed a year at a local community college and decided not to continue, he rolled those funds into his younger child's account. Today, the combined account holds around $11,500.
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His question for the hosts: Would it be wiser to withdraw the money now — even with taxes and penalties — or leave it invested for the next eight or nine years until his younger child attends college?
Why The Hosts Drew a Firm Line
Kamel and co-host Jade Warshaw didn't hesitate to discourage the withdrawal. Kamel said that once taxes and the 10% penalty are applied, "that $11,000 quickly turns into seven grand." He also warned that pulling the money now would "unplug the growth" that could help fund future education costs.
Warshaw agreed, adding that too much of the family's financial strain was tied to auto loans. Michael confirmed he had a balance of about $15,000 on a 2022 Hyundai and another $30,000 on a 2024 Toyota truck originally purchased for $54,000.
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Warshaw didn't mince words. "It's too much of your world to have this much tied up in vehicles that are going down in value," she said.
Both hosts said Michael should consider other strategies instead. "I would be selling that truck and working extra," Kamel said, adding that he would rather see Michael make changes in his own budget than tap funds set aside for his son's future.
A Familiar Financial Crossroads
Michael's situation reflects a broader reality for many families: rising vehicle costs, persistent credit card debt, and competing priorities for limited income. The hosts stressed that while aggressive debt payoff can be helpful, using a child's 529 plan comes with long-term consequences — including lost compounding and fewer educational options later.
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