<human>: My husband and I started out with a lot of debt and no assets, and three kids between us.  Two are grown now and doing fine, even though we couldn't provide much assistance.  The youngest is college-bound next year.

We have no savings to speak of, and no retirement (about 20 years away), but we have good insurance and credit (paid off every month) and a decent income now.  I handle the finances, and we're in a good position to start saving and be more stable than we ever expected to be.  I'm currently unemployed, also, so whatever I manage to make next year is extra savings/retirement.

We will have a year-end bonus of at least 10k, net.  This is not slated for anything other than savings.  As I understand it, Indiana offers a 20% tax credit for 529 contributions, maxing the credit at $1000 per year.  I realize it's a slight risk to say that we'll be able to pay $5000 toward our youngest's college expenses next year, but it's a pretty safe bet that we'll contribute at least that much.  

* Would it make sense for us to put half of our bonus into a 529 in order to take advantage of the full credit this year?
* If the fed raises the interest rate and we have a conservative short-term 529, how much of a hit could we take?
* Are we correct that a $5000 account will give us $1000 back in the spring, to further contribute to some sort of savings?

I've learned so much from browsing here.  Thanks in advance.

Can you give me the gist of the text in a nutshell?
<bot>: Finally at a point where savings is possible, just as kid is about to go to college.  Contribute to school or make our own situation more stable?  Short-term 529 for tax credit, or regular savings account?