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after looking into it, it seems to get out of this in 2 years we need to pay 1300 a month(she has 23K in debt), and after that if we were to continue to save 1300 a month for 3 years after we'd have around 46K, and be close to being able to put 20% down on a house. Now, to figure out how to get to that number...
Option 2 may be a loan from my parents. But I'd rather avoid borrowing from family
are you getting every discount you can on student loans?
for instance, i get a 0.25% interest rate reduction for having them have direct ACH set up for my monthly payment. it means they automatically debit my account on the due date.
i also get a 0.25% reduction for making 48 straight payments on time.
a last resort could be calling and extending your student loan repayment term. this would lower your minimum payment, but you could always pay more when you're back on track.
i'm suggesting these because I assume student loan interest rates are significantly lower than the credit card rates.
also - every month she should call her credit card companies and ask for an interest rate reduction. every bit would help, so be persistant.
if your credit is very good, you may be getting the attractive balance transfer options. i'd shy away from this because you'd be taking her debt into your name - bad idea before marriage in my opinion....but if you get married, it's everyone's debt...
you need to nickel and dime everywhere. also, i have citi thankyounetwork rewards. i get so many points each month for just having a checking and savings account. every 3 months, i have enough points for a $25 student loan rebate typically, without having to spend a penny. i also get points for using my debit card, or if i use my citi credit card i get 3 points per dollar on certain categories. Helps me chip away extra off of my student loans.
most important thing in my opinion before you get married - fully understand why she got so much debt and be comfortable with that. people don't change much, so you'll have to work hard at keeping this weakness in check.
most fights in a marriage are about money. so address this ahead of time!
I'm sorry but some of what you said was off base... I dont know if you've been living with credit cards or not... but my cedit rates are are 29.99 and 28.99 with BOA and Citi, and my credit is fine. Like I posted previously, she has no flags on her credit report at all, no late payments... nothing... The rates just went up, over a year ago. All of ours jumped up, and they havent gone down... Her credit is fine, and she is responsible with money now atleast. Living in an expensive city, and making 30K coming out of school was what got her to where she is. She's making enough now, but on her own, theres no way she can afford anymore... so without my help it'll take her what? 10 years? and thats if nothing bad happens on the way there... I dont see how me helping where I can is a bad move... it'll be our money anyway... and the more money she's wasting on interest, the less money we can save...
I'm planning on proposing in april or may, so theres no need to get rid of the ring... thanks for the advice though?
Wedding costs, I agree... Unless we get some help from family, we'll have to do something smaller. That we'll figure out when we get there I guess.
My college loans are currently around 45K, hers are closer to 35K... She isnt looking for a handout from me or anything... but if I'm planning on spending my life with this girl, this is an issue we're both going to need to deal with no??
the poster wasn't off base. to have close to 30% APR on a credit card means you either have low credit scores or blemishes on your credit...missed payment, late payment, etc.
i highly recommend running your report through the government site (for free), and then it may be worth paying the $8 for your scores. maybe something is on your report that's an error, causing these higher rates?
as a point of reference, i'm 6 years out of school with $50,000 left on my loans. my interest rates when i graduated were around 12%. my interest rates now are all sub-10% except for the "rewards" cards like LL Bean Visa which is 13%.
something is causing you to have higher-than-normal interest rates - address that as soon as possible.
don't waste your money on david ramsey. it's a class that tells you to pay off your debt. lesson summed up right there. money would be better spent on a kiplinger or money magazine subscription. lol
and yes, if you're gonna get married, you have to deal with this together. and have the wedding you want that you can afford, but know the consequences. don't let people here tell you how to spend your money, but take their advice on how to get out of debt. how to spend is opinion. many people that tell you to spend $1,000 on a wedding are the same people who will buy Bose surround sound or some other over priced item. so take that sort of advice with a grain of salt!
First some basic questions you MUST get answers to before you propose:
1. What was at the root of the debt? What did she spend the money on? Medical emergencies or is she a compulsive shopper, living beyond her means etc? If she has not solved the root problem of creating debt, she will continue to go into debt over and over again (see recent pop culture article about Toni Braxton filing for bankruptcy for a SECOND time because she cant get her spending under control).
2. Is she still accumulating debt? Are you sure of this answer?
3. Have you scrubbed through your budget to make sure every possible penny is going to pay down debt? Guessing at $100k combined, your take home is $5500/mo. $1500 to rent; $400 to your student loans, guessing another $1000-1200 for bills, car expenses, etc. Where is the other $2500 going each month? You cannot afford to eat out, go on vacations, blow money on beer, gifts for each other, etc. I don't see how you can't knock out her credit card bills & a chunk of your student loans in 12-18 months' time unless there is frivolous spending going on.
Next, some martial advice. FINANCES cause the MAJORITY of marriage problems- either not being on the same page about how much to spend vs save or being resentful of all the things you can't do (like have a nice wedding) because one of you came into the marriage with a crippling amount of debt. Knock out her credit card debt AND any student loan debt that's over 4-5% interest rate BEFORE tying the knot.
There is no way you won't resent her if you can't have a nice wedding, a nice honeymoon, or even think of buying a home until this debt is gone.
I would also HIGHLY recommend pre-engagement counseling (doesn't have to be through a church, you can find a nonreligous marriage/relationship counselor easily) because I imagine the two of you are very much NOT on the same page when it comes to budgeting, finances, spending, saving, etc. Especially since you were able to save and buy a ring on only a slightly larger income than her. I'm not some fuddy-duddy either....I'm 30.
all great points! only think i disagree with is paying off student loan debt that's higher than 4-5%. student loan debt is annoying, and pay it off when you can, but i think people make a much bigger deal about it than necessary. if your $400/month payment is tied to loans where the rate is fixed, why stress over it? now if they are private loans and the rates are variable - then it's worth paying down before rates increase (which they will eventually). but focus on the debt that's greater than 10% (credit card debt). then, save for your wedding. my wife and i got engaged in march 2006 and set the date for sept 2008. we figured out what we'd be spending and just directed that into a savings we didn't even see. paid for our wedding (then replenished savings with our gifts!), and just kept saving that same amount of money. couple years later, we put a down payment on a house.
i still have $50k in student loans (highest i-rate is 3.5% though) and she has about 15k left. that's where my extra money goes now though, so we're chipping away. i just have come to terms with the $340/month that goes to my student loans, and it gets slightly smaller every time i make an extra payment. but with rates so low for me, there's little incentive to dump much money into the student loans instead of saving/investing it.
$100K? Together, you guys are raking in more than double the median household income in this country, and you have no kids and no mortgage/insurance/tax/upkeep. You don't live "frugal" if you are blowing so much of that that you can't write a check right now to pay off that $25K.
The first thing you have to do is redefine frugal. More than half of all US households are living, with kids, on what YOU make alone. Figure out how to do that for 6 months, use her income to get your noses above the waterline, and then go from there. How the hell can single people not live on $40+K each?
By the way, now much was that ring? $25K?
this is just insulting and shows a complete lack of understanding of the cost-of-living of different parts of the country. in nyc, if a couple made a combined $100k/yr and lived near NYC to get to their job in an hour or less, you'd have a very hard time writing a check write now to pay off $25k in credit debt.
get real. more than half of all US households are doing that in areas with far lower COL expenses...
also going a bit deeper... she is currently paying all of her CC debt herself...
Figure after taxes, since she makes 48K, she's bring home around 2850 a month. Since we were both unemployed for an extended period last year, we wiped out our savings, and built up a bit more CC debt
we try to split everything, so her expenses are
750 - rent 70 - phone 65 - travel 55 - tv/internet
900 - credit (trying to get it to 1300)
300 - student loans 200 - food 100 - save
= 2450
so there is 400 left monthly... and the goal is for me to try to take on all of the other expenses, and for her to put that money to her cards, so she can get out of this...
I also understand that people making 100 HHLD seem to get by fine... and we get by, but jsut arent getting out of debt. thats all, but now we have a plan thanks..
ok so where is the $400 left going?
what's the $100/month in savings for - emergency fund?
$70 for phone - can you guys combine on a family plan? my wife and i did that and a 700 minute per month shared plan came to $69.99 plus tax.
$65 for travel - is this commute costs to work?
$55 tv/internet - sounds about right, but can you get it lower? call the cable company and threaten to cancel. or...better yet...cancel if you don't really need cable and just use digital antenna for the short term.
$200 in food sounds expensive. you live together? please tell me you're not spending $400/month on food combined!
you're on the right track though. it's easier than you think. and set milestones and treat yourselves to something when you hit them.
I used to like weddings, but I have come to think they are collossal rip-off and waste of money. And not just in terms of money.
So much effort goes into planning a wedding, and by the time the day comes, it goes by so quickly that the bride and groom often don't really get a chance to enjoy it. And with it comes either more piles of debt, and what goes away with it is a good-sized down payment or the chance to pay off debt.
I certainly don't think anybody who's already in debt ought to be blowing money on a fancy wedding. If you actually have the money to pay for the wedding without giving up something else, that's one thing, but to add to debt for a big blowout party is crazy.
i'm gonna get flamed for this....
we spent around $30,000 on our wedding. we could afford it, so judge me how you'd like but....
we got a contribution from my parents and her parents that made up maybe $5,000-$7,000.
we had 174 guests attend (people will flame me for that too, but i don't care).
we got close to $16,000 cash gifts.
we had a BLAST.
we didn't use an ounce of debt, so no debt after wedding.
anything i could pay for with credit i got 1.5% cashback.
we'll always remember the day and the fun we had.
yes, it's only one day, which is why everyone should do what they want, as long as it doesn't put them into debt. could the money have been better spent? sure. but in the end, out of our pocket (excluding parents' contribution - let's assume they would have given us that towards something else if we chose, though who knows if they would have?) was $14,000.
Just got my credit score today, its 712. Now, the reason my credit card rates went up is a mystery... I had one at 14.99 (boa) and another at 19.99 (citi) My boa increased from 14.99-29.99 last year. After calling over and over about it, they would not budge and drop it. Once my BOA went up, my citi soon followed. Honestly, no late payments at all. I also have an Amex gold, which is now the only CC I use, because I have to pay the entire thing off each month.
Anyway, My BOA's credit limit is only 3000, and my citi is only 1500. They wont decrease my rates, soo... I'm just going to pay them down... I'm only around 3K in the hole(in CCs), and thats shrinking fast every month. It's also increasing my credit score since my credit to debt ratio is a big reason it isnt higher. So hopefully, by the time I try to get a mortgage, I'll be fine... But the only thing I'm worried about now is paying those off on my end.
With the girlfriend, we know we need to get her CCs under control. We'll get out of this, we have a plan now, and now we just need to stick to it. Once we knock off the CCs, we'll start saving for the rest of life.
Thank you for all the info here, from everyone. I came in here looking for a way for my GF to transfer money into a lower interest loan, and came out of it with a plan for her to pay everything off with our current income.
Hopefully we can put this behind us, and not have to worry about CC debt in the future... Now its time for all the hard work to get out of it
ok so where is the $400 left going?
what's the $100/month in savings for - emergency fund?
$70 for phone - can you guys combine on a family plan? my wife and i did that and a 700 minute per month shared plan came to $69.99 plus tax.
$65 for travel - is this commute costs to work?
$55 tv/internet - sounds about right, but can you get it lower? call the cable company and threaten to cancel. or...better yet...cancel if you don't really need cable and just use digital antenna for the short term.
$200 in food sounds expensive. you live together? please tell me you're not spending $400/month on food combined!
you're on the right track though. it's easier than you think. and set milestones and treat yourselves to something when you hit them.
the 400 extra is whats being lost on other random expenses, be it the dog and cat, or entertainment, but will now be re-directed into the CCs.
100 a month, is yes, her emergancy fund. She likes to have savings, atleast 500-1000 of just incase money... because you never know... and I understand, considering we were both unemployed and really struggling last year.
I know we could downgrade out phones, we are on a family plan... but with iphones... and we're under a 2 year contract
yeah, the 65 is for subway and bus for work, cable is pretty bare bones, no premium channles or anything.
And yeah, we're really working on getting the food budget down(the 200 is also for other household goods)... going to start living like college kids again, even bought one of those 20 pack cases of ramen. No more farmers market for us for a while... But even so, groceries in boston are expensive. We're looking into BJs or Sams Club, but since we're in an apartment, storage is pretty tight.
And yeah, we're both feeling much better about the whole situation now. Now that we know how to pay everything down, it doesnt seem like such an issue anymore, just something we need to work for.
we spent around $30,000 on our wedding. we could afford it, so judge me how you'd like but....
we got a contribution from my parents and her parents that made up maybe $5,000-$7,000.
we had 174 guests attend (people will flame me for that too, but i don't care).
we got close to $16,000 cash gifts.
we had a BLAST.
we didn't use an ounce of debt, so no debt after wedding.
anything i could pay for with credit i got 1.5% cashback.
we'll always remember the day and the fun we had.
yes, it's only one day, which is why everyone should do what they want, as long as it doesn't put them into debt. could the money have been better spent? sure. but in the end, out of our pocket (excluding parents' contribution - let's assume they would have given us that towards something else if we chose, though who knows if they would have?) was $14,000.
ok....go ahead and flame me now!
The wedding, we'll figure out when we get there. I'm not sure how much anyones throwing in... All I know is, I have a big family, and so does she... and the amount of issues that would be caused within our families for leaving people off our list is worth the money to avoid it... Plus my family is all about 3 or 4 hours away from where we'd be having it, so it'll have to be on a Sat... so, it wont be cheap... but we'll see what we can do.
I know I'll get flamed too... especially since I'm the one here with the debt... but by then, the plan is for this to not be an issue... We'll see though, I'll be asking her soon, and the wedding will be about 2 years after that.
the 400 extra is whats being lost on other random expenses, be it the dog and cat, or entertainment, but will now be re-directed into the CCs.
100 a month, is yes, her emergancy fund. She likes to have savings, atleast 500-1000 of just incase money... because you never know... and I understand, considering we were both unemployed and really struggling last year.
I know we could downgrade out phones, we are on a family plan... but with iphones... and we're under a 2 year contract
yeah, the 65 is for subway and bus for work, cable is pretty bare bones, no premium channles or anything.
And yeah, we're really working on getting the food budget down(the 200 is also for other household goods)... going to start living like college kids again, even bought one of those 20 pack cases of ramen. No more farmers market for us for a while... But even so, groceries in boston are expensive. We're looking into BJs or Sams Club, but since we're in an apartment, storage is pretty tight.
And yeah, we're both feeling much better about the whole situation now. Now that we know how to pay everything down, it doesnt seem like such an issue anymore, just something we need to work for.
so what she's spending that $400 on, take those things and incorporate into the budget. you can't not spend on dog/cat. put a line item in for that.
emergency savings is fine. i'd leave that.
phone - i guess you're stuck into having that voice and data - just make sure you're on the cheapest plan avail. do either of you get a discount with ATT through your employer? check into that.
cable - i'm not saying reduce your plan - just call and tell them it's too expensive and you want to cancel. this is done by frugal persons all the time and results in a slight savings. every dollar counts right?!
don't fret over BJs or Sam's - you'll likely spend more there anyways. Trips there for me and my wife get pricey cause we buy crap we don't need. Wal-mart is great for household stuff if you have one nearby (and even groceries if you have a supercenter). Don't underestimate the power of coupons (my wife does) - tons of sites out there. i'll link some late, but off the top of my head... couponmom.com
be smart. you can trim the grocery budget down for sure i know it.
good luck!
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