Pay Student Loans or Save for home

**Benderz** · 01-14-2018, 06:27 AM

Kim,

I was in your exact same position at age 25. Debt, family, career, all the same. I won't tell you what i did, but my current girlfriend at the time and now wife of 18 years agrees we suffered because we did things in the wrong order. In retrospect I strongly strongly recommend you separate your finances and live as an individual until you marry and combine your money. It changes your relationship and ensures a long healthy relationship. Also, do not be pressured by your future in-laws. Draw a line now or it will affect you your entire life. My wife and I gave in and bought a house. It caused lots of stress in our young relationship and marriage. It almost caused the end. And when we had fertility problems and were strapped with student loan debt and a house it delayed our family plans. So do what your heart tells you and use this time to aggressively pay off the debt. And date your boyfriend and act married after you are married. My wife and I wish we followed that advice.

**Gailete** · 01-14-2018, 07:05 AM

While reading your thread one of the first things that hit me was why YOU were signing for a line of credit for your boyfriend? Then when I read that his parents are well off, I really questioned it. Why didn't they sign for him? It dismays me when I see unmarried couples helping out the other one financially. Some of the threads here, young ladies are paying off their boyfriends cc bills to 'help him out' and get things taken care of before they get married. Sorry but that is doing things in reverse. Especially when the young lady is putting her own savings and retirement planning on hold while they help this guy pay off his bills. All I can see into the future for them is that when she has paid off his debt, he is gone leaving her with an empty bank account. These things do happen.

What you do with your money is you business, not his parents business! Unless they are going to pay for your student loans which I highly doubt. You follow their lead in this, they will expect you to do it always. I can hear it now -- "Nope you shouldn't get pregnant yet" "You need a bigger house since you have a baby on the way" - "forget those student loans except the minimum as you need to buy a car for our son". I had a super interfering MIL (my FIL wasn't quite as bad) who felt that she could make comments about anything going on with our marriage. It was horrible. It wasn't her business what I made for supper, and if they didn't like what I was making, why didn't they encourage son to cook? They were on my back constantly to get a better paying job. When I finally did, the divorce came where the ex tried to grab everything, the house, the kids (he wanted the child support money not so much the kids) and I'm sure they felt that now that I was making more money the ex could be able to dip into that as well. Not saying this would/could/will happen to you, but it is none of their business how you spend your money. If you want to take that extra $1300/month and go for a long vacation in Hawaii without your boyfriend that is you decision, not his or theirs. At this point ALL your finances need to be completely separate from him and vice versa.

As you can probably guess, if you feel the best use of your money is paying off your student loans, then so be it. So far you have handled your money very well and have put yourself in a good position financially. You do need to save more AND pay off your loans, so I would split the 'spare' money, some into savings and some into the student loans. When my son was paying his off, he paid extra, and tracked them so he could always tell where he was at. When he got to the point that he was just above $1K my parents sent him a check to pay the rest off. He was flabbergasted to say the least, but for him a huge chip off of his shoulders! You will feel great when they are paid off!

Out of curiosity, if his folks are so gung ho about you saving for a house, how much has HE saved for the down payment and the house? What are his folks telling him to do with his money? Just things to think about. And yes, I am old-fashioned but I have been through a lot myself and seen even more.

**MZKIMJACKSON** · 01-14-2018, 07:34 AM

Hi Benderz,
Thank you so much for your advice! That’s exactly what I needed to hear! I’ll move forward with saving at least 4 months of income then aggressively tackling those student loans. It’s beautiful that you and your wife were able to weather those storms and have been together for 18 years.

The future in-laws can be tough. I highly value their opinion because they are older, wiser, and financially comfortable, but I’ll take note to draw a line when it comes to feeling pressure from them.

Just to confirm, our finances are completely separate; however, we do split rent and utilities. The line of credit was a one time thing and won’t happen again. I tend to stay on him about how he spends his money and his credit because I want us both to be financially free, but I’ll make note for us to live as individuals so that we keep things healthy (although I’ll admit he secretly welcomes my opinion of what to do with his money since I was able to pay off so much of my debt last year).

Thank you again for your advice!

**MZKIMJACKSON** · 01-14-2018, 08:58 AM

Originally posted by Gailete View Post

While reading your thread one of the first things that hit me was why YOU were signing for a line of credit for your boyfriend?

Hi Gailete,
Yes, I signed a line of credit for my boyfriend as we both decided this was the best way to establish his credit and relationship with a credit union. This was a one time thing and I do not regret doing this. He hasn't missed a single payment and will have this paid down by March. I understand the risk associated with being a co-signer and appreciate your concern here.

Then when I read that his parents are well off, I really questioned it. Why didn't they sign for him?

His mom and step dad are indeed well off. They did not cosign for him because we did not ask them to. I understand that most young people go to their parents for help financially, but we'd rather handle things on our own all while taking their advice on what option is best.

It dismays me when I see unmarried couples helping out the other one financially. Some of the threads here, young ladies are paying off their boyfriends cc bills to 'help him out' and get things taken care of before they get married. Sorry but that is doing things in reverse. Especially when the young lady is putting her own savings and retirement planning on hold while they help this guy pay off his bills. All I can see into the future for them is that when she has paid off his debt, he is gone leaving her with an empty bank account. These things do happen.

I understand your frustration here, but I am not that girl and we are not that couple. My boyfriend and I have been together for ten years. Both of my parents are deceased (mom passed when I was 11 and father was never present), and my boyfriend has been my rock since I was 15. I will spare you the list of things he has done for me in their absence as we will all be in tears but just know that our relationship is stronger than the typical "unmarried couple". Also, I do NOT pay any of my boyfriend's bills/debt/etc or put any of my own savings and retirement planning on hold to help him. He works two jobs as well and is perfectly capable of paying his own bills. I did sign my name on the dotted line for the line of credit and take responsibility for the risk associated with that.

What you do with your money is you business, not his parents business! Unless they are going to pay for your student loans which I highly doubt. You follow their lead in this, they will expect you to do it always. I can hear it now -- "Nope you shouldn't get pregnant yet" "You need a bigger house since you have a baby on the way" - "forget those student loans except the minimum as you need to buy a car for our son". I had a super interfering MIL (my FIL wasn't quite as bad) who felt that she could make comments about anything going on with our marriage. It was horrible. It wasn't her business what I made for supper, and if they didn't like what I was making, why didn't they encourage son to cook? They were on my back constantly to get a better paying job. When I finally did, the divorce came where the ex tried to grab everything, the house, the kids (he wanted the child support money not so much the kids) and I'm sure they felt that now that I was making more money the ex could be able to dip into that as well. Not saying this would/could/will happen to you, but it is none of their business how you spend your money. If you want to take that extra $1300/month and go for a long vacation in Hawaii without your boyfriend that is you decision, not his or theirs. At this point ALL your finances need to be completely separate from him and vice versa.

Hmm.. I never thought about how following in their lead will lead to things always being this way. I'll admit that I tend to go to them for advice but will make note to keep a handle on how much input I allow them to have. I also understand the possibility of a breakup and am preparing myself for the possibility by contributing more to my savings.

As you can probably guess, if you feel the best use of your money is paying off your student loans, then so be it. So far you have handled your money very well and have put yourself in a good position financially. You do need to save more AND pay off your loans, so I would split the 'spare' money, some into savings and some into the student loans. When my son was paying his off, he paid extra, and tracked them so he could always tell where he was at. When he got to the point that he was just above $1K my parents sent him a check to pay the rest off. He was flabbergasted to say the least, but for him a huge chip off of his shoulders! You will feel great when they are paid off!

It feels good to know that I am headed in the right direction, thank you. I'll move forward with continuing to save while paying off those loans. Congrats to your son as I am literally counting down the months until these are paid off.

Out of curiosity, if his folks are so gung ho about you saving for a house, how much has HE saved for the down payment and the house? What are his folks telling him to do with his money? Just things to think about. And yes, I am old-fashioned but I have been through a lot myself and seen even more.

I welcome your "old-fashioned" thoughts. I could use some guidance. But to answer your question, his folks are on him about saving for a home just as they are me. Similar to me, he is working on aggressively paying off his debt (he works two jobs as well) before saving for a home. His debt is not even a third of mine, and he is in a much better position than I am in as his will be paid off in May of this year while mine won't be paid until 2020. After he builds his savings (aside from his emergency fund) to cover a few months of income (10K by December), I'd like for him to cover most of the bills so that I can put even more on my student loans and possibly pay them off even sooner. Honestly, I don't even want to think the responsibility of a home until I'm debt free.

Thank you so much for the feedback! You're tough, but I welcome it : )

**msomnipotent** · 01-14-2018, 09:02 AM

My best advice is to not ever do something that someone else thinks you should do with your money. If you like your situation now, why change it?

There is a very good chance that you won't even qualify for a mortgage for some time yet. You have $1,300 in savings and almost $40,000 in debt. You can tell them that buying a home is part of your 5 year or 10 year plan and leave it at that, then tell them to stay out of your purse if they persist. Meanwhile, keep track of your credit score and continue to save for what you want. Maybe you would want a new car more than a mortgage a few years from now?

You are doing a great job so far. I would focus paying off the credit cards while adding more to savings, then focus on the 2 loans for 6.8% interest (while still adding to savings). Then I would pay off the smaller one just for a sense of accomplishment. None of your loans have a high interest rate, so I would put more effort into saving. If something happens, you will be paying a lot more for interest on a credit card, so focus on not needing to use a credit card for an emergency.

**MZKIMJACKSON** · 01-14-2018, 09:21 AM

Originally posted by msomnipotent View Post

My best advice is to not ever do something that someone else thinks you should do with your money. If you like your situation now, why change it?

Hi,
Thank you for this information. I tend to go to them for advice. I'm young and don't have it all figured out. Being as though this is a large amount of money over the course of three years, I want to ensure what I'm doing with it is the right move.

There is a very good chance that you won't even qualify for a mortgage for some time yet. You have $1,300 in savings and almost $40,000 in debt. You can tell them that buying a home is part of your 5 year or 10 year plan and leave it at that, then tell them to stay out of your purse if they persist. Meanwhile, keep track of your credit score and continue to save for what you want. Maybe you would want a new car more than a mortgage a few years from now?

I understand that I won't qualify for a mortgage at this moment but if I was to contribute just above the minimum on my student loans and save the rest, I could qualify rather quickly as I would be save approximately $1,300 per month. This is why I wanted started this thread on which route to take.

You are doing a great job so far. I would focus paying off the credit cards while adding more to savings, then focus on the 2 loans for 6.8% interest (while still adding to savings). Then I would pay off the smaller one just for a sense of accomplishment. None of your loans have a high interest rate, so I would put more effort into saving. If something happens, you will be paying a lot more for interest on a credit card, so focus on not needing to use a credit card for an emergency.

Thank you for the compliment. It feels good to know I'm on the right track.
My credit cards are paid off already (apologies if I didn't make that clear in my original post. I paid all debt aside from my student loans last year), but I will indeed focus on paying the 2 loans with the highest interest rate first. Great Lakes actually already does this for me, for any extra payments go directly to the principal with the highest interest rate, but I will keep track of the payments and ensure this gets done. I understand your point of putting more effort into saving. My plan is to keep making the minimum payment until I got my savings to 10K in August then putting everything into the student loans.

Thank you thank you thank you for your advice

**Benderz** · 01-14-2018, 09:27 AM

So if you haven't guessed, i'm not a fan of credit cards. Please beware the credit card / credit score trap. Speaking from experience, You Don't Need Credit Cards or a Credit Score. I have been without for 15 years, lived overseas, travel, and purchased two homes. All with only a debit card and solid financial foundation. Credit cards trick you into spending more than you make and never help you out in the long run. Start now and cut them up. When you are ready, have a good down payment, stable job history, you can get a mortgage. All of the short term benefits are outweighed by risk. Don't worry about the points and keep your money.

**Jluke** · 01-14-2018, 09:50 AM

You listed an overall monthly payment for 11 loans but Can you payoff a specific individual student loans?

I would payoff the 148.40 immediately.

Then the 1434.70 at 6.8% in one or two lump payments.

Then 1075 and 1471 while you start accumulating cash funds.

That will take care of what I consider the easy ones.

**MZKIMJACKSON** · 01-14-2018, 10:04 AM

Originally posted by Benderz View Post

So if you haven't guessed, i'm not a fan of credit cards. Please beware the credit card / credit score trap. Speaking from experience, You Don't Need Credit Cards or a Credit Score. I have been without for 15 years, lived overseas, travel, and purchased two homes. All with only a debit card and solid financial foundation. Credit cards trick you into spending more than you make and never help you out in the long run. Start now and cut them up. When you are ready, have a good down payment, stable job history, you can get a mortgage. All of the short term benefits are outweighed by risk. Don't worry about the points and keep your money.

I understand how credit cards work. Mine are paid off but I do appreciate the comfort of knowing they are there while I'm building my savings. If something was to happen to my car in the next week, and the cost was more than what I have in my emergency savings, my debit card would not be able to help much. I'm working to build my savings so that this will not be an issue; however, it will take me a few months to get to a point that I can truly say I don't "need" them. I'll admit that I thought this was a good contributing factor to my credit score due to the consistent monthly payments and low balance but never considered not having them. That's definitely something to think about as I've even considered using them to pay my monthly bills and pay the balance before the end of each cycle. I've always been under the impression that one needed to establish credit and never thought of things this your way. Thank you for the input. This definitely gives me something else to think about moving forward.

**scfr** · 01-14-2018, 10:24 AM

1. Do YOU have a burning desire to be a home owner? If the answer is no, then stick with your current plan.

2. Let your boyfriend run interference with his parents. When it comes to potentially uncomfortable conversations or situations, I deal with my mom and my husband deals with his. 25 years married.

**LivingAlmostLarge** · 01-14-2018, 10:35 AM

Pay the student loans. It'll impede your ability to qualify for a mortgage anyway.

**Benderz** · 01-14-2018, 10:36 AM

Originally posted by MZKIMJACKSON View Post

I do appreciate the comfort of knowing they are there while I'm building my savings.

I cut my credit cards up back when I had 30K of debt due to fertility and closed them as soon as they were paid off. I never needed them for emergencies or to build up a credit score. I understand all your points. It is harder to deal with things like breaks on your car, insurance, and mortgage. But you will do much better in life without them.

**Gailete** · 01-14-2018, 10:40 AM

Originally posted by Benderz View Post

So if you haven't guessed, i'm not a fan of credit cards. Please beware the credit card / credit score trap. Speaking from experience, You Don't Need Credit Cards or a Credit Score. I have been without for 15 years, lived overseas, travel, and purchased two homes. All with only a debit card and solid financial foundation. Credit cards trick you into spending more than you make and never help you out in the long run. Start now and cut them up. When you are ready, have a good down payment, stable job history, you can get a mortgage. All of the short term benefits are outweighed by risk. Don't worry about the points and keep your money.

While he hasn't bought a house or done all that you have done, my youngest, ONLY has a debit card and he has bought airplane tickets, has rented cars, purchased items on line, etc. Well you know the drill. He pays his own way, which is why when his grandparents paid off his school loan, after telling me what he got in the mail, the first thing out of his mouth was "Can they afford it?" The last thing he wanted to do was take money that they needed. Yes they could afford it otherwise they wouldn't have done it. He is my autistic son and just doesn't like people handing him money unless he feels that he has earned it. Apparently the grandma on his dad's side used to hand out money to my boys, the oldest one would take it, because why not? The younger one wouldn't as it made him feel uncomfortable!

**MZKIMJACKSON** · 01-14-2018, 10:43 AM

Originally posted by Jluke View Post

You listed an overall monthly payment for 11 loans but Can you payoff a specific individual student loans?

I would payoff the 148.40 immediately.

Then the 1434.70 at 6.8% in one or two lump payments.

Then 1075 and 1471 while you start accumulating cash funds.

That will take care of what I consider the easy ones.

Heey,

It's funny you asked this question because I actually considered waiting to make my post after speaking with the student loan company about how payments are applied. I know for a fact that any additional payments I make outside of the monthly are automatically applied to the loan with the highest interest rate. I am unsure of how the monthly payment itself is distributed but i believe this is allocated proportionally to all of the loans. Let me get back to you on that one tomorrow. My original plan was to make the minimum payment on these until August as I need to build my savings (goal is 10K), but I could instead make the extra payments to payoff the loans with the 6.8% interest rate first. I really wanted to see that 10K in my savings first (just to get one goal out of the way).

Just to confirm, are you advising for me to hang tight with the emergency savings, contribute all of my efforts to paying off the two loans with the highest interest rate of 6.8% (could have these done by March if I take this route) then afterwards, simultaneously build my savings while paying off the loans (as opposed to strictly putting my efforts into saving first)?

Thank you for your input!

Pay Student Loans or Save for home