SavingsTalk.com

MrsSunset

I have been with my fiance for about 5 years. We have put off marriage until we are financially secure.

When we met, I had about 10k in cc debt and he had about the same plus about 100k in student loans.

Over the years, he's paid off all but 45k of his student loans and I've been debt free for about 3 years.

I have about 28k in savings earning about 5% interest. He has student loans- federal are 3% interest, private are 17% and 22%.

Should I help him pay his debt or continue saving?

Logically, we've been together 5 years and our finances will combine soon enough, but emotionally, I have a hard time thinking about draining what I've worked over 2 years to amass. On the other hand, paying 22% interest means it takes a long time to pay the principle of the loan off.

Any help is appreciated.

briansol

Welcome to the site

In my opinion, Fiance' or not, I wouldn't do it.... yet.

I would, however, get married.

Getting married gives you tax breaks on a lot of things, especially if you own a home (don't rent) and file jointly.

I would move a good chunk of your savings into something less liquid and more profitable. A nice mutual fund or money market could earn you more.

Once you have the house you own, and have some equity, take a HELOC and pay off the private student loans with it. You can probably get 6-7% on a HELOC now.

any way you slice it... 45,000 at 22% is going to take a LONG time to pay off.


If it were me... I'd probably offer up 8k towards either closing costs on a home, or if you already own, throw it all on the 22% loan.
take 12k and put it into a mutual fund or money market.
keep 18k liquid for random expenses, your wedding, etc.

MrsSunset

Thank you for the advice. I never considered getting married sooner for a tax break. We just said let's get secure first. You brought up a lot of interesting points. I will definitely look into those suggestions. A LOT to think about, but you're right that my money should be doing more than sitting there, too.

Thanks, again.

titan22

That is a tough situation to be in. I have more debt than my girlfriend, and when we get married, i want to take responsibility to pay it off.

With commingled assets and income, you will be able to pay your debt off faster.

What did he do in college to acquire 100k in debt?

Here is an easy way to decide what you should do.

Figure if you are going to commingle all of your assets or keep them separate.

Plan A)
If you are going to both put all of your money into one account, I would suggest you just pay it off now. If you pay it off now, that is less of YOUR personal money going to pay off interest and more towards principal.

Plan B)
Some couples will often add all of the combined expenses and make 1 account used to pay for all the household stuff (i.e. rent, utilities, bills). They will split the costs in half and both contribute every month. If you do that, the both of you would keep your separate bank accounts for personal use.

This is a good choice for many because you could have your money and he could pay his own personal debt. It also will save you from the arguments about how much he spends on golf and you spend on shoes. Separate assets and pockets of money will prevent discussions on discretionary money.