Who has married into debt

When a person invests money he or she has to pay taxes on their investment yields. On top of it you are also being placed into higher tax bracket but this is a completely different topic.

I will give you my example. I went to Rutgers. No scholarships and parents did not pay/save for college. Due to parent's relatively high combined income I was only eligible for a miserable $4,000 from government pell grant. I had a total of 4 loans to start. I also worked full time while in college saving myself from 5th and 6th loan.

When I graduated in 2006 my average APR between all of my loans was about 6%. When lenders started selling my loans between each other my APR was all over the place eventually reaching 7%. It was not until Obama passed his laws that all of my college loan rates got down to 2.76% which is great news to me because it will let me pay off my college debt faster by 2 years.

Now let me explain something. If you have college debt and have a great job then all you keep doing is making those college payments. In 5 years time you will pay off the interest. In next 10 to follow you will be paying off loan itself. But here is the kicker.
Car loan-you do not pay-they take your car
House loan-you do not pay-they take your house
College loan-you do not pay-they turn into blood sucking leeches and will garnish your wages, set liens against your property, contact all your financial institutions and make sure to extract money of you somehow. Meanwhile your credit rating falls and life crumbles under your feet.

I keep saying that no debt is good and that is true. Most investors borrow money and get returns on their money. They then pay off most loan using investment yields except for a portion and keep paying monthly payments on that to sustain their credit ratings.

My advise to anyone who is marrying another person with debt:
EVALUATE their finances BEFORE MARRIAGE. You need to look for a history of making payments on time, not getting behind on loan payments, career job that is capable of sustaining payments. You also need to see what is the total debt vs earning ratio. To make long story short you are looking for someone who is perfectly capable of providing for themselves.

Lastly... if either of you get's sick and can't work... your combined income would have to be sufficient of paying off ALL of your combined debts.

Today I am noticing a certain trend of failed college careers seeking salvation in marriage. I know A LOT of people who's significant other has done exactly that. They went to college and got a degree in a poor career choice and can't find a job and are behind payments so they used credit cards to pay off some of the owed debt and now owe both on credit cards and college loans. And then they meet significant other who has to pull them out of debt straining combined family income to limits. Vacations-can't afford. Buying stuff-can't afford either... but love birds are happy as they can be... both college educated and poor.

P.S. Average semester at Rutgers =$7,000 not including books, parking, food, rent etc.
I attended full time 2003-2006 3 semesters per year. You do the math.

 

^^^this is the best post i have ever seen.

 

When my wife and I got married, I had a condo that I was selling for more than I owed and she had about $8k left on a car loan. We used the money from wedding gifts to pay off the car loan. Now, the only debt we have is our mortgage. It's a great feeling. Personally, I think you know what type of person you are marrying and if you know that she's definitely the one and that she manages money well, I would pay it off now. You can't start off being in debt. You'll end up in debt.

 

no way in hell bro

 

some good advice here. I know what I would like to do. Split the car payment, put half down and the refiance. It will lower how much I pay in interest then I can throw more in savings. Student loans make 1.5 payments. Thats what I want. Lets see if she is on board.

 

X2 I am, have been raise to believe that debt is evil. I own everything and have only my belongings to build credit and never exceed 6 months before paying it off

 

What college did you attend? UOP? I dated a few pharmacists myself.

Good thing is you make good enough salary to pay it off. Some of other majors, finding job will be much harder with less $$.

 

Of course these articles will list student loan as "good debt" because they want you to borrow the money because they know you will borrow too much and get in over your head but what most people fail to realize is that these debt are government backed and you cannot wipe this kinda debt. These website will list this because they themselves are government funded.

In regard to not paying your bills - No im not that type of person. But in the business im in I see this stuff everyday. You can wipe away any other debt out there except student loans.

No im not some stuck up type government type. I know finances and i know finances well. Listen to people that know what there talking about not people that act like they know what there talking about. I could care less what everyone else does with there money Im just laying someof my knowledge out there for others.

And by the way i do not have any student loan debt

 

I think the best thing I can do is give you a "typical" scenario.

Male majors in architecture from (random college costing $60,000)
Female majors in urban geography (random college costing $60,000)

We all know that starting salary is never high for people entering job market. Anyone telling you otherwise is liar liar pants on fire. No self respecting company will pay person fresh out of college competitive wage until they put time in with the company.

For sake of argument let's say that Man landed a job for $38,000 fresh out of college; his girlfriend landed a job for $35,000 fresh out of college. Each person's college loan payment is $500/mo.

Factor in 401K deductions, health insurance deductions, tax deductions and of course the college loan. After taxes male earns $19,000 and female earns $17,000.

Their combined income is $36,000.
Average person's food allowance is $200/mo so let's subtract that.
$31,200
Let's say they live together and average rent nowadays is $1,000/mo
$19,200 left
Utilities bills, phone bills etc $100/person
$16,800
Both have car loans so average car loan is what... $400/mo
$7,200
They need furniture and living doo dads so lets say they stock up on towels, bed sheets, plastic crates, spoons etc... spending $400/mo living fairly within their means.
Between the 2 of them they have $2,400 left.

Now it costs about $10,000/yr to raise a baby so let's see how loss of one's income affects this family. All of the bills have to rely on 1 income. All of the food and living expenses have to rely on 1 income. All of the loans have to rely on 1 income and somehow you also need almost $1,000 extra per month for a baby. Ahh... and insurance goes up too.

If mom takes 2 years off (as many moms do) it means family is in deficit of her after tax income and additional expenses because of the baby.

I think only exception to the rule is if male is earning like $73,000/yr.

Those of you who never went to college have practical understanding of how your expenses work. You work and you earn and the more you work the more you earn generally speaking. With college education you earn generally a salary so you work but out of this salary you are also paying 2nd mortgage on your college tuition and it is a 15-20 year mortgage... not like you buy a tacoma and pay it off in 5 years. This is permanent. In 15-20 year time you can raise kids and have them almost graduate high school upon which you will be kind of pressured into paying their tuition.

I personally would not advise parents to pay for their kid's tuition... it teaches kids economics a lot faster how to be responsible and understanding of how debt works.

 

Both my fiancé and myself are at $300k+ in student loan debt. So totaling $600k+. But due to earning potential and what we make currently I'm not sweating. Student loans usually have
very low rates(usually). We are looking to buy a house now which will put us in more debt but we make enought to be ok (even though housing in hawaii is high). I'd not look at the amount of debt without looking at earning potential. But seriously if you love the girl don't be too concerned about that issue cause your marriage will be doomed with financial strife.
Oh and on a side. Student loans are gonna be the next bubble that's going to burst. Heheh

 

I paid my wife's credit cards off to bring her out of debt.

 

I would like to know how this student bubble will affect people like myself. After watching news for past 6 years they always talk about how "Average student debt is $28,000". I would like to know where they take those numbers because average self respecting college nowadays takes $258/credit hour and you need 136 credits to graduate which is already $35K. Factor in cost of books and we are about $40K and that is just tuition and books alone.

By my estimate my last college payment will be 10 years from now and I have never once missed a payment and I do not have huge government loans. My fafsa loan still has 3.7K balance (just started to go down after I paid off interest) and people like myself have private loans... I wonder how student loan bubble will impact anything.

Not trying to get a free ride out of it or anything but considering that my interest rates were modified by this administration... there is nothing to really burst that I can think of. I have always paid and will always pay.

Not like they will completely forgive my loans or anything...

 

I had my school paid off by the time I was done. I payed as I went.

Edit: I had A few payments after but for the most part I ha it paid off.

 

I worked full time through college paying for living expenses, food, college. My college cost a lot more that I could repay every semester. A lot more.

 

Not to go off topic,

I am learning alot about basic finances through these last couple pages.

 

you young guys need to raise the bar...

and marry a good looking rich broad.

 

I like this. Make a plan to do it together but yeah, don't just pay it off for her.

 

Woops... I meant FAFSA loan not pell grant.

 

no such thing