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Originally Posted by Denvergirlie  The danger of doing this will be your "free" from those monthy bills and you might be tempted to use the credit cards again or buy another car on a loan.
If you are committed to not use credit again, then yes, it could be a savings for you, but often the biggest lesson learned in getting free from debt is the pain involved in getting free from that debt.
As Dave Ramsey points out, it's often behavior change that is the biggest life lesson one learns from getting debt free.
Yes, you will still have the student loan, but will you be as committed as getting rid of the student loand debt as well? You already mentioned that you could put those payments on forbearance, and can be dangerous as well.
I would think long and hard before doing this, has your behavior changed that led you into this debt in the first place? Do you have a fund going for a new car purchase and repair? Do you have a plan in place to not get into this same credit trap again in the future?
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We THINK we have safe and responsible financial behaviors in place. We haven't used credit irresponsibly in a few years (I don't count DH putting my b-day present on the card - I'm still impressed he went out of his way to make it a surprise!). We've used the cc one or two other times in the past 24 months, but we paid it off immediately (within 30 days).
I KNOW I will be tempted to buy another car on a loan or do something dumb like that, but I know DH and I wont go for it. Well, unless we wind up with an extra pair of kiddos and run out of seatbelts. We have a small EF and a relatively new car, at least by DR standards. We live in Alaska and I drive as a part of my job (often transporting kids) so I really wanted to have something reliable and safe, so we didn't downgrade.
I honestly don't know if we'd be as committed to paying off the student loans. Part of me is resigned to the idea of dying without having them paid off. They aren't really that bad, we just have a lot of schooling we each want to do, we're dying to try the Peace Corps, etc. These things are not conducive to paying DOWN debt.
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Originally Posted by velochic No way.
Student loans cannot be dismissed in court. If you are ever in a situation where you need to file bankruptcy, school loans will not be forgiven. If you get behind on your payments for gov't loans, not paying back student loans can cause all SORTS of problems... including things like getting/renewing a passport and income tax garnishment, etc.
You are not comparing apples to oranges with the loans you have and the conditions surrounding them are completely different.
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This is exactly why I'm hesitating. If it was simply transferring one loan to a similar one with a lower interest rate it would be a no-brainer. It's the tricky extras that make financial situations so much "fun" to work out.
And I'm also nervous about payments. We might not be paying one simple payment on student loans, or even one payment per person. And without knowing what the amount might be, I feel like we're really gambling by trying it.
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Originally Posted by phathui5 If you're having to shift debt around, it sounds like you aren't making enough money to support the things that you're paying for.
Do you guys work out a budget every month? Are you living within your means?
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We're working on a budget. Since we got married we've basically bought nothing, so we didn't see the point in a budget. No coffee, rare alcohol, we biked to work, 2 movies per year, etc. Over the last year that's changed and while I think we're still making very reasonable and responsible choices, I want to be sure we're living as frugally as I think.
If we make all of our payments as scheduled and budget for food, day care, etc. then we still have a good chunk of income left over per month. Realistically, even without the loan we would still pay down our debt fairly quickly. But we're down to just two more (outside of long term debt) and I want to see them GONE. Plus, the new baby is coming and I am really unsure about how maternity leave is going to play out. I'm just nervous that I'm going to lose my job either before the baby comes or I won't want to go back to work after he/she comes. So if I CAN pay off the debt, I want to.
You guys make some good points. DH and I will continue to discuss this for a long time I'm sure. Maybe I'll hold off on using the loans until I actually lose my job or can't face going back. We'll still be able to access some if we NEED them but we don't need to take them out just to switch debt around. Ah well, I suppose I must someday learn to be patient, might as well be today.
