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High income/high debt thread

post #1 of 118
Thread Starter 

I feel weird about posting in the getting out of debt/low income threads because my financial concerns seem so different than theirs, so I made this thread. 


We are fortunate. We have good jobs, a nice house, and can pay our bills & put some away each month. We don't have to stress about $20 here or $10 there. I do keep an eye on such things but they aren't the difference between paying and not paying bills for us.

 

But we also have over $400k of debt between the mortgage and all our student loans. That's the only debt we have--we pay our credit card off each month and own our cars free and clear. We can't get that quick satisfaction of paying off small debts because the smallest debt is $16k, and the one after that $80-some-k. (I paid off the $2k one six months after I graduated. That felt good.) Half our income goes to the mortgage and SLs. 

 

Can anybody relate?

 

I'm trying to keep at least $9k in our EF because I figure that's 3 months' worth of one person's paycheck and what are the odds we'd both lose our jobs at once? But maybe I should cut that amount on the supposition that if one of us lost our job I'd put all our SLs in forbearance and that's $1700-$2000 a month we won't be paying (I pay extra nearly every month). It's taking me a lot longer than I wish it would to save up that $9k, and I also have to save up for our next car (I don't want to have a car loan if I can help it, and my 96 Accord won't hold on forever) and for my next mat leave (I work part-time so it'll be unpaid... but I'm not even pregnant right now so maybe I shouldn't worry yet.) 

 

I'm not trying to have a pity party here or anything. I certainly don't think I deserve anybody's pity. I'd just like to chat with any like-minded folks who are interested. 

 

edit: I was hoping to start a support thread, where those of us in this situation can chat with each other, rather than a thread that's all about me. :)


Edited by erigeron - 2/26/13 at 7:57pm
post #2 of 118

I'm not in your position but I wanted to chime in and tell you to never feel weird about posting about finances in a finance forum! Sure, many people are in different circumstances but the weight of debt is very real and can be pretty stressful -- even if you're doing well financially.

 

One of my bff's is in your position (yes, it is a friend and not really me LOL). We make so much less money than she/dh but because of all their debt (student loans and etc...while we have very little debt) we come out pretty even at the end of the day. I think I even have a lot less stress  because I don't have the debt hanging over my head. We talk about it a lot and it's interesting. In fact, I may tell her about this thread!

 

Anyways, it doesn't at all appear like a pity party to me and I don't think you should apologize/qualify for wanting to discuss financial concerns that pertain to where you're at in your life!

post #3 of 118
Try living like one of you is not working. Put that salary into paying off the debts, retirement, emergency fund, or car fund. Worry about the $10 & $20 spent here and there. They add up.
post #4 of 118
Thread Starter 

^^^^Well, that's basically what we end up doing... one entire income goes to debt and savings. We do keep a pretty close eye on our spending, but we start to get miserable if we are too tight. I start to feel like I'm driving myself crazy over every $1.50 one way or the other, and my husband starts to feel like I'm hassling him. We put both of us on a pretty loose allowance system, which has been helping.

 

Are you in this situation too? I was really going for more of a group thread where anybody can discuss their concerns than a thread specifically about my situation. 

post #5 of 118
Thread Starter 
Quote:
Originally Posted by Tumble Bumbles View Post

One of my bff's is in your position (yes, it is a friend and not really me LOL). We make so much less money than she/dh but because of all their debt (student loans and etc...while we have very little debt) we come out pretty even at the end of the day. I think I even have a lot less stress  because I don't have the debt hanging over my head. We talk about it a lot and it's interesting. In fact, I may tell her about this thread!

 

My best friend and her husband live very frugally and have no debt aside from her student debt, which I think she has paid off a lot of already, and maybe a few k of student debt of his. There are definitely aspects in which I am jealous of this. 

 

My husband is a "Well, I just figure everybody has a ton of debt so it's not a big deal" type, and while he understands that the debt bothers me, he doesn't really "get it". 

post #6 of 118
Quote:
Originally Posted by erigeron View Post

^^^^Well, that's basically what we end up doing... one entire income goes to debt and savings. We do keep a pretty close eye on our spending, but we start to get miserable if we are too tight. I start to feel like I'm driving myself crazy over every $1.50 one way or the other, and my husband starts to feel like I'm hassling him. We put both of us on a pretty loose allowance system, which has been helping.

 

Are you in this situation too? I was really going for more of a group thread where anybody can discuss their concerns than a thread specifically about my situation. 


That's our situation almost exactly -- I can especially relate on the part about driving yourself crazy over a few dollars and hubbie feeling hassled -- I do this, and I eventually realized that he and I just approach things differently, and we try to make room for each other's perspectives while (trying) not to drive each other crazy!  We have high-ish salaried (relative to the American middle), but we live in an expensive city, both have a chunk of school loan debt plus two kids in day care, which is like a mortgage (in fact, we rent because there's no way we could buy with our monthly daycare expenses).  One thing we do agree on is that exasperated feeling of "we make all this money, why can't we go out to eat, ever?!"  Because our funds are tied up / obligated to other things.  I'm very grateful for what we have, and don't lose perspective on that, but in many ways it is disappointing -- as in, 10 years ago, if I knew I would have an above-average salary, and a partner who has the same, that we wouldn't have to "worry" about money.  Sigh.

post #7 of 118
We were in your position. What happened to us is we got out of all debt except for the house. It was great! Then my husband lost his job. We are now struggling with debt and a reduced income. We would allow for fewer restrictions at certain times, for up to a certain amount, so it wasn't so stressful.
post #8 of 118

I'm more in your situation....I make good money now and after my divorce (cost me about 30K when I was still only making about 40/yr) and the debts I racked up I finally started putting money away. I have no CC debt, I didn't goto college so I don't have any student loans.

Right now I owe on a car - but I'm actually doing that on purpose because I'm trying to rebuild my jacked up credit from said divorce (was like 90 days late on mortgage 2x I believe?....either that or not eat or lose my kids. so....priorities)

I've got pretty close to 50K in savings right now, and i'm putting about 1/3rd of my income into savings each month. the 50K is all in the last ehh...2.5yrs?

I also bought some $$ items for the house in the last 2-3yrs like a new tv, freezer, new fridge and dishwasher, dyson...etc

 

Unfortunately the house I got stuck with isn't one I even wanted, but after looking at (I kid you not) over 150 houses this was the ONLY one my ex was "ehh...not too bad" about so I said we'd take it. it's the polar opposite of my style. 80s ranch vs what i'd like which is 40/50s bungalow. My ex still owns half because we were ordered to put it up for sale and after a year with one offer for almost half of what we OWED.....he refused to resign the realtor docs and I was tired of people in and out of my home. So 4yrs later i'm still paying on the house I never even liked and he owns half. Urk.

Going to court again (-3K for lawyer retainer. ugh) and hopefully something will happen with house sitch...However...

 

with all i've read/heard what my plan would be in your situation is to try and live off half your income if possible (i'll link a good blog which discusses a great reduction strat) and work towards a 6-9m EF. some people say 6m of salary but for someone in my position my cost of living is pretty low...and if I were to become unemployed I wouldn't have my #1 expense of daycare so that lowers it more. I aimed for 1yr of ACTUAL expense, and right now I probably have enough saved that with unemployment + childsupport+savings I could probably be jobless for 3yrs.

Thats a great feeling!

 

The other thing i'd do is start paying off mortgage early (and in your case studen loans) if the house was 100% mine. my mortgage company has options to autobill once every 2 weeks so you make a couple extra payments a year even. If the house I lived in was 100% mine (and no student loans) i'd probably put between 1/2 and 1/3rd of my savings contribution now that I have a big buffer towards mortgage monthly so I could pay off early. at half my savings contribution currently that would be 2x mortgage payments a month. Meaning i'd pay it off in about 10 years vs the 22yrs remaining.

 

Odds are the SL are a higher interest rate than the house, and you should always "snowball" debt, so I'd build up 6+ months of actual expenses savings (what you'd need to survive if you both were not working) and then put a big chunk towards the SL. once you pay those down, put that amt towards the house.

 

The blog I came across talks about creating a budget using your real numbers (a site like mint can help. Also DO NOT USE CASH for atleast 3m so you can look through statements and figure out where your money is actually going) figure out what you spent in each catagory each month for a few months. You can use a cash envelope system at this point if you want, or just create budget and keep an eye on things. Anything you can't control like utils and mortgage stay the same, any variable spending like clothing/entertainment/food/etc you reduce by 2% each month until you cannot reduce further.

Doing it this way you shouldn't feel a pinch where you are counting every penny, but you will start seeing extra.

 

http://thethriftycouple.com/deep-in-debt-to-debt-free-series/

 

What I do now (and I no longer have to worry about 10 bucks here or there like I have my entire life) is auto withdraw X ammt every time I get paid from my check to my savings. It's setup automagically so I don't even notice. I kept increasing this until I felt the pinch and occasionally had to dip into savings to pay for something. I don't like doing this.

When I get 3 paychecks a month instead of two, I put about 80% of that check into savings (daycare...you know...lol) right away.

When I get paid I login and move whatever excess cash is in my acct above and beyond said paycheck.

Ie - if I had 400 bucks in checking when I get paid, I login and move the extra 400 over to my savings.

 

I setup an investment acct about a year ago, and right now my savings "buffer" is 10K and whenever I go a few thou over the 10K limit I call my broker and move money into the Inv acct. I'm thinking about lowering it now that i've paid my property taxes for the year down to 5K however.

 

The big things I had to cut out when broke (and i've been dirt poor as a kid, dirt poor as an adult, and when still married our JOINT income was about half of what i'm making now with 1300/mth in daycare expenses and ex who spent money willy-nilly and didn't tell me) were eating out and groceries. I'm not big on entertainment anyway, and I don't spend a lot on beauty and clothing and the like.

 

Now that we are solvent, we eat out occasionally and I don't stress about clothing replacements. I goto chicago 1x every 2yrs for xmas (when I have the kids) which ends up costing about 1-1.5K between gas and food and gifts and the like, I go through the kids clothing about 2x a year and buy new pants/shorts/pjs/shoes on a set deadline. I also don't have te kids for a large stretch in summer so I don't pay daycare (ie, more for savings) and I hardly eat anything so I can usually put extra away then.

 

I schedule my bigger expenses according to that schedule so I don't spend too much in one month and have to borrow from savings to cover it.

post #9 of 118
Thread Starter 

Basylica, what kind of investment account did you get? All our bank seems to have is a money market that requires something like $25k to open. Right now we're just accumulating savings in piddly little accounts that make practically zero in interest.... which I think is part of why I am resistant to saving more (though I probably should; I'm paranoid about my job and it would be hard to find another in this area without having to go full-time and pay out the nose for daycare). Plus, I want to put the money into the debt snowball! I pay $300 extra a month on the biggest student loan. It should be paid off within 6 years and then I'll roll that money into the mortgage. Right now I feel like I'm waiting impatiently for the 6 years to go by. 

 

I'm still not honestly sure what to do with the "live on one income" recommendation. One income would literally cover the mortgage and student loan payments and that's it. Maybe $50 left over. This time of year we both take home about the same amount (in summer he's teaching less and I'm working more, so it tips more towards me, but overall we make about the same). 

 

sweetmamaleh, I can identify. "I'm very grateful for what we have, and don't lose perspective on that, but in many ways it is disappointing -- as in, 10 years ago, if I knew I would have an above-average salary, and a partner who has the same, that we wouldn't have to "worry" about money. " Sometimes I think about, would I still have taken on all this student debt if I'd known how I'd feel about it? But I don't think too hard about it, because honestly, even if I decide in hindsight I would NOT, what am I going to do about it now? And then I had to go and marry this guy who's expensive to take care of. ;) (kidding... sort of... he's not so bad... and he's definitely gotten better... and I wouldn't trade him in... but if I'd found someone as frugal as, say, my best friend's husband, then we would definitely be spending less and saving more. But what can you do?)

post #10 of 118

I bank with chase and I don't *think* there was a limit, but might have been. I intially invested 20K last summer in may, and added another 10 around oct/nov. I've got 1500 in interest right now already and it's been under a year. my broker put me into a "low risk/low reward" senario, but I think 1500 is awfully good. Surely better than the 16 dollars I made ALL year on my savings!

I just walked into Chase and asked to speak to their investment guy and he was great. My mom was in town visiting so I drug her along, but she's never had so much as 50c to rub together so she wasn't there for advice persay. It was nice to look over at mom and see her busting with pride that I'd done so well for myself after having to struggle for so long...esp after the divorce drama.

He basically wanted to know my income/debts and ability to save (ie, income - cost of living) to get an idea of where I was financially. Then asked me what I was trying to do with my $$. I said I didn't have any big plans other than maybe someday buying a new house (one I actually liked!) but that wasn't an immediate goal. I basically wanted easy to access money that was out of my direct acct and earning a little more than 16/yr. LOL. It would only take about 24hrs to cash out my investment if something tragic happened....so I have ability to get the money fairly quick incase I needed it or someone I loved did. Meanwhile it's happily earning for me with little chance of loss.

I guess he has a program he plugs all these values into and runs senarios (job loss, fire, etc) against to see how well you are doing financially. He said ideally it should be a 70% (I guess you'd be ok 70% of the time? lol...not sure) and he prefers to see his clients in the high 80s +

He ran my numbers and it kept coming back as 99%+. He kept laughing and saying "I don't think you realize...how secure you really are"

But thats my goal. I've had years of not being able to find/keep jobs due to econ...luckily before kids. I was very poor growing up, and I still don't know how I managed to feed kids during divorce drama. I was coughing up 3K every 2/3 months!

My savings tells me that I don't need to work 20hr days anymore to "prove" to my job i'm worth paying like i've always felt, and I don't have to take crap from really bad jobs anymore....because I had a lot of those too. And that if my kids need *anything* or something happens to me where I'm disabled for awhile....I've got the bills covered for quite some time. It's a really good feeling :)

 

Don't count debt repayment when we are talking about "living on one income" - do housing/utils/food/clothing and gifts.

Consider the other salary as debt repayment. make sure you have a couple thou in a emergency fund (so that you don't have to use credit for unexpected expenses) and focus on paying down your school loans.

I don't know age of house and interest rate, but they are still REALLY low so you might look into if you can lower your mortgage payments by refi right now.

 

Put say 2/3 or 3/4ths of your second income (if you can manage to get your living expenses down to one income) towards the loans and the remainder into savings while building up a 6ish mth savings buffer. It's more important to pay off debt than invest or put into savings right now, because interest on debt is always going to be more than interest on savings.

 

Once you pay off the majority of school loans (all the while slowly building savings) you can shift the balance of the payments towards either building up more savings for a bit...or start making extra payments on mortgage.

 

What i'd do personally is say you had 2K to work with -

put 1500 towards school loans

500 towards savings

Look into a way to add an extra mortgage payment like my company does where they will withdraw weekly or bi-weekly so you are getting a few extra payments in, but you shouldn't notice a huge chunk disappearing. Otherwise you can do the math yourself and setup autopay if you want (I hate autopay...I don't want money mysteriously disappearing on me. I only do my car payment and car ins payments this way)

 

When school loans are down to say 15% of current balance

1K towards loans

1K towards savings

Be dividing your mortgage payments by 4, and pay that every week. this way you'll be paying 1 extra month every year.

 

when school loans are paid off -

1K + towards mortage

1K + towards savings

 

anything over and beyond say 6m living expenses in savings look into investment acct like I have. Since I can get my money in 24hrs I don't NEED that much in savings, but you don't want to have to take money from your investment acct. Once you've had an acct for awhile like I have, you can slowly lower the 6m of living expenses as you feel comfortable.

 

 

my biggest lesson is that you need to get rid of the money before you realize you can spend it :)

its like gaining weight....easy to gain (Spend) hard to lose (save)

I started my savings about umm....3 years ago?

at first it was 50 bucks a paycheck (I have never in my life been able to save more than 100 bucks or so, and inevitably something would blow up and i'd dip right back in!) and I got paid 2x a month. Then I noticed I had extra, and upped it to 100....but found myself having to borrow occasionally. I put tax returns and my yearly bonus I was getting into savings.

Then my kids both started school and daycare dropped from 1300 to 1K to 700. I upped my savings to match the "extra" money. Then I got a raise, and after my first paycheck I upped savings to compensate.

And then like I said before, if there is *any* money in my checking when I get paid, I move that amt over to savings too.

and my ex pays a whopping 500/mth in child support, and I generally take the cash out (texas has a eppicard system so I have to use atm card to withdraw it) and deposit it into my savings. Sometimes I use it to pay daycare since I don't deal in cash and they only take cash. hehehe.

But I generally move money to savings to compensate.

 

But I'll look at my bank acct like today and see I have probably 600 bucks right now because I just payed mortgage and daycare, and I don't get paid til friday next week. and I am fully expecting I should have atleast 100+ in my acct at that point in time. I only keep what I need in there, and everything else I move and I try REALLY hard not to move it over. Unbeknownst to me (I don't read fine print. lol) I get charged like 5 bucks or something if I make more than umm...4 transfers from savings to checking a month. So thats further motivation not to touch my savings.

post #11 of 118

I just wanted to chime in and say we're in a similar boat.  We live comfortably, we're not rich, but we're certainly firmly in the middle class.  We both work full-time, only have the house debt and day care as our major expenses, but it still seems like we should have more in savings than we do.  My husband has always been hesitant to stick to an actual budget or even keep track of our spending, but I really wish I knew where our money was going for a month or two.  I think the majority of our splurges are on food, honestly.  Otherwise, we're pretty frugal by nature.  DH spends his fun money on microbrews/homebrewing and used paperbacks, I spend it on the occasional dinner or coffee with my girlfriends and craft supplies.  I have generous friends who like to give me clothes for my son, so that's been huge.  We're very, very lucky in many ways.

 

We have one on the way now, but DS will be starting all-day school two weeks after the baby is born, so that will work out well.  We'll still have to pay for after-school care for him, but that will be negligable compared to infant day care prices.  ;)  It kind of stinks that we're starting over again, but at least we didn't have two in full-time day care at once I guess.

 

The thing that made me chime in is someone else's frustration with the low interest rates for savings.  We do have 401Ks, a Roth, and our son's education IRA making sort of OK money, but it would be nice for our regular savings to get more than 40 bucks of interest a year.  Thank you for sharing your story at Chase, we should look into whether or not our credit union has a similar service.

 

We've also been putting off a re-fi, we've done it several times and need to look into it once again, especially since our house is presumably worth a little more since we finished the basement.  Last time we re-fi'ed we had to bring money to closing to get the mortgage we wanted because the market was so bad and our house was worth way less than we paid for it.  But as it stands now, we'll have the house paid off before DS is in college, which I think will be very helpful, and if we can get it paid off before then with a re-fi, how great would that be!

 

That was long and rambly and had zero advice in it, but thanks for starting this thread.  :)

post #12 of 118
You can get a better interest rate with a six month or one year CD than a savings account. The money is tied up for that duration, but the return is better. You can use a ROTH IRA as a savings place, too. The money is already taxed, so there are no tax penalties if you need to use it. It's a great way to save for college, too. Since it's in your name, the child is usually eligible for student loans more than if the money is in a college account.

For the car and student loans, I'd pay off the highest interest loan, first, then put that amount toward the next highest.
post #13 of 118
Thread Starter 

I'm really torn on using the Roth as a saving vehicle. I really want to have some money in the Roth that we aren't going to touch, and we are going to (potentially, ideally, hopefully) save more than the 11k limit per year. Also, if we use a Roth we can't file our taxes separately, which our tax preparer thinks would be a good move for us (if, that is, we hadn't used the Roth in 2012). He says he has clients who convert a traditional 401k to a Roth once a year so they can still do married-filing-separately. We lose the student loan interest credit if we do that, but we're on the verge of losing it anyway. 

 

The other thing too is I have several savings accounts earmarked for different things--one to get transferred into the Roth, one for the car, one for the emergency fund, one currently not in use that is for a hedge against planned low-income periods (maternity leave/less money coming in over the summer), and I hate to stick all that in one pot, which is my problem with using either a Roth or an investment account. 

 

I read mixed reviews of online banks.

 

I probably should just switch to a credit union and have done... ugh. I'm lazy. 

 

How have others done this? 

 

GISDiva, I think having some allowance for each partner to spend as they want is important... we do this. The key is not to let it take over. 

post #14 of 118

I post in the other thread but am at the stage of no debt and padding savings account for retirement and known expenses . I make a good salary, no debt (student loans paid of 10 yrs ago). Just a mortgage under 100K. I have a budget but usually move $$ around to cover other things (last minute vacations). I have one cash account that I refuse to touch. I still add to it as well. IRA that I started two years ago. But Im using 2013 $ to max out year 2012.  And Im now trying to pad a travel account (my weakness), car replacement account etc.  I have thought of refinancing but the cost is 3600 dollars. It may be better for me to just put that cash on the principle, OR refinance so long as the mortgage rate is then transferable if I sale. OR I may just sell and buy a different house @ the lower mortgage rate. ... so I want to have a down payment set aside if I go that way. My goal is to have a bit of money in these different savings account over the next 6 mths so when I do travel, I already have the money for it rather then using cash that was slotted for something else.  I try not to fuss over the low savings interest rates right now. There just doesnt seem anything worth while and it may be like that for another year. BUT once the savings interest rates go up, so will things like mortgage rates, car rates etc and other things that are really alluring right now.  (my cash savings isnt making interest $$ and I have accepted that for now; and the IRA is in stocks which have done well (10%). My plan is to move 25% of cash savings into stock every time it reaches a certain amount.

 

 I would focus on your 16K student loan. A a bit more to your EF (50.00/mth?), just to keep it growing and car replacement. Paying off the loan will take time, and personally I think some fun money  is needed for quality of life.

 

I remember when my son, (first born) was in montessori and that expense was high and it made for a very tight budget. There was very little left over for a home repairs. I felt burdened with this expense (and paying off cc debt at the time), but once he entered first grade @ public school the expense was gone and disposable money increased (which was put towards cc and paid off). And I remembering thinking that these things pass, they are not in daycare forever, (or sl eventually get paid off) so not to financially stress over it; try to enjoy your time while you have a stable income and a solid budget.


Edited by SunRise - 3/3/13 at 11:04am
post #15 of 118
If each of you have individual Roth accounts, can't you still file separately?

What is the savings of filing separately?
post #16 of 118
Thread Starter 

We each have individual Roths. I don't think there is a such thing as a shared Roth. I have to talk to my tax preparer again to find out the savings of filing separately and what I should do for 2013. 

 

I ran the numbers again and basically, whichever debt I tackle first, despite their different interest rates, if I continue to pay $300 extra and snowball everything will be paid off at the same exact time--it's always September 2027 when the last one is done, no matter what order I go in. So it really doesn't matter which debt I go after first. I'm therefore toying with the idea of going after the smallest one. I can get it paid off within a few years. I have to decide how I feel about that. 

 

Basically, being in the early parts of the snowball, it's hard to feel that sense of gratification. I have a spreadsheet with our total $ of debt and every time I make a payment I subtract the amount of principal that was paid. That is the only change I see right now, and it's going to continue to be the only change I see for a few years. There is no good Dave Ramsey-style advice for this situation. I suspect there is no easy solution. We just have to keep on keeping on.

 

We just bought our house in September so there's no sense in refinancing. I like the idea in the blog Basylica linked of trying to find ways to make small cuts rather than stressing yourself out trying to make and stick to big cuts. But as far as trying to increase family income, I may not be alone here in saying that many of those ways don't seem to be good options for us. We are working professionals and make more than most of our friends. Going around offering to babysit or do yard work or hang Christmas lights or do other odd jobs seems a little... weird. Also we do not have a ton of spare time... we have some, but not a ton. I'm definitely never selling books to Half Price again, though, after reading about Amazon Trade-In. 

 

The one thing that we could do to really boost our income is something I really don't want to do--me work full-time. Even after factoring in increased childcare costs I'd be clearing significantly more each month, but the stress and time away from my daughter isn't worth it to me. Whenever I increase my hours temporarily I reach this same conclusion again. 

post #17 of 118

I wanted to chime in here although we don't have a ton of debt (just to mortgage on our house and a rental property....which is a rental because we were/probably still are under water in it), but I make a good income.  I handle the finances, and sometimes feel like a nag with DH (who stays home with the kids) because I pay attention to the small amounts (maybe too much?).

 

I'm definitely going to have to check out Chase, Basylica.  I have a languishing account there, and our main bank is CapitolOne (formerly INGDirect).  ING was fully online, but the interest rates on their savings accounts were close to 1%, which is an order of magnitude higher than any of the bigger banks or our local banks.  I've been online banking for years, and quite honestly, if I never have to walk into a bank branch again I'd be perfectly fine. 

 

I've also read a lot of conflicting guidance about emergency funds, and DH (former investment banker and financial planner) thinks that the 3-6 months (depending on who you read) is overly conservative if you have good credits and assests on which to base a line of credit.  If we needed a chunk of money in an emergency, we have a line of credit we can draw on.  I'm more paranoid about it though so we have two months saved.

 

As for paying down your mortgage; that's one place where you don't want to put your money....especially if you have a good interest rate and other debt with higher interest rates.  I calculated that with our income tax deduction our mortgage rate is a little under 3%.  It makes more sense to put extra money into a Roth or a college fund than paying down the house.

post #18 of 118

I don't have any advice but wanted to chime in since I am currently reading "Your Money or Your Life" & trying to get a handle on my family's financials.

 

I make a decent salary & my husband supplements it with part-time work. I feel we are comfortable but this is the first time we've had a good salary in our lives & we honestly don't know what we are doing. My son is almost 4 & we haven't started any college savings. I owe a ton on my student loans but I am reticent to accelerate payments on them because I receive loan assistance from my school & they currently pay about half of my payments. We rent & pay off our credict card every month.

 

I will say we have used ING (now Capitol One) for years & years. I like that we can easily create new savings accounts for specific purposes. But we'll see what happens after the sale & I'm not sure that'll we'll stick with it.

 

Someone on another board suggested the website ynab.com (for you need a budget) & I so need to commit to something like that just to get a handle on our larger financial picture. Luckily, I've always been a saver (so we have a few months salary stowed away) but we have nothing in terms of long term goals like a house.

 

OK, I'm rambling, but this thread is motivating me to actually do something! Thank you OP!

post #19 of 118
Thread Starter 
Quote:
Originally Posted by t2009 View Post

 

OK, I'm rambling, but this thread is motivating me to actually do something! Thank you OP!

Welcome to the thread! Feel free to post any questions or anything else you come up with during this process. I'm hoping we can all learn from each other and provide some moral support. 

 

Quote:
Originally Posted by crayfishgirl View Post
 
 It makes more sense to put extra money into a Roth or a college fund than paying down the house.

 

Hmm... from a certain standpoint that does make sense. I am of two minds about it. And I do plan to pay off the higher-interest student loans first. The flip side for me is just that being in so much debt makes me nervous. It makes me feel like if something goes wrong, somebody else actually owns the rights to my life and can take away things that are important, or claim my income, or ruin my credit. I suppose if we were debt-free we'd still have that with water bills and stuff, but that's paying for stuff we're using as we use it, so it feels different. If we owned our house free and clear, it wouldn't matter if one of us lost our job--and if I hated my job, I could quit without stressing out about having another one lined up. 

 

Plus, on our current accelerated payment plan, we'd have the house paid off before our kids are in college, which frees up some income for tuition. 

post #20 of 118
Quote:
Originally Posted by erigeron View Post

Welcome to the thread! Feel free to post any questions or anything else you come up with during this process. I'm hoping we can all learn from each other and provide some moral support. 

 

 

Hmm... from a certain standpoint that does make sense. I am of two minds about it. And I do plan to pay off the higher-interest student loans first. The flip side for me is just that being in so much debt makes me nervous. It makes me feel like if something goes wrong, somebody else actually owns the rights to my life and can take away things that are important, or claim my income, or ruin my credit. I suppose if we were debt-free we'd still have that with water bills and stuff, but that's paying for stuff we're using as we use it, so it feels different. If we owned our house free and clear, it wouldn't matter if one of us lost our job--and if I hated my job, I could quit without stressing out about having another one lined up. 

 

Plus, on our current accelerated payment plan, we'd have the house paid off before our kids are in college, which frees up some income for tuition. 

 

 

I agree with you--I'd like the security that would come with having our house completely paid for. 

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