Author Topic: Financial Challenges with Marriage  (Read 5847 times)

cgsealk

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Financial Challenges with Marriage
« on: August 30, 2014, 08:05:59 PM »
Hello all,

I am a 33 yo male in the military who recently got engaged to an awesome lady.  She is 24 and about to graduate with a masters and a student loan amount of about 65k @ around 6% interest.  She should make about 40-50k/year out of school. 

I have a Roth, TSP savings account, both retirement amounts combined are equal to my yearly salary to date.  The only debt I have is 16K (411/mo payment) for an awesome truck I bought brand new and will own for next 20-30 years (2010 Nissan Frontier 4x4, with 27k miles).  I understand the Moustache stance on vehicles, but I am holding onto it for multiple reasons, but NEVER want this type of debt again!!  I need to replenish my emergency savings as I bought the RING with some of it.  Once this happens, I also plan on increasing my payments on the truck.  None-the-less, my savings rate is 25% of income as of now.  Of course, I am looking to save more :)

In one year when we marry, my fiancé and I could probably live on my salary, as I will get a raise in basic allowance for housing (BAH) for marriage and will more than likely advance in rank within the next year.  We both that we want to pay off her student loan debt as quick as possible, possibly minimally contributing to a retirement account for her.  With the 6% interest rate, I would preferably choose to have most if not all of her income go towards the debt.  We plan to wait about 5 years for kids. 

In general, how would you approach this, financially speaking?         

Cheddar Stacker

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Re: Financial Challenges with Marriage
« Reply #1 on: August 30, 2014, 08:39:11 PM »
If she gets an employer matching contribution for a 401k, take advantage of that before you do anything else. It's a 100% return on investment.

After that, the student loans are likely your best bet. 6% is too high and you should get rid of it right away. After that ramp up all possible retirement savings to reduce taxes and build a huge investment portfolio.

Pooperman

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Re: Financial Challenges with Marriage
« Reply #2 on: August 30, 2014, 09:26:36 PM »
Make sure to get an agreement about whose stuff is what (a prenup). If shit ever hits the fan, you'll be glad you did. If thing work out forever, even better. Just protect you stache and future FI.

Weyfarere

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Re: Financial Challenges with Marriage
« Reply #3 on: August 31, 2014, 12:09:24 PM »
How would I approach that?

Once the two of you marry, you are one, including financially*, so consider both debts and both incomes all yours (and all hers). Beyond that, I'd agree with Cheddar Stacker, unless the car loan is near, or higher than, 6%.

*My opinion. I believe there are other threads discussing shared versus separate finances.

Lyngi

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Re: Financial Challenges with Marriage
« Reply #4 on: August 31, 2014, 02:42:58 PM »
The merging of finances depends on the state you live in.  I'm in Utah and I found out I'm not responsible for DH debt.  Unless we have a jointly opened credit card.  So keep your credit cards separate.  That being said, any jointly owned assets can have a lien applied, boats 4 wheelers, snowmobiles.  My house has a lien from a credit card DH forgot to pay, and then forgot to include in his debt repayment plan.  Now that is an epic saga. 

cgsealk

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Re: Financial Challenges with Marriage
« Reply #5 on: August 31, 2014, 04:54:15 PM »
How would I approach that?

Once the two of you marry, you are one, including financially*, so consider both debts and both incomes all yours (and all hers). Beyond that, I'd agree with Cheddar Stacker, unless the car loan is near, or higher than, 6%.

*My opinion. I believe there are other threads discussing shared versus separate finances.

The car loan is at 4%, so not too bad at all.  I will definitely have to do more research on shared finances, but I do agree with your opinion, thank you!


If she gets an employer matching contribution for a 401k, take advantage of that before you do anything else. It's a 100% return on investment.

After that, the student loans are likely your best bet. 6% is too high and you should get rid of it right away. After that ramp up all possible retirement savings to reduce taxes and build a huge investment portfolio.

This sounds like a great plan, thanks!
« Last Edit: August 31, 2014, 04:57:18 PM by cgsealk »

Krnten

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Re: Financial Challenges with Marriage
« Reply #6 on: August 31, 2014, 08:53:48 PM »
How is your fiancée with money?  Did she work between undergrad and grad?  Does she have savings of her own?  Has she been living on her student loans only or have you been helping her out, etc?  Does she have any debt other than student loans?  Does she live within her means?

She's young, so she may not have much of a financial history, but I'd just ensure that you're on roughly the same page before marrying.  I say this as the spouse who came into the marriage with a lot of student loan debt.  I didn't feel great about that and am lucky my husband has never made an issue of it.

You should be mindful of the wealth/debt disparity you have.   What happens if you have kids sooner than you planned?  Will she feel pressure for kids from friends and family before the 5 years?  Do her friends/relatives have kids in their 20s?  What are your plans for childcare once you do have kids?  You could soon have a sah wife and be making the student loan and truck payments on your income alone. 
Is that ok with both of you?  Can you afford it?

It's a downer to think about, but Id make sure you're in agreement about the major issues.

MrsPete

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Re: Financial Challenges with Marriage
« Reply #7 on: September 01, 2014, 10:20:20 AM »
Sounds like you're in agreement on the initial phase of your plan:  Live on your salary, use hers to make the student loan go away.  I'm completely with you on that plan! 

However, I've heard more than one couple start out with this type of plan . . . and then realize that they'd never discussed Step 2.  I've heard of more than one couple who completed the first step, and then HE ASSUMED they'd continue saving, work towards building real wealth . . . while SHE ASSUMED that their goal was reached, and it was time to loosen the purse strings a bit and include some vacations, a nicer wardrobe and a nicer car in their budget.  It's not our place to tell you what path you should follow, but you should agree between yourselves on Step 2. 




Gin1984

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Re: Financial Challenges with Marriage
« Reply #8 on: September 01, 2014, 12:17:44 PM »
You may also want to check out your total highest tax bracket once you get married.  Her 65K loans are tax deductible (up to $2500 in interest), and your car loan is not.  I would pay off the higher rates (many people have multiple rates within their SLs) and then if she has lower rate loans, compare them after tax benefits to your car loan.

WESTOFTHEHUDSON

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Re: Financial Challenges with Marriage
« Reply #9 on: September 01, 2014, 07:44:19 PM »
Congratulations on the engagement! I'm not sure what the living arrrangment is but as soon as possible (either now or after the wedding) I would have her find employment but budget to live on just one salary. It will be a good practice and also allow you to knock out both debts in the max time.

DH and I did that this past year, even though I was working Full-time. It was nice because everything I brought home was for my tuition (planning on reutrning to school) and to knock a huge chunk of mortgage out.

Bob W

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Re: Financial Challenges with Marriage
« Reply #10 on: September 01, 2014, 09:06:13 PM »
Attend financial peace university.  Available on most military posts.