Hey guys,
I live in the US now but have about 18,000 GBP of student loan debt over in the UK with an interest rate of 1.5% (variable, changes every year based on UK inflation). By the current exchange rate this is about $30,000 USD. I have about half of that amount (8,000 GBP) over in the UK in a bank account earning about 2% interest, which I'm using to pay the minimum payment each month towards the loan - about 250 GBP/month.
I'm considering moving money from the US to the UK (about $17,000 USD) to pay off the remaining loan balance now. I have enough cash here that I wouldn't have to sell any stocks or bonds in order to do that. My reasoning for this are that:
- It seems like the US dollar is only getting weaker.
- I don't like being at the mercy of the exchange rate. If I keep paying it off slowly then when my 8,000 GBP I have over there runs out in a few years and I have to move some more money over anyway then the exchange rate could be awful like it was a few years ago (2USD to 1GBP!!) which makes my loan even more expensive.
- I hate having debt in another country. If it was a US loan at 1.5% then I wouldn't pay it off, but as it relies on all these factors outside of my control, such as exchange rates and the inflation rate in the UK, then I worry about it more.
So my questions are;
- What would you do?
- If the outlook for the US dollar is that it may get weaker due to inflation in the coming years then should I move even more money over to the US and use it as an inflation hedge?
Any help, opinions or suggestions are appreciated!
If it helps, my current financial situation is:
Cash: $59k
Stocks: $204k
Home equity: $100k ($168k left on mortgage at 2.6%)