Hey Everyone,
Here is a link to my first post and introduction, for background info if you're interested :)
https://forum.mrmoneymustache.com/ask-a-mustachian/new-to-the-boards-introduction-and-request-for-advice-)/msg129339/#msg129339So the following has happened since then: After much discussion (thanks in no small part to all of your great advice!) I managed to convince my fiancee to join finances and adopt a budget. We settled on an allowance-type arrangement (she will get $400 (!) per month and I will get 65% of that). Naturally, my plan is to use my allowance to do some additional savings or to pursue activities that increase our net worth. The remaining line items on our budget are fairly generous, but set at a level that will allow us to save around 70% of our take home. She also agreed to create a joint Mint account, and I'm trying to optimize some of her expenses (car insurance, etc.). I think by the end of the year, the projected savings rate will go up to around 73%, hopefully...
Now to the current issue of housing: One of the big triggers for all of the above was a rate increase on the first mortgage on our condo (yes, she bought with no money down...) from 4% to 8.6%. This happened because some time ago she talked to the bank and managed to get a temporary modification on her interest rate, which expired this month. Not going into what a fucking suicidal decision this was initially, the change made it very clear that no new house should even be considered for the time being, and that this debt must be killed ASAP
So here is what our plan is:
- 100% of any penny we earn above our expenses after we build up an emergency fund of around $5k will go to killing this mortgage (it has a current balance of around $163k)
- Try as hard as we can to refinance. We've already visited a mortgage broker and per his advice, it would be almost impossible given the fact that the loan isn't fannie/freddie backed and the condo is 100% upside down. Any words of wisdom in this area would be appreciated.
- Here is the iffy point: My fiancee has around $17k in available borrowing from her 401k. The rate is 4.25% over five years, and the payments are directly deducted from her paycheck. I think it's a no-brainer (immediate $800-$900 savings in interest per year), but she has doubts/fears. Am I missing something? I don't want to push this too hard if there are real risks involved that I can't see at the moment - All advice is welcome.
Anyway, despite the crazy amount of debt, I'm very excited to be on-track to FI and to be marrying an amazing woman who (although she hates "money talk" as she puts it), is willing to look the problem in the eye and solve it, instead of pushing it under the rug...
Cheers!