When is the right time to pay off a significant other's debt?
Serious relationship of around 3 years, lived together the last 2 years. Planning to get married.
Would you wait until after you are engaged? after you are married? before that?
Background - We live in California:
Me = $50k in liquid assets. no debt. Most of the money has the goal of "future savings", preferably for a house.
SO = $21k in student loans (ranging from 4.5% to 7% interest). $18k in car loan (1.9% interest).
Personally, I'm not concerned about the car loan as it's at such a low interest rate. I would like to have the money set aside to pay it off, but I will invest that money while I am paying it off. I can make 1.5% on my checking account alone, so that's about a wash almost in and of itself.
We have verbally committed to being able to pay off the student loans before getting married. That wedding will likely cost around $20k once you include the ring, the various parties, and the honeymoon. Obviously, we will try to lower that number but I would rather play it safe with a high estimate. Huge families, and it would be hard to cut it out completely. Needless to say, I don't want people talking about the cost of the wedding. I'm only asking for input on the debt repayment part.
If we were married, I would have no doubt about paying off the student loans before I save for a house or invest my money. That guaranteed 6% interest is hard to beat. She agrees that we want the student loans paid off before being married. It's hard for me to hang onto $50k cash knowing that I have the ability to knock out those student loans, and that requirement of eliminating the student loans before marriage seems silly.
What do you guys think?
Here's the options as I am seein them:
1. Keep finances seperate until marriage. Forcing her to pay off her student loans before the wedding, while I save for the wedding. This could take 4-5 years, which seems like pushing the wedding date out very far. She wants to be married in the next few years (we are in our mid-20s) and wants to begin having kids by 30.
2. Propose. Get married. Ignore the timeline of paying off student loans. Once married, use my extra money to eliminate the student loans in their entirety. This would allow us to get married as soon as I buy the ring and pop the question. Ha! Then save for a house together.
3. Propose. Use my extra money to eliminate the student loans in their entirety. Then, make sure WE have enough saved for a wedding. Get Married. Then, begin saving for a house together. Same situation as above, but I would be paying the loans before the wedding date. $100 per month in savings on the student loan interest.
We plan to get married. There's no question about that. The question is more about the timing and logistics of it. How to get married in a way that makes sense financially. There are definitely various savings benefits to getting married. I estimated at least $300 per month worth of savings on dental insurance, health insurance, car insurance, taxes, and student loan interest. We have about $550 per month that we are able to save between the both of us currently, and with the student loans out of the way, that amount jumps up to $900 per month. My original stance was #1, but it seems more and more than #2 or #3 makes the most sense.
#2 or #3 - what input do you all have?