Where to allocate money?

[GreenScrubss]

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Hey y'all,

Currently a first year medical student. My significant other (currently a 4th year pharm) will be a working pharmacist when I am an MII and will be moving in with me.

My question is, is it a better idea them to pay off their loans aggressively to get them paid off asap (~100-125k)

or

My SO pay off smaller amounts of their loans and pay for our COA (housing, groceries, phone) minus my tuition of course. In this case I would borrow for only my tuition.

I hope this makes sense. I know it is probably finance 101 but I am utterly horrible with money.

 

[doc05]

I hope this makes sense. I know it is probably finance 101 but I am utterly horrible with money.

this doesn't make sense. there is no answer to this question, it depends upon multiple variables. good luck.

 

[sweetlenovo88]

1. You should get together as a couple and live on a reasonable fixed budget and minimize your expenses.
2. Next, are you married? Going off Dave Ramsey's advice: He should not be subsidizing your tutiton/paying for your loans if you are not married.
3. If not married, live on the fixed budget, take out as little in student loan money as you can and have him pay off his own personal debt with his earnings.
4. Once/if you are married you can change the plan and see if it makes more sense for him to pay for your tuition instead of his loans based on the interest rate.

 

[bc65]

Agree with the above. Until the day you are actually married, you should only pay off your own loans. You should share household expenses as you would with a roommate.

Once you're married, you should pay off the SO's loans if the interest rates are higher than your new loans, or if you have better repayment options on your loans through PSLF or PAYE, REPAYE. If the loan rates and terms are higher on your loans, then use your extra money to minimize the new loans and pay the minimum on the SO's loans. If the loan terms and rates are all equal, then it doesn't matter which ones you pay off. In that case, I would probably have the SO pay off their own loans. That would make things more fair. Their income is paying off their loans.

Keep in mind that your loans may not be amortizing interest now, or during residency, depending on the terms of the loan, so there might be some advantages to working on the SO's loans while you're in school and residency.

But you're not married yet, so you have quite a while before you have to decide. Worry about it after you have set a date for the wedding.

 

[dynx]

Hey y'all,

Currently a first year medical student. My significant other (currently a 4th year pharm) will be a working pharmacist when I am an MII and will be moving in with me.

My question is, is it a better idea them to pay off their loans aggressively to get them paid off asap (~100-125k)

or

My SO pay off smaller amounts of their loans and pay for our COA (housing, groceries, phone) minus my tuition of course. In this case I would borrow for only my tuition.

I hope this makes sense. I know it is probably finance 101 but I am utterly horrible with money.

I on the other hand have the opposite opinion. Since you're the one asking the question the answer is whats best for YOU.
If you're not married have him pay as much of your living expenses as possible and you take out the least amount of loans you can. Now if he was aking the question I'd say pay your own loans first.

If you are married depends on a lot of factors. His interest rate, the rate you're going to get your loans at, cost. If he's compounding interest on his loans at a higher or the same rate pay his off first. But again, you need to do the math, no way around it. If you're not married NO MATH INVOLVED, get as much as you can now, the risk premium is enormous for you. Extra special life bonus as well, if he's dumb enough to pay your loans then drop him just before you start making money.

 

[bc65]

if he's dumb enough to pay your loans then drop him just before you start making money.

You make a valid point, but it's probably not worth it once you factor in the time you'll spend dealing with the lawsuits and the stalking incidents.

 

[GreenScrubss]

I on the other hand have the opposite opinion. Since you're the one asking the question the answer is whats best for YOU.
If you're not married have him pay as much of your living expenses as possible and you take out the least amount of loans you can. Now if he was aking the question I'd say pay your own loans first.

If you are married depends on a lot of factors. His interest rate, the rate you're going to get your loans at, cost. If he's compounding interest on his loans at a higher or the same rate pay his off first. But again, you need to do the math, no way around it. If you're not married NO MATH INVOLVED, get as much as you can now, the risk premium is enormous for you. Extra special life bonus as well, if he's dumb enough to pay your loans then drop him just before you start making money.

I on the other hand have the opposite opinion. Since you're the one asking the question the answer is whats best for YOU.
If you're not married have him pay as much of your living expenses as possible and you take out the least amount of loans you can. Now if he was aking the question I'd say pay your own loans first.

If you are married depends on a lot of factors. His interest rate, the rate you're going to get your loans at, cost. If he's compounding interest on his loans at a higher or the same rate pay his off first. But again, you need to do the math, no way around it. If you're not married NO MATH INVOLVED, get as much as you can now, the risk premium is enormous for you. Extra special life bonus as well, if he's dumb enough to pay your loans then drop him just before you start making money.

Weve known eachother for awhile and I'm confident I could have all my living expenses paid for and just take out loans for my tuition, however I don't know how I'd feel F-ing someone I care about over like that and leaving. We're pretty much in an open relationship now (long distance)

 

[dynx]

Weve known eachother for awhile and I'm confident I could have all my living expenses paid for and just take out loans for my tuition, however I don't know how I'd feel F-ing someone I care about over like that and leaving. We're pretty much in an open relationship now (long distance)

Oh lord! this is key info
Please disregard all other advise above and just go by my post
Take out the minimum loans you can and have him pay for what he will. It will work out for you trust me.
You're going to need to explain to him that it makes more sense for you to take less debt. Say something like when we're both married and working our marginal tax rate will be higher and we'll be paying more for our combined student loan payments with less tax deductions for interest than if you paid your loans off now"
It sounds like a good logical explaination. dont screw this up, once in a lifetime.

 

[dynx]

You make a valid point, but it's probably not worth it once you factor in the time you'll spend dealing with the lawsuits and the stalking incidents.

lawsuits? for what? cause he rented a house he lived in and paid for food he ate? good luck with that.
Really, this is a service. This experience will be education for him worth more than gold and far more than his degree. Think of how you're helping him! Early life lesson. He'll thank her. You're doing the job his parents should have done, cant put a price on that.

 

[bc65]

awsuits? for what?

Breach of oral contract. SO paid off OP's loans based on a promise of marriage which OP then reneged on. The suit may or may not be successful. Plus it's unethical. That's not a problem for you, but is for me and OP.

 

[dpmd]

The answer of what is best for both (for the sake of argument I will assume a relationship that is meant to last, but that is a huge assumption here I know) will depend on the interest rates for their loans and the rates you will get(as well as any origination fees). Avoiding or paying down the highest rate loans is first priority. Avoiding an origination fee for equivalent interest rates is next priority. In both scenarios retirement planning is also important.

 

[QofQuimica]

OP, assuming you don't want to take dynx's amoral advice to screw your, ahem, friend, over, I suggest you treat them like you would any other roommate and split your expenses 50-50.

 

[AMEHigh]

Hey y'all,

Currently a first year medical student. My significant other (currently a 4th year pharm) will be a working pharmacist when I am an MII and will be moving in with me.

My question is, is it a better idea them to pay off their loans aggressively to get them paid off asap (~100-125k)

or

My SO pay off smaller amounts of their loans and pay for our COA (housing, groceries, phone) minus my tuition of course. In this case I would borrow for only my tuition.

I hope this makes sense. I know it is probably finance 101 but I am utterly horrible with money.

The other thing to consider, what happens if he breaks things off with you? You won't have money for your living expenses.

I'm not one to say that things need to be exactly 50-50 until you're married (I don't plan to get married again for a long while and my SO and I have come up with a solid financial plan together), but you still need to protect yourself financially. Relying on him to cover your entire living expenses and only take out loans for tuition sounds like a poor decision all around.

 

[dpmd]

The other thing to consider, what happens if he breaks things off with you? You won't have money for your living expenses.

I'm not one to say that things need to be exactly 50-50 until you're married (I don't plan to get married again for a long while and my SO and I have come up with a solid financial plan together), but you still need to protect yourself financially. Relying on him to cover your entire living expenses and only take out loans for tuition sounds like a poor decision all around.

Not really, because she would be able to take out additional loans later in the school year if needed. I had a husband covering my living expenses so only took tuition loans, then we decided to buy a house so was able to take out additional loans (up to cost of attendance would have been allowed for federal loans) for a down payment.

 

[AMEHigh]

Not really, because she would be able to take out additional loans later in the school year if needed. I had a husband covering my living expenses so only took tuition loans, then we decided to buy a house so was able to take out additional loans (up to cost of attendance would have been allowed for federal loans) for a down payment.

I was just pointing out the fact that I don't think she should rely on someone else to completely support her, especially without the legality of marriage. I know you can get out more loan money or use credit cards or borrow from friends, etc. But even in a solid relationship I think it's a good idea to have a little wiggle room to funds that are somewhat immediately available (it still usually takes a little bit of time to apply for additional loan money and for it to hit your bank) for unforeseen circumstances.

When I was married I made sure to have my own account with some money in it for emergencies and I still do the same thing with my current SO whom I live with. No one had brought up that point, so I thought I would at least mention it.