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FI and I disagree
My fiance and I are moving in together next week and we are already disagreeing an a big money topic. Here is some background.
We lived together for a year with separate finances before he moved away to take a job. He is a Private School teacher so he doesn't pay for any living expenses or food. Right now his only bill is his cell phone and student loans. We combined incomes so that he could still help pay for our apartment we were leasing and I could continue writing out checks for his SL. (I got tired of transferring money constantly and we agreed to combine accounts.)
We have 2000 in savings and we constantly have over 2000 in checking. I firmly believe that while I am okay with a cushion in the account I think 2 thousand is too much. We agreed he could take 750 of it and buy new clothes for next school year because right now he is in good will clothes and needs some better fitting and newer clothes. But we are trying to get out from under 28000 worth of SL debt and I think we should use part of the 2 thousand in checking towards that while he wants to leave it.
What do you think?
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
Re: FI and I disagree
The standard "opinion" is that a person or couple should have 6 months of living expenses in their savings account, and checking accounts are for living within your means, covering a monthly budget for everything. Unexpected things happen and not having money available is a terrible stressor.
Student loan debt should be considered part of your monthly budget. Honestly, using "part of" a $2000 balance to pay down loans is not going to make a major difference in your lives. If you had a windfall of $5000-$10,000, that's a different story.
Just my opinion, but if you want to get out from under student loans, make higher payments each month versus using a surplus from your checking account. Even if your soon-to-be joint living arrangement is provided for free, I think your savings account may be light on the balance.
We have paid over four thousand dollars down on loans not including monthly payments in the last two months. Two thousand dollars in out E fund would cover our living expenses for about 6 months if we lived bare bones. Our monthly bills total to be about $350 dollars however luckily even if FI were to be injured or pass away we would still receive 75 percent of his pay until his contract is up. Another great perk to this job. Two thousand is what was left over in our checking account this month.
We don't make higher payments on each loan just minimum payments on all and pay as much as we can on one.
If we took 1,300 from checking today it would pay off in full another loan.
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
What is your balance left on the loan? If you have been paying about 2k a month for the past 2 months- then taking this money from your checking account is not going to move the needle much. Our general rule of thumb as a couple is that is one person wants a bigger emergency fund, they 'win' the argument. (although honestly this isn't much of an argument for us). I am going to be staying at home next year to take care of baby and before I quit, we are adding to our emergency fund because otherwise I would be nervous about going down to a 1 income family.
When are you out of your apartment? I'm sure that isn't figured into your $350 monthly bills.
I would say you both really need to sit down and do a budget together. It is great that you are getting your debt under control, but if he has only been able to buy goodwill clothes you may need to add 50-100 to your budget each month for a couple months for him to buy some new clothes. (honestly, I don't understand the dig at good will- they get some nice, brand new stuff some time and I have found work clothes there). I would not take this out of your 'emergency fund' or whatever you called it in your checking. Assuming he works a normal school schedule he is almost done for the year, and if you set aside a bit for him each month now through August he could go on a pretty good spending spree.
Start your budget with all your income at the top- all your expenses (including savings, and what you want to put towards a loan that month) until you get to 0 at the bottom of the page- every dollar should be allocated. It may help you both get on the same page for $.
I moved out of the apartment in Jan. because the police recommended it after a man had harassed me for over a month and then tried to come in through my window one day. (The apartment complex would not evict him but let me break my lease.) I live with my mother for free. So yes all bills total to be about 350.
He doesn't want to put it in savings. He wants to leave it as fun money. 2 thousand dollars is NOT fun money in my eyes. He has been able to buy other clothing but was waiting to make sure he was going to be getting another years contract first. This was his first year teaching and they go year by year. No tenure. Goodwill is great!! I love it. But he could use some matching suits. Not just oddball pieces.
Thanks for the advice. I guess we need to sit down and talk ASAP.
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
Sorry I didn't answer this one. We owe about 28,300 on a few loans(sorry I dont have my budget notebook in front of me) and owe 1,257 on this particular loan. It has a 6.8% APR and I would just love to be officially out from under it. We have been paying this one for two years already.
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
I can understand wanting to get out from under but you can't give up your only cushion. Once you fully fund your e-fund, then you can make larger payments.
As much as $28k in student loans is a burden it's not that horrible.
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
You should have 6 months of expenses including a reasonable rent. If something were to happen between you and your mom and you moved out, or if your FI lost his job and needed somewhere to live, or if you and your FI decided to move in together and needed to rent a place, you would need that rent money. Your $350 in monthly bills are not the same as the expenses you'd have if you ran into trouble.
I'd probably put that into your E-fund and budget for new clothes over the next few months.
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. Seussthis exactly. If you need help getting started, I would recommend The Total Money Makeover by Dave Ramsey- or you can listen to him Monday through Friday afternoon on his website/ local am radio station from 1 to 4 pm Central time. He really helped us get started talking about these types of things- other than pre-marraige counseling we had never really talked about money. Doing a budget made our money stretch further.
One way to maybe consider talking to your fiance about money would be to discuss future goals- what do you want to be able to do together after you have your loans paid off- your own house, nice vacation, kids, retirement, whatever- that may help him see why you are so intense on getting the loan paid off and delaying gratification. $2000 in 'fun money' IS completely ridiculous to me- so you aren't the only one! (And I"m a teacher too- just like your fiance- so I have a general idea of what his starting salary is)
We will be living for free until July of 2014. That cannot change if he is injured or passes away because of his work contract. I am not worried about rent money. FI and I are moving in together on Friday.
I thought the idea of paying of loans and other debt was to throw everything you had at them?
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
You are on track to pay this off in 14 months if you can continue the 2000 per month! That's awesome!
In that case, you have 14 months to build up an emergency fund for 6 months of expenses including rent. $4000 is a great start.
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. Seuss
I am glad someone else agrees 2000 is NOT fun money. Haha.Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
Thank you. We decided we would hold off on TTC until we were out of this debt so we have been working hard. The ultimate goal is to have it done before our two year anniversary. But 14 months sound even better. Then we can start saving for a family and for our long term future. We are both in our early 20's so I am glad we are already getting it together.
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015