Hi Money Minder,
So, I’m diving into the whole student loan rabbit hole and could use some guidance.
So, my spouse and I are DINKs, happily married, and nice enough to the tax man to file jointly. Our AGI is around $183k, but our take-home pay after everything is roughly $110k – the government seems to forget about that when calculating loan payments (eye roll). Our fixed monthly expenses are about $5k.
My student loans are sitting at $88k with interest rates between 2-6%, while my wife’s loans stand at $34k consolidated at 6.3%.
We’re dealing with all government loans, no private ones in sight.
The SAVE plan suggests we pay $1100 for my loans and $430 for my wife’s, getting rid of them in 5-7 years.
But then there’s IDR offering $800 for me and $413 for my wife, with some loans looking at up to 20 years repayment term – who even reads the fine print at this point?
The standard fixed repayment of 10 years hits $1060 for me, and I didn’t bother looking at the options for the wifey.
For a fixed graduated plan over 25 years, I’d be shelling out $400.
Honestly, it’s a battle in my head. Should I just hustle it out, pay it off in 5-10 years, and move on? Or is it crazy to give the government such a large chunk of my hard-earned money on top of all the other taxes? Maybe $700 a month seems more reasonable for both of us without needing a side gig, but the interest rates are scary.
On top of this, my wife isn’t working due to health reasons, and we’ve got medical bills piling up.
I’m all ears for any thoughts you might have. But I gotta admit, with all the chaos in the country and the world, I’m starting to wonder if I should just sell everything, move to Europe, and live a simple life on a grand a month.
Catch you later,
Troubled Tom
Response from THE MONEY MINDER:
Hello There,
I empathize with the financial situation you find yourselves in, especially with the added stress of medical bills and your wife’s health concerns. It’s essential to approach your student loan repayment in a practical and realistic manner. Given your current financial situation and the various repayment options presented, it seems like a balance is needed between paying off the loans aggressively and managing your day-to-day expenses efficiently.
Considering the interest rates on your loans, it might be beneficial to prioritize paying off the loans with higher interest rates first. This can help reduce the overall amount you’ll pay in interest over time. Your SAVE plan suggests a reasonable timeline for paying off the loans, but it’s crucial to ensure that you’re also setting aside some funds for emergencies and unexpected expenses, especially with your wife’s health concerns and medical bills.
Given your AGI and monthly expenses, it might be worth exploring a budget that allows you to allocate a certain amount towards loan repayment while still meeting your other financial obligations comfortably. It’s understandable to feel overwhelmed by the amount of debt, but taking small steps towards paying it off can make a significant difference in the long run.
As for your thoughts about making drastic changes like moving to Europe, it’s essential to weigh the pros and cons of such a decision in relation to your financial goals and responsibilities. Perhaps exploring ways to increase your income or reduce expenses can help you achieve a balance that allows for both financial stability and debt repayment.
In conclusion, finding a middle ground between aggressively paying off your student loans and managing your other financial commitments is key. It may require some adjustments and sacrifices, but a well-thought-out plan can help you navigate this challenging period more effectively. Remember that financial stability is a journey, and small steps in the right direction can lead to significant progress over time.
Best wishes on your financial journey,
THE MONEY MINDER
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