TL;DR – Take home per month on my own is $2,656. My paycheck is for my loans totaling $182.5K; husband’s paycheck is for everything else. Husband wants to add to the payments but wants to make it count. What are our options?
Hello everybody,
I have lurked in PF on several occasions trying to get a grip on my situation and thought I could figure it out but need some guidance at this juncture. I currently live in an inexpensive city with my husband in a house. He got a new job making 100K at the end of last year and has asked me about my loans because we will want kids in the near future.
I had undergraduate loans from 2009 ($124.5K of the overall total is from that) and I had gone back to school and got my masters in 2015 (the added 58K). I had amounts and interest rates in spread sheets and I was paying them down very slowly. Due to all of the loans having daily interest accrual, I learned on PF that if I paid them weekly, it would drastically cut down on the interest I would pay over the life of the loan. Before April 2016 I had set up all payments to automatically deduct from my bank account to get that 0.25% interest rate deduction. After I read that here, I calculated the payments to manually pay weekly between the 3 loans and have dropped the private loans from $97K to almost $92K since then.
Monthly bills/loan amounts:
- Take home per month, just me: $2,656
- Work matches 50% of my contributions between 1 and 6% of my 401K, I’m currently contributing 6%
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Federal loans total approx. $86.5K, private loans total approx. $96K, overall total: $182.5K
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Federal loans – Based on my income alone, I qualify for the income contingent based payment plan so for all of these I pay $234 a month. The principal, however, is not being reduced at all. I’ve put all my attention into the private loans with the highest interest rates.
- Direct Subsidized Stafford loan: $14.5K @ 5.875% fixed
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Direct Unsubsidized Stafford loans:
$14K @ 5.875 fixed
$14K @ 6.55% fixed
$22K @ 5.16% fixed
$22K @ 5.96% fixed
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Private loans -
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Chase turned AES: I was paying $838 per month until the weekly thing caught my attention, now it’s $212 per week. The interest rate deduction is gone but I’m definitely paying it off quicker now.
$20K @ 9.56% - $220
$25K @ 7.06% - $233
$47K @ 7.5% - $385
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Discover: $4K @ 8% - minimum payment is $60, it was originally a $5K loan (in 2008), now paying $150 per month and am “paid ahead” until 7/18 and it's not moving very much which is ridiculous. If I'm paid ahead, why does that not mean
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Car payment: $430.65 per month, $28K Refinanced @ 3.24% for 72 months
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LA Fitness: $21.30 per month (on a friends’ family plan)
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Rewards credit card: Was using the rest of my paycheck to pay this off, husband went ahead and used some savings to pay off the $5K on it and now I just use it to get groceries and pay it off every month. Now it’s around $300 - $400 per month.
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Points credit card: $1K left on this one, used this for wedding/birthday/Christmas gifts (and lately it’s been sympathy flowers unfortunately) that I can’t afford at the moment. Yeah, I know, it’s not ideal.
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Overall I’m paying ~$2,084 out of my paychecks per month + whatever is left over to paying down balances on credit cards
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Have $300 in savings just so I don't have to pay the maintenance fee. Husband keeps his savings over $5K and anything over that we can use for extra things, like my credit card he paid off or house stuff like the fence we had to install after it was taken out by a hurricane or a new air handler in the future.
More info:
When we got married in 2015 after I graduated, we decided that since he was making 65K which would cover all the bills: the mortgage (he bought a house before we were married and I moved in), internet, his car payment, electric, water and dog, I could focus my paychecks on paying down my loans and since I wanted to contribute I would buy our groceries every month. I also bought a car for graduate school because some classes were at a campus 3 hours away one way. I put 18K miles on that car in a year, it turned out to be less per month than maintaining my gas guzzler. What really had my credit score down was the 90 days late for each of these private loans when it was through Chase in 2011, so next year it should fall off and my credit score will jump I’m hoping. I sent a goodwill letter a couple years ago, after I had a steady job and was paying more per month, to remove the late payments, and they flat out denied my request even though they sold it to AES and AES told me they couldn’t remove it as they weren’t the original lender.
So anyway, my husband had some thoughts/suggestions that maybe you guys can help us out with.
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Buy a bigger house now (we were going to upgrade anyway for kids), take the equity from the increased market value on our current house (Valued at just over $200K, he’s paid $40K and the original mortgage was for $140K) to pay the 20% down on a max ~$250K house and the remaining chunk he’d put towards or two of my private loans. I hope I explained that right. Also, since we are married in FL, is he able to buy a house just in his name? Or would they have to use both of us because we are married and therefore have to run both of our credit scores?
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He asked if I could refinance my loans. I have tried with SoFi and earnest and to refinance all of them, I would lose all my federal benefits, especially the forgiveness after 25 years if that is still a thing. I could see refinancing the private loans, definitely. My credit score was under 700 until just recently, so they didn’t approve me when I tried last year alone and that total might’ve been too high compared to my earnings. He then offered to cosign. Would this be a smart way to do it? Should I do all of them at a 3.92% fixed rate (lowest SoFi offers) or just the private loans? That would increase the monthly payment but if he helps it would be paid off in ~8 years instead of 19 that I have left paying the way I’m paying according to my amortization spreadsheet. Also, if we refinance through one of these providers, does the interest accrue daily? And I guess if it’s paid off in 8 years, the forgiveness after 25 years is not a factor.
Any guidance would be appreciated. Even doing a combination of the two, would we wait until after a chunk is paid off and then refinance the rest? Or would we try to refinance all of it and then pay a chunk of the refinanced total with the lower interest? Or are there other options like investing in stocks? We're open to anything. There are actually options now with his help.
Submitted February 25, 2017 at 11:43AM by squizzdoodle http://ift.tt/2lQRLZM
