Throwaway as I don't want to put my personal stuff out on my main.
So here's the situation: My partner has been renting from a long-time family friend for 14 years. In that time, rent has remained the same ($900). The owner does not want to be a landlord anymore; he has another house he's been using a property management company for and he wants to move us over to the same management co. The PM has given him a list of improvements needed on the home (which has not had any real attention in 14 years), and his plan is to have us sign a year lease at the current rental rate and perform the improvements during that time, and when that term ends the rent will more than double. We are unwilling to stay in this house at the new rate.
Financial stuff:
My partner's finances aren't great. He has about $3k of medical debt that has gone to collections, and he has a CC with a $10k balance at 16% APR ($250 monthly min payment). His income is variable as he's recently switched careers to a commission-based structure and he's still learning. His credit score is 670. He effectively has no savings.
I have more debt, but better control of my finances. $12k in student loans (6.9%, $220 monthly), $1800 on a car loan (3.3%, $180 monthly), and $9500 on a personal loan from debt consolidation after divorce a few years back (6.3%, $700 monthly). My credit score is 830. I have $10k cash in the bank.
I have about $2k every month to throw at bettering our financial position (this is after all minimums are paid). This is what I'm thinking:
- Pay off the medical debt first
- Cut the CC debt in half next
- Attack the personal loan next to reclaim the highest monthly payment back into cashflow
- Save everything after these are accomplished
That would leave us with a bit of a car loan, my student loan, and about $5k in CC with about $20k cash for homebuying in July of 2022. I'm hoping that by getting the collections done first will give his credit score time to improve. But I'd appreciate input on the plan--should we pay off the whole of the CC before the personal loan? Not worry about the personal loan since it's not revolving credit (it will be paid off in Oct 22 at the current rate of repayment anyway)? Save more aggressively to have a bigger down payment, and not worry about the debt?
In case it's relevant, he's eligible for a VA loan when it comes time to buy.
Thoughts?
Submitted August 25, 2021 at 10:21AM by personalfinance2021 https://ift.tt/2UKduGw
