How to handle incoming student loan debt (Lawyer Type)

Debt
#1

Love the IG and happy to be here now! I’ll try to be as clear/brief as I can with my background before posing the question. My situation is pretty specific.

I’m 29 and I pull in just under 100k total before taxes, and about half of it is untaxable because I work for the military. Since my most recent promotion, I’ve been living off of about 50% of that because I have been debt snowballing for 2 years now. 75k in debt is now about 28k (all student loans) and for the first time in my adult life, I have a positive net worth! It’s only about +3k, but every bit counts.

I have just about $17k in the federal TSP and I’m contributing 5% ($304/mo) to get the agency match. $1k is in savings and I live off of just about $4k/mo, and $2600 goes to my remaining student loans. Scheduled payoff date is March 2021. Yay!

Here is the curveball: I’m about to get married. She is incoming with about $3k in credit card debt (not bad) but a whopping $250k in student loans after law school. Her particular field isn’t the flashy BMW driving kind of law everything thinks about, so while we aren’t going to be rich we won’t be going broke either. Oh, and her interest rates vary between 5-7%. So here is my question.

My plan is to continue paying mine off, then move to fully fund 3-6 months of expenses, and then max out my TSP while I am still in so I can take advantage of the super low fee structure. That would leave about $800/mo left over to boost our monthly spending a bit and reward ourselves for getting this far, while saving $1k/mo for a down payment on a house in the 7-10 year timeline. Meanwhile, we are living solely off of my income and her entire paychecks go to pay down her balance, which takes about 10-12 years. After that point, we would roll her payments to max out a 401k, IRAs for both of us, and then spread out the remaining balance.

I’m curious your take on this. I know the mathematical answer is to take my future $3100/mo debt snowball and apply it to her balance to get out faster (5-6 years) but I don’t know if that is emotionally feasible to do for that long. I just wanted a reputable human’s take on the situation. Thanks!

#2

Yeah… in my opinion, you’re moving to the “reward yourself/buy a house” phase a little too fast. The goal here is to maximize lifetime happiness. I think if you two live like a broke young married couple for a few years, you can knock that debt out way faster, then you’ll have the full freedom of your incomes to buy homes, build wealth, have freedom, etc.

After your debt, you mention:

  • Emergency fund
  • Max out TSP
  • Boost monthly spending
  • Save for house

That’s blurring the focus too soon. $250K is a big number… but what if you both live on HER salary, and you put YOURS towards the debt. Hold off on investing anything past the match. Then you’re debt free in 3 years or so. Plus, I bet you’ll both see pay raises before then, making the whole thing go faster. 32 years old, 100% debt free, double incomes is a pretty good place to be.

I think it’s REALLY EASY to crank up your cost of living, but really hard to crank it down. When you’re old you will look back and tell stories about how you guys lived on nothing the first few years of your marriage and it was one of the happiest times of your life. Spending more won’t make you happier, but freedom will. Save the luxury living for later. I think you’ll be happier now getting the monkey off your back, and way happier later with your full incomes going full blast on wealth accumulation, not to limping along in debt for 12 more years.

That’s what I would do!

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#3

Thanks so much for the input! That is definitely something to ponder moving forward. I’m curious what she will say haha but I will definitely follow up.

Thanks for all the easy to read posts. I feel like they’re helping me to become more financially savvy.

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#4

Well if she doesn’t like that plan, you can let her figure out the quarter million of debt while you live on your six figure salary debt free :wink:

But seriously, probably good to get on the same page… slightly delayed gratification for a longer term payout.

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#5

Update, we’re going to start on it all next spring after mine. She things I’m slightly crazy but she’s on board.

Thanks for the advice and continued financial education!

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#6

When you guys are 50, millionaire status, happily married without worrying about your debt and your friends who are buried in debt come over for a dinner party. She’s going to tell the story about how she thought you were crazy to pay off the mountain of debt.