Finances for newlyweds - yet another debt vs. investing ?

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lolabean
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Finances for newlyweds - yet another debt vs. investing ?

Post by lolabean » Thu Jun 06, 2013 3:58 am

Hi everyone!

I've been lurking for a couple months and have been learning a lot from you all and from the wiki! I was hoping to perhaps get a bit of advice from you sage Bogleheads, and I'll try to learn and give back to the board in the future :)

I am newly married, and my husband and I are both in our early 30s. We both did the broke grad student thing in our 20s, and have only recently both started making what one would consider "good money" in a high cost of living city. Husband has no debt (one of those lucky guys with family help), and I have been diligently paying down my student loans but still have about $50K in debt left - federal loans at 6.8%.

Even though I know we are married now and "what's mine is yours" applies, I do not feel comfortable having my husband pay down my student debt. He also wasn't super comfortable with the concept, but he wanted to help out somehow. We compromised by having him save for our emergency fund, and now we have eight months of expenses saved - 25% in an immediately-accessible savings and the rest in what sadly passes for high-interest CDs these days. He is now putting his extra cash away to save for a down payment on a house. We pool all expenses and split them based on our income ratio (except for the emergency/house savings, our own individual monthly Roth contributions, and my student loan payments.)

When it comes to retirement, neither of us started saving until recently. Last year, we both opened and maxed out Roth IRAs and put the $$ in Vanguard target retirement funds. Husband is just now starting his 401k, putting 10% of his income away (and has a delicious 5% employer match as well.) If he gets a moderate return he should have 1x his annual income saved in retirement by age 35, which seems to be a good start.

But then there's me - the 30-something who has only $6K in a Roth IRA and $50K in student debt. I am able to pay about $1K/month towards the loans (the minimum payment is $500). If I keep this up, it will take about 5 years to pay off the loans (as opposed to 10.) I would be saved about $10K in interest. However, that would put me at over-35 with only a Roth IRA. That worries me. My company offers a 401K, but no match. (For the record, I am job hunting, hopefully landing with a company that does offer a match :) If I did start putting something in a 401k now, my monthly student loan payoff would be lessened as a result.

However, for now - with my loans at 6.8%, which could be around what a 401K return would be, should I be putting something in a 401k at this time? Or should I just keep paying extra towards the loans? The psychological burden of the debt doesn't trouble me that much, but the psychological burden of getting older and feeling that I'm losing a lot of precious time on potential retirement earnings compounding troubles me. And yes, I know that is ironic considering that I didn't save a penny towards retirement in my 20s.

Any advice greatly appreciated! Thank you!

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Grt2bOutdoors » Thu Jun 06, 2013 9:57 am

Hello and welcome to the forum!

With a juicy 6.8% guaranteed return on your money, I'd be in favor of getting rid of the loan. Here's my thinking, if you and hubby at some point want to purchase a home/place to live, it's better to have less debt than more. Yes, having a large retirement plan would be great, but you have time to amass retirement savings and that can be in the form of both 401k, Roth and/or taxable savings accounts. Also, paying off the student loans will grant you more flexibility - one less noose around the torso. :happy
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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sometimesinvestor
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Re: Finances for newlyweds - yet another debt vs. investing

Post by sometimesinvestor » Thu Jun 06, 2013 10:19 am

The stock market has more than doubled in the last 4 years . Can it continue? Yes but a bird in the hand etc . Pay off the debt and forget about the Roth ora 401k withouta match. If you read in the paper that the stock market is at 12000 on the Dow or below you have a sufficiently good chance of beating a 7% return that you should go back to the Roth before paying off the loan . Else no. Is this market timing no. Its recognizing potential value and a possible bargain. If you do ge ta job with a matched 401k than that changes things.

lolabean
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Re: Finances for newlyweds - yet another debt vs. investing

Post by lolabean » Thu Jun 06, 2013 10:27 am

Thank you for the responses! One thing I forgot to add - we will very likely be ineligible for the Roth in a year or two due to the income limit so I want to get the tax advantage while I can. Should I just forget it and stop saving for retirement altogether, and put all that cash towards the loan?

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Grt2bOutdoors » Thu Jun 06, 2013 11:47 am

lolabean wrote:Thank you for the responses! One thing I forgot to add - we will very likely be ineligible for the Roth in a year or two due to the income limit so I want to get the tax advantage while I can. Should I just forget it and stop saving for retirement altogether, and put all that cash towards the loan?
Nonsense! You can do what is called a "back-door" Roth IRA, even if your income exceeds the current thresholds for a Roth. Search the wiki for information on Back Door Roth IRAs.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Twins Fan » Thu Jun 06, 2013 12:28 pm

lolabean wrote:And yes, I know that is ironic considering that I didn't save a penny towards retirement in my 20s.
Neither did I... Actually, I didn't even save a penny in my 30's either. :D or is that :oops:

It starts to add up pretty quickly though when you can really dedicate to a savings plan.

At 6.8%, I'm also in favor of knocking out that student loan debt ASAP. Definitely over a non-matching 401k. The Roth... I can see why you want to contribute there and that's not a bad thing, but a couple years of max contributions is $11,000. That would take a pretty good chunk out of that debt. Up to you though... kind of a personal preference thing.

Leemiller
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Re: Finances for newlyweds - yet another debt vs. investing

Post by Leemiller » Thu Jun 06, 2013 9:12 pm

I just have a hard time with the two of you working and with your husband getting so much put aside for retirement without you saving much because you're paying off debt since you didn't have family help. It sounds to me that this just isn't about the numbers but about how you will feel about not having much in retirement savings - so more of a security issue? Honestly I can see a conflict also when you get a more expensive house since your husband is going to feel differently about where "he" is financially then you will - will you really be ready to pay more for a house and see less go towards retirement/debt. My husband and I both work and we pay for things in a haphazard manner and aren't completely joint, but we are in similar places financially.

It isn't ironic that this bothers you. My husband and I got married in our 30s and neither of us had started saving much until our 30s (both attorneys). I maxed out my retirement before I paid off my student loans (mine are ridiculously low at 3%) but even put money in retirement while I was paying off credit card debt because it made it easier for me to want to save when I saw a balance grow. Your income will be going up as well. You didn't say what your tax bracket is but that is a consideration as well.

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zebrafish
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Re: Finances for newlyweds - yet another debt vs. investing

Post by zebrafish » Thu Jun 06, 2013 10:20 pm

I really think you need to look at all this as our finances, our debt, our joint retirement.

When he married you, he knew about the debt. It will help your marriage to combine finances and work together. For a while, my wife and I lived together but "separate". We are now on the same page and working together and it is waaaaaaay better for our relationship and our finances.

What happens if you have a child and don't have a job any more? Are you not going to eat because you aren't earning an income? If you don't have an earned income, will your spouse not give you "his" money during retirement?

happygilmore
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Re: Finances for newlyweds - yet another debt vs. investing

Post by happygilmore » Fri Jun 07, 2013 10:37 am

pay off that debt at 6.8%!!!!! its all in one big bucket now.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Spooky » Fri Jun 07, 2013 10:54 am

I think it will be better for as a family to have him help pay off the loans. The phase out for Roth starts around $178,000 right now for married filing jointly, so if the two of you are soon to be in that sort of income range, I don't know why you would keep 6.8% student loans around.

The money that you personally spend on interest is money that can't go into retirement savings, which in theory will be for both of you. You will be paying more taxes than you need to, if you are missing out on the 401k (even though there is no match). Maybe you can run some numbers in turbo tax and in some retirement calculators and see what happens over the next 20-30 years with different scenarios.

I paid off some of my husband's debt after we were first married, and he is still helping me with some of mine later (at very low interest rates), but we also continued to max out every tax-advantaged savings opportunity.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Batousai » Fri Jun 07, 2013 12:14 pm

zebrafish wrote:I really think you need to look at all this as our finances, our debt, our joint retirement.

When he married you, he knew about the debt. It will help your marriage to combine finances and work together. For a while, my wife and I lived together but "separate". We are now on the same page and working together and it is waaaaaaay better for our relationship and our finances.

What happens if you have a child and don't have a job any more? Are you not going to eat because you aren't earning an income? If you don't have an earned income, will your spouse not give you "his" money during retirement?
This. I've never understood the idea of "his money" or "her money" in a marriage. I don't want to turn this into a soapbox, so I won't say anything more about that.

The correct move financially would be to pay off the 6.8% debt ASAP, the right move for your relationship may be a different answer though.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by FinanceRookie » Fri Jun 07, 2013 1:15 pm

If this is of concern to you, that is saving above and beyond what you're currently doing in your Roth IRA, than yes opening a 401(k) would allow you to contribute more pre-tax money. I would suggest finding a healthy balance between the minimum payment for the loans and the $1,000 payment. Adding only $100 on top of the minimum would decrease the number of payments and save you roughly $4K in interest! That leaves you with a $4,800 annual contribution to your 401(k) while accelerating your student loans.

If you were me, I'd pay down the high interest student loan in full ASAP
:beer

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Re: Finances for newlyweds - yet another debt vs. investing

Post by 2stepsbehind » Sat Jun 08, 2013 7:58 am

Batousai wrote: This. I've never understood the idea of "his money" or "her money" in a marriage. I don't want to turn this into a soapbox, so I won't say anything more about that.

The correct move financially would be to pay off the 6.8% debt ASAP, the right move for your relationship may be a different answer though.
Do you understand the idea of "his toothbrush" or "her toothbrush" in a marriage? I think there are a variety of financial arrangements couples can make and none are inherently superior or flawed.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by zebrafish » Sat Jun 08, 2013 11:40 am

2stepsbehind wrote:Do you understand the idea of "his toothbrush" or "her toothbrush" in a marriage? I think there are a variety of financial arrangements couples can make and none are inherently superior or flawed.
I do understand the first point (but I don't agree with the second). A pair of $3 toothbrushes hardly holds the power and stake in a relationship like how money and finances are handled. I would argue that holding how a couple handles their toothbrushes akin to their handling of money is a bit of a false analogy.

I think the OP does indicate that her spouse wants to help but she is reluctant to take help from her spouse to pay off "her" loans-- but that at the same time she worries about not contributing to "her" retirement. My simple argument is that it might be more productive to work together as a team-- this may help improve things now and down the road in their finances and their relationship. This is something I've learned after being married for 15+ years, but certainly there are other ways...

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Re: Finances for newlyweds - yet another debt vs. investing

Post by 2stepsbehind » Sat Jun 08, 2013 12:17 pm

zebrafish wrote:
2stepsbehind wrote:Do you understand the idea of "his toothbrush" or "her toothbrush" in a marriage? I think there are a variety of financial arrangements couples can make and none are inherently superior or flawed.
I do understand the first point (but I don't agree with the second). A pair of $3 toothbrushes hardly holds the power and stake in a relationship like how money and finances are handled. I would argue that holding how a couple handles their toothbrushes akin to their handling of money is a bit of a false analogy.

I think the OP does indicate that her spouse wants to help but she is reluctant to take help from her spouse to pay off "her" loans-- but that at the same time she worries about not contributing to "her" retirement. My simple argument is that it might be more productive to work together as a team-- this may help improve things now and down the road in their finances and their relationship. This is something I've learned after being married for 15+ years, but certainly there are other ways...
You don't have to agree--it is meant to be provocative to those who proclaim no value in separateness. You can work as a team and still have separate accounts. You can pool money together and still be working at cross purposes.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Batousai » Mon Jun 10, 2013 1:14 pm

2stepsbehind wrote:
zebrafish wrote:
2stepsbehind wrote:Do you understand the idea of "his toothbrush" or "her toothbrush" in a marriage? I think there are a variety of financial arrangements couples can make and none are inherently superior or flawed.
I do understand the first point (but I don't agree with the second). A pair of $3 toothbrushes hardly holds the power and stake in a relationship like how money and finances are handled. I would argue that holding how a couple handles their toothbrushes akin to their handling of money is a bit of a false analogy.

I think the OP does indicate that her spouse wants to help but she is reluctant to take help from her spouse to pay off "her" loans-- but that at the same time she worries about not contributing to "her" retirement. My simple argument is that it might be more productive to work together as a team-- this may help improve things now and down the road in their finances and their relationship. This is something I've learned after being married for 15+ years, but certainly there are other ways...
You don't have to agree--it is meant to be provocative to those who proclaim no value in separateness. You can work as a team and still have separate accounts. You can pool money together and still be working at cross purposes.

You are getting into the weeds. Is it possible to have a marriage that works with separate money? Sure. It's also possible to build a canoe out of concrete, doesn't mean it's advisable. Marriage is something that is built upon trust, and unified in coming together as one team, forever. I don't know the OP's situation, however I have seen a trend in the US population in general. These days people don't seem to view getting married as a "forever" commitment and instead as an "at will" commitment. The deliberate separation of finances often occurs so that they can easily split finances later when they divorce. Going into something like marriage with the assumption that you should plan to get divorced is a self fulfilling prophecy. If you find the odds of you divorcing the person you are marrying that high, you shouldn't be getting married. I am not saying that you shouldn't plan for contingencies, but socking money away into an account that is protected in divorce proceedings is something that shouldn't be done in a healthy marriage.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Toons » Mon Jun 10, 2013 1:16 pm

Grt2bOutdoors wrote:Hello and welcome to the forum!

"With a juicy 6.8% guaranteed return on your money, I'd be in favor of getting rid of the loan. :happy
"


+1 That Sums it up in a nutshell :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Finances for newlyweds - yet another debt vs. investing

Post by 2stepsbehind » Mon Jun 10, 2013 3:03 pm

Batousai wrote:
2stepsbehind wrote:
zebrafish wrote:
2stepsbehind wrote:Do you understand the idea of "his toothbrush" or "her toothbrush" in a marriage? I think there are a variety of financial arrangements couples can make and none are inherently superior or flawed.
I do understand the first point (but I don't agree with the second). A pair of $3 toothbrushes hardly holds the power and stake in a relationship like how money and finances are handled. I would argue that holding how a couple handles their toothbrushes akin to their handling of money is a bit of a false analogy.

I think the OP does indicate that her spouse wants to help but she is reluctant to take help from her spouse to pay off "her" loans-- but that at the same time she worries about not contributing to "her" retirement. My simple argument is that it might be more productive to work together as a team-- this may help improve things now and down the road in their finances and their relationship. This is something I've learned after being married for 15+ years, but certainly there are other ways...
You don't have to agree--it is meant to be provocative to those who proclaim no value in separateness. You can work as a team and still have separate accounts. You can pool money together and still be working at cross purposes.

You are getting into the weeds. Is it possible to have a marriage that works with separate money? Sure. It's also possible to build a canoe out of concrete, doesn't mean it's advisable. Marriage is something that is built upon trust, and unified in coming together as one team, forever. I don't know the OP's situation, however I have seen a trend in the US population in general. These days people don't seem to view getting married as a "forever" commitment and instead as an "at will" commitment. The deliberate separation of finances often occurs so that they can easily split finances later when they divorce. Going into something like marriage with the assumption that you should plan to get divorced is a self fulfilling prophecy. If you find the odds of you divorcing the person you are marrying that high, you shouldn't be getting married. I am not saying that you shouldn't plan for contingencies, but socking money away into an account that is protected in divorce proceedings is something that shouldn't be done in a healthy marriage.
And you are imposing your own values on others. I've seen couples who have entirely separate accounts, entirely joint accounts and accounts in between. All arrangements can work where there is open and honest communication. I don't think people are going into marriage with the assumption that they should plan to get divorced--or at least any more than people buy homeowners insurance with the expectation that the house will burn down.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by lolabean » Mon Jun 10, 2013 5:55 pm

OP here. I just want to make clear that it is a mutual decision between both my husband and I for me to pay off my own loans. I would feel very uncomfortable having him pay them for me. That's just the way I am. He feels the same. As I said before, it is not like he is not contributing or that I am getting a raw deal out of this - while I pay down my loans, it has been entirely his income that has built our 8-month emergency savings and our savings for buying a home someday. We don't have a pre-nup, and since he makes more money, he pays proportionally more of our expenses.

The only part where I am dinged is having to make the choice to save for retirement vs getting rid of the loan. However, after reading over the suggestions here and crunching some numbers, I've decided to not contribute to a 401k and to just use my extra cash to pay down the loan before my 35th birthday. I will probably be able to do this whether or not I contribute to a Roth, but I might stop doing that too just to pay the debt down faster. If I get a job with a 401k match, I will contribute only up to the match.

If I then start maxing my 401k and Roth out at age 35, I will theoretically be able to catch up to my husband's level of retirement savings in a handful of years - and I will be debt-free.

And because one of you mentioned it - yes, we are planning on children, but I 100% plan on continuing to work, as I am not cut out to be a SAHM and our incomes are enough to cover high-quality child care after maternity leave.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by zebrafish » Mon Jun 10, 2013 10:58 pm

lolabean wrote:The only part where I am dinged is having to make the choice to save for retirement vs getting rid of the loan. However, after reading over the suggestions here and crunching some numbers, I've decided to not contribute to a 401k and to just use my extra cash to pay down the loan before my 35th birthday.
You see, this is where working together might help you meet your goals better than working separately. You say your spouse has extra cash. Perhaps it makes more sense for your mutual long-term financial goal(s) to both max your 401k plans, and to use your husband's extra income to pay off "your" loans. I get the idea that you created the debt so you want to pay if off, but this mine/yours approach might be working against you in the long run...

To give you an example-- my wife makes significantly less than me, but because we consider all income "ours", she maxes out all of her pre-tax retirement at work such that her take home pay is less than $100. This boosts our mutual yearly retirement contribution by 1/3 and reduces our taxes by a significant amount (win/win). If she had to take home her "own" money, we wouldn't be able to contribute as much to retirement and we'd pay higher taxes (lose/lose). Just a plea to think about long-term financial goals. You're a team, right?

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Batousai » Mon Jun 10, 2013 11:34 pm

zebrafish wrote:
lolabean wrote:The only part where I am dinged is having to make the choice to save for retirement vs getting rid of the loan. However, after reading over the suggestions here and crunching some numbers, I've decided to not contribute to a 401k and to just use my extra cash to pay down the loan before my 35th birthday.
You see, this is where working together might help you meet your goals better than working separately. You say your spouse has extra cash. Perhaps it makes more sense for your mutual long-term financial goal(s) to both max your 401k plans, and to use your husband's extra income to pay off "your" loans. I get the idea that you created the debt so you want to pay if off, but this mine/yours approach might be working against you in the long run...

To give you an example-- my wife makes significantly less than me, but because we consider all income "ours", she maxes out all of her pre-tax retirement at work such that her take home pay is less than $100. This boosts our mutual yearly retirement contribution by 1/3 and reduces our taxes by a significant amount (win/win). If she had to take home her "own" money, we wouldn't be able to contribute as much to retirement and we'd pay higher taxes (lose/lose). Just a plea to think about long-term financial goals. You're a team, right?
Now, now, you're imposing your "values on others" by suggesting such. :p

Seriously though, I agree 100%. You're either in or not, make the choice that's better for the long term for both of you.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by lolabean » Tue Jun 11, 2013 1:32 am

Batousai wrote:
Seriously though, I agree 100%. You're either in or not, make the choice that's better for the long term for both of you.
I can't say I agree with "you're in or you're not", as I personally don't see anything wrong with keeping some money separate if it makes you comfortable. Is our situation the absolute smartest financial thing we could be doing? Nope. But it does make us both feel comfortable and equitable, which I think is very important. I can't imagine having my take-home pay be just $100 and then having to feel like I was depending on my husband's income for everything else. I guess maybe it's just being part of a younger generation, but I can't say I entirely understand couples who combine everything. Different strokes, I guess. I knew by asking this question someone would bring up the matter of how we are approaching our finances overall, rather than just my specific question, and that's fine - but we are doing what is comfortable for us and it would feel really weird for both of us for his money to go to pay my loans.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by mnvalue » Tue Jun 11, 2013 3:32 am

Why not borrow the money from him at half-way between 6.8% and whatever the savings account pays and pay off the loans now? If you do monthly compounding, the math is pretty simple: Assuming .84% on savings, put "(12th root of (1+(.068-.0084)/2))" into Google. If you can deduct student loan interest, then adjust that 6.8% to be an after-tax interest rate first. Each month, multiple the remaining balance by that factor, then subtract the amount of the payment you made to get the new outstanding balance.

Then it's not "his money" paying off your loans, but you two both come out ahead individually and as as group don't pay the interest to the bank. He continues doing what he's doing (saving for the downpayment) with your loan payments helping in that effort, but now your interest is going there.

Either way, skip your Roth IRA contributions and put all your excess cash flow towards paying off the loans.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Bob's not my name » Tue Jun 11, 2013 5:24 am

Grt2bOutdoors wrote:
lolabean wrote:Thank you for the responses! One thing I forgot to add - we will very likely be ineligible for the Roth in a year or two due to the income limit so I want to get the tax advantage while I can. Should I just forget it and stop saving for retirement altogether, and put all that cash towards the loan?
Nonsense! You can do what is called a "back-door" Roth IRA, even if your income exceeds the current thresholds for a Roth. Search the wiki for information on Back Door Roth IRAs.
Are you sure you're going to exceed the limit anyway? In, say, 2015 your gross income would have to be over about $225,000 to be ineligible, assuming you first max two 401k's due to your high marginal rate. If your income is already close to $200,000 it seems you ought to be able to pay off those loans in less than five years.

I agree with the others that you shouldn't be borrowing at 6.8% to contribute to a Roth IRA (and you shouldn't contribute to a Roth IRA before maxing your 401k, either).

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Batousai » Tue Jun 11, 2013 8:15 am

lolabean wrote:
Batousai wrote:
Seriously though, I agree 100%. You're either in or not, make the choice that's better for the long term for both of you.
I can't say I agree with "you're in or you're not", as I personally don't see anything wrong with keeping some money separate if it makes you comfortable. Is our situation the absolute smartest financial thing we could be doing? Nope. But it does make us both feel comfortable and equitable, which I think is very important. I can't imagine having my take-home pay be just $100 and then having to feel like I was depending on my husband's income for everything else. I guess maybe it's just being part of a younger generation, but I can't say I entirely understand couples who combine everything. Different strokes, I guess. I knew by asking this question someone would bring up the matter of how we are approaching our finances overall, rather than just my specific question, and that's fine - but we are doing what is comfortable for us and it would feel really weird for both of us for his money to go to pay my loans.
Like I said in my original post, the best financial decision is not always the right decision after you factor in the people part of the equation. :)

To give you some insight, there is only one checking account where we direct deposit paychecks. After that, it's all "ours". She doesn't pay the mortgage. I don't pay the mortgage. We pay the mortgage. It's a mindset, and perhaps one that doesn't work for everyone.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Twins Fan » Tue Jun 11, 2013 10:54 am

Ok, now if we can get back on track here... :D

The OP did not ask if it's best to combine their money or keep it separate. They asked if it's best to pay off the debt or invest. Let's keep the advice to the question asked for the situation given and not try to tell someone how they should live their life.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by zebrafish » Tue Jun 11, 2013 12:58 pm

Twins Fan wrote:The OP did not ask if it's best to combine their money or keep it separate. They asked if it's best to pay off the debt or invest. Let's keep the advice to the question asked for the situation given and not try to tell someone how they should live their life.
I'm not telling her how to live her life-- I'm trying to help her come up with the best financial decision by considering all the options. I think there is a way for them to pay off the debt and invest, that is all.

She can choose to take or ignore my advice, that is up to her.

:beer

bungalow10
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Re: Finances for newlyweds - yet another debt vs. investing

Post by bungalow10 » Tue Jun 11, 2013 2:13 pm

lolabean wrote: And because one of you mentioned it - yes, we are planning on children, but I 100% plan on continuing to work, as I am not cut out to be a SAHM and our incomes are enough to cover high-quality child care after maternity leave.
Just a small dose of reality here... if you are only able to pay $1k on your student loans each month and are not able to make retirement contributions, you are going to have a hard time paying for daycare while saving for retirement.

Unless you plan to have your husband pay for daycare? I'm not sure how this works when you don't combine your money....
An elephant for a dime is only a good deal if you need an elephant and have a dime.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by lolabean » Tue Jun 11, 2013 5:29 pm

As I noted in my original post, we do combine expenses:

"We pool all expenses and split them based on our income ratio (except for the emergency/house savings, our own individual monthly Roth contributions, and my student loan payments.)"

When kids come along, we will figure it out then - I will hopefully be close to if not totally paid on my loans and will be starting to max my 401k and Roth. Child care expenses will come out of the shared pot.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Twins Fan » Tue Jun 11, 2013 6:12 pm

Welcome to the forum, lolabean! :D

This has been an unusually critical thread for some reason. At least, it sure is coming across that way. I can't help but think you really feel attacked in this one? Typically it's not like that at all around here, so do stick around.

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Re: Finances for newlyweds - yet another debt vs. investing

Post by zebrafish » Wed Jun 12, 2013 12:14 am

Twins Fan wrote:This has been an unusually critical thread for some reason. At least, it sure is coming across that way. I can't help but think you really feel attacked in this one? Typically it's not like that at all around here, so do stick around.
As a single person, I don't necessarily expect you to understand the advice/perspective of married people-- especially those of us who have been married a 10+ years. Nor do I think the advice given by me or others was particularly harsh-- just honest. In the world of compounding, seemingly small financial decisions at a young age can have large consequences later. The OP came here to ask for advice, and she can do what she wants with it, which includes ignoring it! :wink:

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Re: Finances for newlyweds - yet another debt vs. investing

Post by guitarguy » Wed Jun 12, 2013 11:06 am

First off, I'd pay down the loan as fast as possible. Like others have said...the whole 6.8% guaranteed return.

I'll leave your marriage in terms of your financial situation up to you, but I will say that you all should look at the big picture. Sometimes things can be accomplished better as a team. If he's uncomfortable helping to pay down your debt...then fine. Don't let it cause you guys to have problems.

BUT, if it's YOUR issue with pride or whatever the case may be, I'd get over it if I were you. Again...big picture. Best for you overall is to get the loans gone, right?

Best of luck!

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Re: Finances for newlyweds - yet another debt vs. investing

Post by Twins Fan » Wed Jun 12, 2013 11:07 am

zebrafish wrote:
Twins Fan wrote:This has been an unusually critical thread for some reason. At least, it sure is coming across that way. I can't help but think you really feel attacked in this one? Typically it's not like that at all around here, so do stick around.
As a single person, I don't necessarily expect you to understand the advice/perspective of married people-- especially those of us who have been married a 10+ years. Nor do I think the advice given by me or others was particularly harsh-- just honest. In the world of compounding, seemingly small financial decisions at a young age can have large consequences later. The OP came here to ask for advice, and she can do what she wants with it, which includes ignoring it! :wink:
Why when I make general comments do you feel like you were directly attacked?

I am single now and I have been married before, so I understand MUCH more than you think I do. I just chose to answer the OPs question given the situation that was given to us, not try to advise her on everything under the sun as some others did. The OP asked if she should pay off debt or invest. She didn't ask for any other advice. Some of you could have just not commented and then there would be nothing to ignore. :wink:

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