Question on the next couple of years

johnhig35 · #1 (**permalink**) 05-01-2010, 10:59 PM

Hey, this is my first time posting, thanks for the help in advance.

I am trying to figure out the best way to deal with our debt over the next couple of years while my wife goes back to school.

Currently we have 160,000 in federal student loan debt (the loans are consolidated- subsidized are about 120k, unsubsidized are about 40k), 13,000 in private student loan debt, 143,000 mortgage (the house is a rental right now). We have no credit card debt.

She's going back for an advanced degree and we should be making great money when she gets out in 3 years, around the 200k a year mark not including my income (which is MUCH less).

We have 20k in an emergency fund (in a money market account making about 1.5% interest), 25k in a non-retirement investment account, 45k in retirement accounts (401k, roth).

I know the importance of the emergency fund, but I am wondering if we should pay off/down the private student loan (5%) before she starts school in july.

littleroc02us · #2 (**permalink**) 05-03-2010, 02:51 PM

Question: What do you have for degrees as for the 160k in student loans? Can you get a great job with all of that schooling? I can't even related to the debt you will be in. Plus, how fast are you going to pay off the loans when your wife gets a job. Last question, do you have children or are planning on it. So, who will stay home with the kids. Could you imagine for example if you had children and she stays home to care for them and she has this additional degree and 200-300k in debt??

johnhig35 · #3 (**permalink**) 05-03-2010, 11:35 PM

Sorry, it's 148,000 in federal loans, and she will not be taking any more out for her residency. ~160,000 total (federal and private).

Great questions. She has the degrees- she'll be a board certified internal medicine veterinarian once she finishes up this program. She has been accepted and has to take it or else she will never have this opportunity again, it's not something that is entered into lightly, just like a residency for human medicine.

Yes, she will be able to get a job at either a university or in a specialty hospital. We are planning on paying off the loans as fast as we can once she has a job, but that's not the point, I am trying to plan for the next 3 years BEFORE she has the job when she will be making 28k a year.

We don't have any kids, but will probably start planning on it after she finishes. I'll stay home with the kids.

I have broken it down and if we pay $75 a week over the next 3 years, we will be able to pay off her private loan, this is not taking into consideration the interest it will accrue.

aalerts · #4 (**permalink**) 05-12-2010, 11:05 AM

Hi,
An important question re your current debt is, how is your cash flow now? In other words, do you have enough income coming in today to pay for your "current" expenses?
Also, it's probably a good idea to keep an emergency fund. How would you take care of an unexpected major expense? You don't want to tap into your retirement savings and your investment account might grow more for future needs. If you do have money left over, pay down the highest interest rate first. That's like a guaranteed return.
Vincent I

littleroc02us · #5 (**permalink**) 05-12-2010, 03:38 PM

Quote:

Originally Posted by johnhig35

I am trying to figure out the best way to deal with our debt over the next couple of years while my wife goes back to school.

My question would be "With what income do you have to pay down the debt in the next couple of years?"

tdls17 · #6 (**permalink**) 07-03-2010, 04:07 PM

No. The first priority should be to keep that emergency fund in tact. should you lose work; you're going to need it..

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