Vancouver, WA · Member since 2021 · 12 posts · 24 votes
BTW this is my first post!
I am 22 and have been saving up for my first property, I currently have 23k saved in cash and I am saving $2800 a month that I am adding to that total. I want to buy a single family property and live in a trailer on the side of the house while renting the house out. This would be paid for and only in my name, but I would have my girlfriend stay with me.
She has 35k in student loans and is about to incur even more. When we get married and eventually combine finances I am unsure of how to approach her debt pay down. Should I continue investing my savings? Should I dump all my extra cash into the debt? Should I not help at all?
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
If you are my son: no you don't payoff a girlfriend's debt. When you are married, then talk about it. What line of work will she have to pay it off after college?
WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
5y
OP, what is her current interest rate on the debt? Can you invest your cash and make more in the near future? It's all there is to this question, really. Will you maximize your returns by paying off the debt or by investing your cash elsewhere? The other side of the question, is obviously all the Dr. Phil takes that were provided to you above.
Investor · Saint Paul, MN · Member since 2015 · 663 posts · 512 votes
5y
@Benjamin Couch
I wouldn’t pay off a debt of someone that you are not legally bound to. What happens if you pay off her debt and then you break up, all that money is gone.
Once you marry you combine finances and then work together to pay off her debt. Keep saving money for your first single-family home and put a big down payment.
I definitely wouldn't do this until you're married. Part of your premarital discussions should be how you each feel about debt and asking her what her thoughts are about paying off her debt, whether she has a plan in mind to do this and what her financial goals are in general. You will similarly want to discuss your thoughts about debt and your financial goals. I don't know that you should disclose that you have all of that saved yet but I do think you all should be fairly transparent around expectations regarding finances as this is supposedly the #1 cause of divorce.
If you, and preferably a premarital counselor, feel you're aligned and she is independently thinking of how she'll address the debt then the discussion can progress on you assisting her. If you're following DR, he'll say something along the lines of to go ahead and put your money towards her debt if it's still around after you guys get married. Idk about that but I will say as you all aren't married YET, go ahead and get to investing with that money. A lot of engagements fall apart before the couple hits the altar and it would be a shame to let deals pass you by because you saved money to pay off the debts of someone you might not even get married to. Also make a plan to not let the wedding get you guys into further debt.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
5y
I would recommend that whatever you do decide to do that you discuss it with her and have it addressed in the perceptual agreement.
Something along the lines of, that if you do pay off her debt and the marriage lasts less than ten years she either repays you or pays you ten percent of her income from her job, whatever that ends up being for ten years after you break up or she can get a loan and repay you what you paid off or you get the value of what you paid off in assets before marital assets are split. And in any case you need to keep financial records to show what you paid off.
What you do not want to do it pay off her debt, let her walk away debt free after 3 years, and you lost your investment as she moves in with a dr.
When you enter into marriage, everyone thinks it is wonderful and will last forever, but very few do last until death...and sometimes those that do were assisted to reach that point. So plan for the exit before you enter. You really should put as much into the exit plan as you do into the wedding plan.
Awh, but those beliefs kept me for getting hitched!
Realtor · Columbus. OH & Dayton, OH · Member since 2020 · 37 posts · 37 votes
5y
Hey Benjamin!
I would suggest if you are looking to help out your girlfriend with her finances to take an approach like the airline videos tell you incase of loss of cabin pressure. Always secure your O2 mask first before helping others. As of right now you are not combined finances so helping her pay debts down is not the primary focus. Make sure that you are investing and growing your portfolio before tackling anything that could slow your growth.
She is willing to live with you in a trailer and from my interpretation that means she is in it for the long haul. Make sure you discuss it with her and try and explain it according to her DiSC profile. In the long run growing a portfolio makes the most sense vs paying student debt as the interest is so small vs income generation from rentals. Also after she is finished with her degree you will likely have enough passive income from rentals to cover the payments and then some vs paying all you can now and still having a payment each month.
Flipper/Rehabber · San Antonio, TX · Member since 2020 · 16 posts · 6 votes
5y
@Benjamin Couch
I do recommend helping her but not in the way that you mentioned. Instead of giving her the cash to pay off the loan or not look for four owner financed properties that would be willing to take a $5,000 down payment each which totals $20,000. Factor in a $300 a month income for each property which is 1200 bucks a month have that paid for at least some of the bill and help her partially while she has an opportunity to come up with the rest. At least this way you're not completely saying no you're saying sure but we're going to work at a different way. I'm not sure what market you're in.
Investor · Fort Myers, FL · Member since 2021 · 13 posts · 3 votes
5y
That is very kind and thoughtful of you to want to help your GF out of debt. The answer would be NO because first of all you do not want to completely wipe out your savings, you need a something for rainy days...Second, student loans can be paid over time and if she will be working in the healthcare field she could qualify for loan forgiveness. She has a 6 month grace period post graduation to start paying back loans with interest. As a healthcare provider, she can even pick up OT and pay off that amount in less than 2 years. Doctors and pharmacists graduate with 3 times that amount and some of them pay it off in 5 years or less. Your GF can pay that amount off easily in a few years if she chooses to do so.
When you get married, you both can start investing together, consolidate those loans and come up with a plan perhaps from the proceeds of your investment to pay off that debt...Invest in Real Estate if that was initial intention for your savings, that would not be a bad investment.
@Benjamin Couch DRIVE TOWARD YOUR GOAL! When you’re married and you need her to qualify for something then you can pay off her loans but in the meantime keep your cash because you never know when the right opportunity is going to show up.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
5y
Lets look a bit down the road . First , student debt , then wedding expenses , buying a house , furniture and decorations . Then a newer car , to fit the children , day care , doctor bills . Look long term .
Investor · Easley, SC · Member since 2013 · 248 posts · 51 votes
5y
Years ago, I had the same question. What I ended up doing was sitting down and talking with her about it. We went over everything together, mine and hers, and we agreed to a budget and plan for paying down debt individually until we would get married. This took a lot of stress off of her because she was so overwhelmed with everything and she appreciated having me form a specific plan to attack each debt .After we were married, we combined everything and I took over paying bills and eventually paid everything off. I would advise you to take this approach and not to pay it off yourself, until you are both married. Good luck.