I was the one with the 6 figure student debt. My wife was the one with the 6 figure bank account.
We didn't immediately merge all assets and accounts on the day of marriage. It was a process that happened slowly.
She offered to pay off my student loans, and we discussed drafting a legal agreement that credit her with the loan repayment in the event of separation. We ultimately decided not to use her money to pay off my loans. A big part of it was that I wanted to know for myself what it took to pay off such a loan. I wanted to feel the burden and know exactly how much work it took me to pay off my education. I felt that if I didn't do that, I wouldn't really be able to answer the question: "Was it worth it?"-- I get asked that question a lot. Most importantly, I wanted to answer that question to myself.
George says that it makes sense for you to pay of the loan, and to an extent he is right. I think it also makes sense for an individual to pay of his or her own educational loans, regardless of who he or she is married to. Why is it okay to pay $100k for an education-- to learn science, math, literature, etc..., but not okay to allow your spouse to pay off a $100k loan so that she learns the value of a $100k debt? In both instances it seems that one is paying for valuable knowledge.
We didn't have a pre-nup, but we should have. We are still happily married, but I now know a lot more about legal realities, business, and wealth to know that we should have.
What seems most notable to me from bigjimslade's OP is that I get the impression that he doesn't fully think that his wife values money in exactly the same way he does. This isn't an end-of-the-world/marriage type problem, but it will take some working on. I think that there are probably oodles of happily married, successful couples who don't value money/debt the same way, but I think that in order to be happy and successful in that situation both members of the couple have to know and understand that they value money differently.
I wouldn't pay off her debt. Not yet, at least. Not without the understanding that seems to be missing. A "post-nup" could lead to resentment, and so could paying off a large loan when the beneficiary of your actions doesn't seem to understand how much that action meant to you.
Pay wife's debts? Support her family members? How to manage?
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dot_com_vet
- Posts: 603
- Joined: Mon Jan 31, 2011 2:07 am
While we had zero debt going into our marriage, we decided to keep separate finances. It very easy, very fair.
It's a bit like being FI in the marriage. We have zero arguments regarding money, we can buy whatever we want. We're both very frugal too, so that helps.
Most people think we're abnormal doing this, but I think more should try it.
It's a bit like being FI in the marriage. We have zero arguments regarding money, we can buy whatever we want. We're both very frugal too, so that helps.
Most people think we're abnormal doing this, but I think more should try it.
Hi Big Jim,
*warning, long post ahead. scroll to bottom for TL;DR*
1. Should you pay off her debt? Not before talking to her and making sure you're both on the same page about it. Would she even want you to do this? Would she feel like a mooch and disrespect herself and her abilities if she accepted such a thing? Would you feel like you were just a sugar daddy if you did? Note that if you two have a big difference of opinion about it, you two are going to need to have some long discussions about the nature of personal responsibility and the roles of partners in marriage.
1a. Having her in debt makes you feel more secure that she can't spend money you don't have on her dad. Step back as much as possible and ask yourself: is this fear justified? I say this as a partner who has used similar twisted logic to hold us back financially in the past. I am more frugal than my husband, and when I start thinking things like this, I know I need to untense my shoulders a bit. Learning to trust other people is really hard...especially when they aren't perfect...but making it clear you're willing to grow and learn with them (because you aren't perfect either), and treating them like and trusting them to be mature adults (and explicitly letting them know that) can go a very long way to helping them act more like it.
2. Can you get it back if you divorce? Depends on your local laws. How worried are you about divorce, exactly?
3. The best way to avoid having to bail out her dad is to have a discussion with her about your concerns down this avenue and come to an agreement now, before it happens. This is a very emotionally charged issue for most people, and if you can bring it up calmly, it will actually be really reassuring to her that you are thinking about and planning for the future.
If you're not good at talking, you can also write a letter. One method that has really helped my marriage is "Marriage Encounter". Essentially you both pick a question/sentence/thing you want to talk about, sit down, and write each other a loving letter about it. Then you read each others' letters silently twice, once with your head and once with your heart. And /then/ you discuss.
It is especially useful if one of you has difficulties articulating your thoughts and emotions quickly or verbally. It "evens out" the lines of communication, as it were. The spouse who's verbally "quicker" may find the exercise a little dorky, but if they respect you (and why wouldn't they, since they decided to spend the rest of their life with you?) they will understand it's important to help you discuss things thoroughly. Any spouse with a little world experience will realize the wisdom of making sure your partner is fully on board with something you want to do -- or making sure you and they understand all their objections to it.
(Marriage Encounter itself is a workshop put on by the church; I don't believe you need to be religious nor even attend the live program to get vast benefit out of the practice. There is a fair amount of material about it free online, mostly relating to good ways of communicating with each other. Active listening and I statement techniques, lists of emotions for those who have issues articulating them, lists of questions you can try, etc.)
4. Regarding merged finances, do you have any idea as to her opinions on the matter? My husband and I have always had joint (we came into the marriage with nothing and dug ourselves into the hole together, and we'll dig out of it together too), but other couples work better with things separate. I could handle separate finances, but it just wouldn't work for my husband.
***
TL;DR version: talk to your wife, and listen closely to what she says.
*warning, long post ahead. scroll to bottom for TL;DR*
1. Should you pay off her debt? Not before talking to her and making sure you're both on the same page about it. Would she even want you to do this? Would she feel like a mooch and disrespect herself and her abilities if she accepted such a thing? Would you feel like you were just a sugar daddy if you did? Note that if you two have a big difference of opinion about it, you two are going to need to have some long discussions about the nature of personal responsibility and the roles of partners in marriage.
1a. Having her in debt makes you feel more secure that she can't spend money you don't have on her dad. Step back as much as possible and ask yourself: is this fear justified? I say this as a partner who has used similar twisted logic to hold us back financially in the past. I am more frugal than my husband, and when I start thinking things like this, I know I need to untense my shoulders a bit. Learning to trust other people is really hard...especially when they aren't perfect...but making it clear you're willing to grow and learn with them (because you aren't perfect either), and treating them like and trusting them to be mature adults (and explicitly letting them know that) can go a very long way to helping them act more like it.
2. Can you get it back if you divorce? Depends on your local laws. How worried are you about divorce, exactly?
3. The best way to avoid having to bail out her dad is to have a discussion with her about your concerns down this avenue and come to an agreement now, before it happens. This is a very emotionally charged issue for most people, and if you can bring it up calmly, it will actually be really reassuring to her that you are thinking about and planning for the future.
If you're not good at talking, you can also write a letter. One method that has really helped my marriage is "Marriage Encounter". Essentially you both pick a question/sentence/thing you want to talk about, sit down, and write each other a loving letter about it. Then you read each others' letters silently twice, once with your head and once with your heart. And /then/ you discuss.
It is especially useful if one of you has difficulties articulating your thoughts and emotions quickly or verbally. It "evens out" the lines of communication, as it were. The spouse who's verbally "quicker" may find the exercise a little dorky, but if they respect you (and why wouldn't they, since they decided to spend the rest of their life with you?) they will understand it's important to help you discuss things thoroughly. Any spouse with a little world experience will realize the wisdom of making sure your partner is fully on board with something you want to do -- or making sure you and they understand all their objections to it.
(Marriage Encounter itself is a workshop put on by the church; I don't believe you need to be religious nor even attend the live program to get vast benefit out of the practice. There is a fair amount of material about it free online, mostly relating to good ways of communicating with each other. Active listening and I statement techniques, lists of emotions for those who have issues articulating them, lists of questions you can try, etc.)
4. Regarding merged finances, do you have any idea as to her opinions on the matter? My husband and I have always had joint (we came into the marriage with nothing and dug ourselves into the hole together, and we'll dig out of it together too), but other couples work better with things separate. I could handle separate finances, but it just wouldn't work for my husband.
***
TL;DR version: talk to your wife, and listen closely to what she says.
Big Jim,
Sorry for the long post that follows.
My wife also has six figure student loans. Due to the fact she will likely go to very part time once we have children it is unlikely that she will ever earn enough to support herself and pay down the debt. My situation does not sound dissimilar from yours, except for the father in law. My salary is just about twice hers. I am also much more frugal.
We've been married less than a year and I have had to come to terms that if I were not with my wife I would be much closer to FI. BUT I remind myself that I would be alone. Being single works for some people - but I would rather learn to accept we will not always make the most optimal financial decision and be with her than to achieve FI in record time and be without. Not to say there aren't couples that make it together, but my life didn't work out that way.
My wife is very sensitive about money, so she is already somewhat uncomfortable with me contributing to her student loans - but recognizes it is going to happen when she becomes a stay at home mom, so it makes sense to start working on the debt now. One thing that is working well: By paying off two of her small loans ($3,500/ea) and taking over the payment on another ($11,000) she took the payments she was making to those loans and started paying it toward the principle on the larger ones. I will have the $11,000 paid off by the Spring and will take over the next highest interest rate ($18,000) and she will fold those payments into the final loan ($64,000).
I haven't run the numbers yet, but we will probably be filing taxes (US) separately for 2011, as we were not married until May and she will be able to deduct the student loan interest. If we filed jointly we would be phased out of the deduction due to my income level.
I expect that I will end up paying about 75-80k in her student loans, maybe more. For me personally, if we end up divorced I don't think I would fight for the money back. I would not consider that money wasted. That's my personal feeling though.
Like many others have said - you need to communicate with your wife, but my recommendation is to do some serious soul searching first. I knew my wife had the debt when we married - but it took me 6 months after the wedding to really accept the fact we were in a $100k hole and I had to start digging out of it.
As for the father in law, I'm not sure I'd spend the "life energy" arguing that now. It might be good to take things a little bit at a time(maybe make a student loan pay off plan now and address the father in law in a year or two). But you do need to find some kind of mental peace over this and the student loan situation. If you're like me, the more you think and think about it the more you will resent your wife and her dad.
Sorry for the long post that follows.
My wife also has six figure student loans. Due to the fact she will likely go to very part time once we have children it is unlikely that she will ever earn enough to support herself and pay down the debt. My situation does not sound dissimilar from yours, except for the father in law. My salary is just about twice hers. I am also much more frugal.
We've been married less than a year and I have had to come to terms that if I were not with my wife I would be much closer to FI. BUT I remind myself that I would be alone. Being single works for some people - but I would rather learn to accept we will not always make the most optimal financial decision and be with her than to achieve FI in record time and be without. Not to say there aren't couples that make it together, but my life didn't work out that way.
My wife is very sensitive about money, so she is already somewhat uncomfortable with me contributing to her student loans - but recognizes it is going to happen when she becomes a stay at home mom, so it makes sense to start working on the debt now. One thing that is working well: By paying off two of her small loans ($3,500/ea) and taking over the payment on another ($11,000) she took the payments she was making to those loans and started paying it toward the principle on the larger ones. I will have the $11,000 paid off by the Spring and will take over the next highest interest rate ($18,000) and she will fold those payments into the final loan ($64,000).
I haven't run the numbers yet, but we will probably be filing taxes (US) separately for 2011, as we were not married until May and she will be able to deduct the student loan interest. If we filed jointly we would be phased out of the deduction due to my income level.
I expect that I will end up paying about 75-80k in her student loans, maybe more. For me personally, if we end up divorced I don't think I would fight for the money back. I would not consider that money wasted. That's my personal feeling though.
Like many others have said - you need to communicate with your wife, but my recommendation is to do some serious soul searching first. I knew my wife had the debt when we married - but it took me 6 months after the wedding to really accept the fact we were in a $100k hole and I had to start digging out of it.
As for the father in law, I'm not sure I'd spend the "life energy" arguing that now. It might be good to take things a little bit at a time(maybe make a student loan pay off plan now and address the father in law in a year or two). But you do need to find some kind of mental peace over this and the student loan situation. If you're like me, the more you think and think about it the more you will resent your wife and her dad.
chenda - we're on the same page. I certainly wouldn't expect my bf to pay off my credit cards when I move in with him/marry next year. I have an education and my health, this isn't the 1950s, I can do it my d*mn self.
bigato - we are also on the same page. This is tough love but can help. An anecdote:
my cousin grew up affluent with a father who, yeah, paid off her mother's massive student loans and who indulged the women of the household financially, always bailing them out.
father is no longer around, and my cousin, a grown woman with no student debt (thanks to father) racks up $50k in consumer debt in a few short years. why? because she grew up her whole life used to someone being there to bail her out.
bigato - we are also on the same page. This is tough love but can help. An anecdote:
my cousin grew up affluent with a father who, yeah, paid off her mother's massive student loans and who indulged the women of the household financially, always bailing them out.
father is no longer around, and my cousin, a grown woman with no student debt (thanks to father) racks up $50k in consumer debt in a few short years. why? because she grew up her whole life used to someone being there to bail her out.
My wife and I got married while still in college (just before senior year), but neither of us had student loans so that was never an issue. (I had scholarships, and she worked 30+ hours a week all through school).
I am a bit worried about her relatives' financial situations spilling over onto us, though. I don't think her parents have any debt besides their mortgage, but they also don't have hardly anything saved for retirement. I've tried to talk her into discussing their finances with them, but she's the youngest of 3 and doesn't feel it's her place to do so. Her older siblings are both responsible and supporting themselves, but neither is in a position to support anyone else, while we have a 6 figure income. If my wife's parents are in financial straits (which could come any time - her father works for USPS), we'd probably be the ones they'd look to for help.
Regarding the original post - I agree with GandK that you should hold off on paying her loan if you're having thoughts of "if we ever got divorced." But I'd also encourage you to try to move past that stage - fretting about a possible future divorce (which would be a miserable experience no matter what you do now) is reducing your life satisfaction now.
I am a bit worried about her relatives' financial situations spilling over onto us, though. I don't think her parents have any debt besides their mortgage, but they also don't have hardly anything saved for retirement. I've tried to talk her into discussing their finances with them, but she's the youngest of 3 and doesn't feel it's her place to do so. Her older siblings are both responsible and supporting themselves, but neither is in a position to support anyone else, while we have a 6 figure income. If my wife's parents are in financial straits (which could come any time - her father works for USPS), we'd probably be the ones they'd look to for help.
Regarding the original post - I agree with GandK that you should hold off on paying her loan if you're having thoughts of "if we ever got divorced." But I'd also encourage you to try to move past that stage - fretting about a possible future divorce (which would be a miserable experience no matter what you do now) is reducing your life satisfaction now.
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George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
@George - Thanks, I hadn't considered that. Looking at the FERS overview, I don't think he's been there long enough (10-15 years?) to qualify for regular pension benefits if he is laid off with the cutbacks the USPS is proposing in the next few months, but if he makes it another 10 years to traditional retirement age that will help them a lot.
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LiquidSapphire
- Posts: 510
- Joined: Thu Jul 28, 2011 6:40 pm
My experience with federal benefits is not with USPS; USPS is a different animal in a lot of ways and I haven't cross checked this info with USPS directly. For example, they have SWEET health benefits compared to us. However...
Under FERS you quality for a pension once you have 5 years of service. When you can draw it depends on a LOT - mainly, a combination of how old you are vs how many years of service he has. Basically, once you turn 62, you get 1% of the average of your highest three salaries times the number of years served. (15 years = 15% of your high 3). You can take it before 62 with penalty. Retirement is COMPLICATED, the rules are insane - if he is possibly within 5 years he owes it to himself to get a retirement estimate.
If he quits today, if he has 15 years of service, he is eligible for 15% of his high 3, TODAY.... but he can't draw it until 62 without penalty.
Under FERS you quality for a pension once you have 5 years of service. When you can draw it depends on a LOT - mainly, a combination of how old you are vs how many years of service he has. Basically, once you turn 62, you get 1% of the average of your highest three salaries times the number of years served. (15 years = 15% of your high 3). You can take it before 62 with penalty. Retirement is COMPLICATED, the rules are insane - if he is possibly within 5 years he owes it to himself to get a retirement estimate.
If he quits today, if he has 15 years of service, he is eligible for 15% of his high 3, TODAY.... but he can't draw it until 62 without penalty.
Not sure how I can correct this information from a post last month. I stated
"I haven't run the numbers yet, but we will probably be filing taxes (US) separately for 2011, as we were not married until May and she will be able to deduct the student loan interest. If we filed jointly we would be phased out of the deduction due to my income level."
This is way wrong. First, if married filing separate then student loan interest is NOT deductible. Second, the tax rates make filing jointly preferable in most situations.
Sorry I posted bad info.
"I haven't run the numbers yet, but we will probably be filing taxes (US) separately for 2011, as we were not married until May and she will be able to deduct the student loan interest. If we filed jointly we would be phased out of the deduction due to my income level."
This is way wrong. First, if married filing separate then student loan interest is NOT deductible. Second, the tax rates make filing jointly preferable in most situations.
Sorry I posted bad info.
My husband and I were both debt free going into our marriage, but if you consider potential in-laws to take care of and wanting to stay home with kids liabilities then I guess I had them.
To me the kids are a non-issue. We decided to have kids and we decided that we didn't want the day care route. We could have each worked part time, but instead decided that it suited us better for DH to work and me to be with the kids (he loved his job and work caused me a lot stress). After we had kids we also decided to homeschool so I won't be generating an income at any point. Even though I don't bring in money, the kids are our kids and we're doing this together. This is how we decided to split things up in our family and both of us view the money as ours together, not his that he shares with me. Honestly, I'd be pretty ticked off if he did view it that way.
For the inlaws, I think my parents may need some help at some point. I don't, and never have, felt comfortable giving people money but I think it's likely that they will end up living with us at some point. I'm very fond of them so that is a nice thing. DH is fine with it, though he would be more comfortable if we built a separate cottage for them or something like that.
Maybe for your FIL you and your wife could consider buying a house with a MIL apartment or a duplex or something like that when you buy a house. You could rent it out initially to help you achieve FI and if your FIL ever needed your help, well, you could help him by letting him live there. Giving money to people who are bad with money is just a disaster waiting to happen. I would much rather give someone a place to live in a situation like that.
I can't say what you should do about the debt. I know my husband and I would have just paid it off while we were both working, regardless of who had the debt. 8% interest is very high.
For me sharing finances is just a part of being married but I know not everyone is like that. Maybe separate finances would prevent a lot of fights that many people have over money in marriage. Sharing finances seems very natural with my husband, but I dated some people that would have made me go gray in a year if I had shared finances with them.
I hope you and your wife can work out a solution that seems right to you both. Having the same financial goals (and habits) really makes things a lot smoother... and FI is something that's easy to get excited about. Live more modestly so you can spend more time with your family and doing whatever interests you. I've always been more frugal than DH and he has sort of met me halfway, but once we started looking at it as FI, he was fine with dropping his Starbucks habit and other expenses. We cut expenses back all around, very severely, as he quit his job and I wanted to be able to live off the stipend he now gets as a grad student. We had a fair bit saved up but b/c we were able to cut our expenses so much we hit FI last fall. We're both very happy about it and it makes it a lot easier to keep our expenses at our new lower level.
Oh, if you two do decide to keep finances separate, you could consider going FI on your own and being a SAHD (contributing your half of expenses from investment income) and your wife can still work and spend more (including the debt), if she isn't interested in FI herself. If you do that and get a property with an apt., I think you will be safe from the 3 liabilites that worry you. It may mean living very modestly now so she can service her debt and pay her portion of expenses, but that is in line with your FI goals so that seems like a plus
To me the kids are a non-issue. We decided to have kids and we decided that we didn't want the day care route. We could have each worked part time, but instead decided that it suited us better for DH to work and me to be with the kids (he loved his job and work caused me a lot stress). After we had kids we also decided to homeschool so I won't be generating an income at any point. Even though I don't bring in money, the kids are our kids and we're doing this together. This is how we decided to split things up in our family and both of us view the money as ours together, not his that he shares with me. Honestly, I'd be pretty ticked off if he did view it that way.
For the inlaws, I think my parents may need some help at some point. I don't, and never have, felt comfortable giving people money but I think it's likely that they will end up living with us at some point. I'm very fond of them so that is a nice thing. DH is fine with it, though he would be more comfortable if we built a separate cottage for them or something like that.
Maybe for your FIL you and your wife could consider buying a house with a MIL apartment or a duplex or something like that when you buy a house. You could rent it out initially to help you achieve FI and if your FIL ever needed your help, well, you could help him by letting him live there. Giving money to people who are bad with money is just a disaster waiting to happen. I would much rather give someone a place to live in a situation like that.
I can't say what you should do about the debt. I know my husband and I would have just paid it off while we were both working, regardless of who had the debt. 8% interest is very high.
For me sharing finances is just a part of being married but I know not everyone is like that. Maybe separate finances would prevent a lot of fights that many people have over money in marriage. Sharing finances seems very natural with my husband, but I dated some people that would have made me go gray in a year if I had shared finances with them.
I hope you and your wife can work out a solution that seems right to you both. Having the same financial goals (and habits) really makes things a lot smoother... and FI is something that's easy to get excited about. Live more modestly so you can spend more time with your family and doing whatever interests you. I've always been more frugal than DH and he has sort of met me halfway, but once we started looking at it as FI, he was fine with dropping his Starbucks habit and other expenses. We cut expenses back all around, very severely, as he quit his job and I wanted to be able to live off the stipend he now gets as a grad student. We had a fair bit saved up but b/c we were able to cut our expenses so much we hit FI last fall. We're both very happy about it and it makes it a lot easier to keep our expenses at our new lower level.
Oh, if you two do decide to keep finances separate, you could consider going FI on your own and being a SAHD (contributing your half of expenses from investment income) and your wife can still work and spend more (including the debt), if she isn't interested in FI herself. If you do that and get a property with an apt., I think you will be safe from the 3 liabilites that worry you. It may mean living very modestly now so she can service her debt and pay her portion of expenses, but that is in line with your FI goals so that seems like a plus