Student loan payoff conundrum

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP: Your wife is 5 mos pregnant, which means 4 more months of Big Law salary + I assume 18 weeks paid maternity leave at 100% salary. So, you're looking at 8 more months of BigLaw salary, minimum. Keep paying your loans down the first four months. Once baby comes, hoard your cash. Forget the house until your wife has settled into something permanent.

W/r/t cost of a baby, $5,000 IMO is low to spend on your first baby. I'm also a big law associate and we just had our first a year ago. The costs add up. We spent well over 5K and I don't think we went over the top on anything. I'm not comfortable buying anything used for a baby, so that may be why my #s were so different from that of PPs.

Has your wife considered returning P/T when she comes back from maternity leave?

What the hell did you buy for your kid?

That was unnecessarily rude.

[Anonymous]

Anonymous wrote:I agree with the others about not needing $5k for baby items. Really, you need a carseat, crib, mattress, baby carrier, pump and some bottles to start. You can easily get this for under $1000 and if you have a shower, you can get most of the items that way.

If you aren't interested in staying in DC, you should speak with your wife about it before buying a house. Why not just keep renting/saving while looking for where else you would like to live? Wouldn't it feel great to move somewhere with a lower COL and pay cash for your house? Your wife can likely be a lawyer anywhere. You haven't said what you do, but my guess is you can do it elsewhere, as well.

I wouldn't cash in the stock to pay off the loans or IRS. I would cut back the student loan payments so you can have the money on hand to pay the IRS and purchase any baby necessities you need. I would probably buy a newer car as opposed to putting more money into the current car that may have reached it's end of life. There was a thread on here not to long ago about what is the point to stop putting money into a car and realize it would be cheaper to buy a newer car. Also, with a baby, you want something safe and reliable.

I agree with most of this advice. Although I can see how it's a good option to cut back the student loan payment and keep the stock, my preferred method (and what I did with my student loans) would be to pay them off and be done with it. Then, while you're still used to paying that $6,000, set up a direct deposit from your paychecks to a savings account. If it's too much, maybe scale back to $5,700 or $5,500 so you have a little cushion but you are still forced to make responsible spending choices.

I agree that you shouldn't buy a house in DC if you aren't sure you want to stay here. Paying rent is worth it for the flexibility until you're sure you want to settle here. You can't necessarily predict what your HHI will be if your wife leaves Biglaw. You'll want to be careful not to overcommit to a mortgage you think you should be able to afford on paper before you a) have a baby and b) have had to live on that reduced income.

[Anonymous]

We easily spend around $7,500 buying things for our first. Some of it was really good furniture, solid wood, no MDF, made in America, organic mattress, custom sheets, etc. Great rocker and ottoman on which I've spent countless hours sitting on. We spent more than we needed to, but I didn't even buy a fancy stroller. Things can add up quickly depending on what you're buying.

[Anonymous]

You are not going to stop feeling like you lead the grad student lifestyle on $120k for a family of 3 in DC, with very little savings. Been there.

Sounds like your wife will feel like the slate has been wiped clean once loans are paid off, ignoring that it took every dollar of savings for two years to accomplish that. Yes that is a feat,

[Anonymous]

But I think the responsible thing to do is to build up your savings too before switching to SAHM.

[Anonymous]

OP here with an update: We settled on Option 3. I sold $25,000 in mutual funds today, and will sell another $15,000 in ETFs tomorrow, enough to retire the $40,000 in debt.

Our next plan of attack is to use the extra cash flow from being student loan-free to pay off the $10,000 IRS bill (hopefully in just two months), leaving us with a lot less debt and a lot less savings. Then we'll start replenishing the down payment fund, and hopefully be able to buy a house before mortgage rates spike too high.

Thanks for all the advice!

[Anonymous]

Is this $5000 for baby gear or expected day care costs? Day care is ridic expensive and will be more than $5000 per year, but $5000 for baby gear is nuts. Craigslist people - all the baby gear is on craigslist. And those gliders are such a waste of money - not comfortable to sleep in, which you will be force do to do when the kid gets sick. Get a lazy boy.