My student loans vs a 529 account for DD
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Anonymous
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I'm 30 and owe about $20k in student loans ... Roughly half at 2.8% and half at 6.8%. DH is debt free.
DD is 3 months old. Should I pay off my loans in full before starting a 529 for her? Because daycare is so expensive, I don't see myself paying off these loans anytime in the next 3-5 years. |
Anonymous
| Pay off the higher interest loan ASAP. Then split the difference between your remaining loan and DD 529. |
Anonymous
Agreed |
Anonymous
| You post sounds like your DH isn't involved in this. Why don't you focus on your loans and he can help you get debt free. I wonder if father's also put money in a 529 before their loans are paid or if it is just a mom thing. |
Anonymous
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I would pay off the 6.8% first.
Between yourself and your DH, I would see where there is flexibility in income and assign it to reducing the debt. For example now that you have a deduction, maybe it makes sense to change your tax withholding and take this incremental amount each pay period and put it to student loans. You need to be very disciplined to do this. My husband and I made a decision to refinance to a 15 year mortgage. It made things tight - not impossible. But we needed to eat out less and bring lunch more. We do this in a way that we do not feel we are making sacrifices. We can still cook fish - but eating salmon at home for a family of 5 is a lot cheaper than a dinner at a restaurant. |
Anonymous
Could you devote most of your salary to paying off your loans and allow/request your husband to pay for the 529? Or, could your husband devote some of his salary to helping you pay off the loans faster? It might just be a quirk of your phrasing, but I'm not sure why this is all solely on you -- maybe the loans, but the 529 should be considered a joint expense for your "joint" child. 
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Anonymous
| Why do all these PP assume their money is separate? I assumed the debt statements were just factual information. My DH paid off his student loans before we married, paying mine off was a priority for our budget. Funding a 529 is also in our budget. Discussing it them as separate investment decisions is the kind of thing that makes me question the decision to keep separate finances when married. |
Anonymous
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OP here. Our finances are pretty much combined. DH is absolutely clueless when it comes to money so I handle all bills and investment decisions. Aside from the mortgage ($2k per month), these loans are our only debt.
It's wild to think that we'll be paying the equivalent of a second mortgage for childcare. We can afford it, but things will be tight for a few years. Seems the overall consensus is to pay off the 6.8% loans ASAP, then open the 529. Thanks for the advice. |
Anonymous
Because when the PP said "my student loans are $xx,xxx and my husband is debt-free," it gives the impression that their finances are not combined. Combined finances means the debts are their joint responsibility, not just hers. But the OP clarified, so, no harm no foul. OP, I think focusing on, at the very least, that higher interest loan makes a lot of sense. I don't know how you're fixed for retirement savings, but that should probably be given a higher priority than a 529, also. You've probably heard this a million times but your children have more options for financing college than you do for financing your retirement. Anyway, best of luck to you! I'm single and I have a 19 month old and day care, holy crap. It is a killer. If I didn't have family in this area I would be so gone. |
Anonymous
This is what we are doing, too. |