Opinions/advice on finances please!

BinxRose · November 2011

Next paycheck, we finally start getting BAH hooray! After all of our bills and what we need to put away each month for our wedding, we have about $930 leftover. Because he deploys in the spring (that's vague enough or OPSEC/PERSEC right?) my FI wants to go out more and have lots of fun while he can. He also wants to use the leftover money to pay off bills that don't even have any interest. I, however, am a saver. I would like to pay off more of our bills with interest (car, school) and save a good chunk for emergencies and the future.

I think it would be a smart move for us to meet with a financal advisor. When I suggested that, he didn't seem very open to it. I think he knows the financial advisor will say what I'm saying!

So, I guess I'd like to know what you would do! We have two car payments and my school loan that have interest. Then we have two other payments totalling $1100 that have no interest as long as we make our monthly payments on time. And to recap, we have $930 leftover. How much would you put towards "fun," what would you try to pay off more every month and how much (if any), and how much would you put in savings for emergencies/future?

firsttimersluck · November 2011

ok so.. here's the deal.
Yes, interest sucks.. It's bad, and the first instinct is to get the things paid off that have interest accuring.
However, if you can get TWO things paid OFF completely, interest or not, you should probably put the money towards those things because it will boost your credit score. And credit score is what counts in the long run. The less ITEMS of debt you have, the better.
We have several financial advisors in our family (in fact, H's family owns their own financial advising business in Chattanooga) which is the only reason I know this.

(overall my point is, if it were us, we would put the whole chunk towards getting that 1,100 paid off and done with) .

firemedicrr · November 2011

Personally? I'm like you, I'm a saver, and my FI would prefer to go out.

My question:

what are the outstanding amounts on each of your car loans and what are your monthly payments? same for your student loans?

if I know actual amounts I can explain it to you better, haha.

shan87 · November 2011

Who knows what the FP will say. I was speaking to an USAA FP and he told me to start a Brookage IRA with semi aggressive investing, with what I would use to pay off my car. I'm umemployed and already have several retirement accounts/investiments. Personally, I think it's silly to keep debit when you could pay it off. I would rather pay off my car loan and stop making that monthly payment than invest it.

But that's me.

BinxRose · November 2011

Thanks FTL! Fire- here are approx. amounts: FI car $14,000 ($400/mo.) My car $19,000 ($300/mo.) My school $20,000 ($145/mo.) Shan- so you're saying you'd pay more each month on the loans with interest?

firemedicrr · November 2011

binx- if I were you, I'd double my payment on FI's car until it is paid off. That means you'd be using an extra 400 dollars a month toward that loan, leaving you with 500 dollars a month of play money.

This means that instead of paying off FI's car in 35 months, you'd do it in 18 (well, 17.5).

once you're done with that loan, I would roll all that money into your car payment. At this point, your remaining amount due on your car would be 13,600 (because this is 18 months in and you'd be paying your regular payments). so at this point you'd put the 800 dollars a month you were paying toward FI's car toward yours plus the 300 you'd been paying anyway, so you'd be paying 1100 a month on your car- with 13,600 remaining, it would take you 13 months to pay off your car completely.

Then you can tackle your student loans. At this point (2.5 years into your repayment plan), you would owe 15,660 on your student loans. At this point, all the money you'd been paying toward your car loan would be rolled into repayment of student loans, plus the normal student loan payment amount. This means you'd pay 1245 dollars a month toward your student loans. It would take you 12.5 months to pay off your student loans.

So.. with this plan, you could pay off all these debts in 3 years and 8 months.

That's how I'd do it- I think it's called snowballing; anyway, it helps your peace of mind because you see your repayments benefitting you sooner, and with rolling the money you'd been paying on your other loan into paying off the outstanding loans, you will be debt free wayyyy sooner.

iluvmytxrgr · November 2011

If it were me, I would take the next couple of months to pay off the $1100 debt. However, I would set aside a certain amount each month to do some of the fun things your guy wants to do before the deployment. I'm talking maybe $150-200. After that debt is paid, figure out how much you want to put aside for savings every month and how much you want to pay toward debt.
Also, sit down and talk about how y'all want to use the extra money he'll be making while deployed. That is usually a pretty decent chunk. Figure out what percentage you want to set aside for savings and what you want to pay down. You may also want to consider putting $100-200 aside for a post deployment relaxing vacation.

firsttimersluck · November 2011

Oh fire.. Your math and logic fill my heart up with warm warm pi

firemedicrr · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:fcaf3e11-06e7-4fb6-8137-54eb2099e9bd">Re: Opinions/advice on finances please!</a>:
[QUOTE]Oh fire.. Your math and logic fill my heart up with warm warm pi :)
Posted by firsttimersluck[/QUOTE]

<div>:D yay. I love doing math, but hated taking it in school- go figure!</div><div>
</div><div>....obviously, there IS a reason that I'm going to be managing the finances that goes beyyyyyond the fact that I'm the nondeployable person in our household! lol</div>

Zimsgirl · November 2011

I would pay off the things with interest first or put small amounts towards all of your debt. I think meeting with a financial adviser would be good. My dad used to be one (before a big family fight, he worked for our uncle/his BIL) so he takes care of all my financial aid stuff.

KendallR10 · November 2011

H and I put extra money every month toward our cars and my school.

We put some aside to play with. Then we have some for just in case. It helps that I get paid like every week

kyrgyzstan · November 2011

Go to

http://www.whatsthecost.com/snowball.aspx

put all your info in. Make sure to make an account and save the snowball. It's my favorite thing.

Also, H recently deployed. His last month here, I made sure that we had a healthy balance of going out and having fun without leaving my budget spreadsheets in the dust. I think that both things are important.

Also, when he deploys, depending on where he is, check out SDP http://www.dfas.mil/militarymembers/payentitlements/sdp.html. H and I are contributing the max, because, well, it's 10% annual interest, way better than our debt, and way better than a regular savings plan. We're still snowballing our debt, but I'm tightening up my personal spending in order to get us able to do both.

firemedicrr · November 2011

I can see merit to any strategy that means you'll pay them all off sooner, however to just play devils advocate, the benefit of focusing on paying one in particular off early is that if you get in a bind a year or two down the road, you have a debt you've already paid off and you could reduce your monthly payments on the next debt you're tackling to pay off early... so, for example, once FI's car is paid off, you'd have the 800 dollars you'd been paying toward his car that is above and beyond your required minimum payment for your car; while it is beneficial to roll this into paying for your car, you could, if you needed to, only pay 500 dollars a month extra on your car instead of 800... whereas if you're increasing your payment a little across the board on all of them, it's going to take longer to have more accesss to funds (IE all you could do is stop paying the 400 dollars a month extra because you'd still have FI's car loan, even though you'd paid it down some; whereas if FI's car is paid off, you not only have the 400 a month you'd added to the minimum payment, you also have access to the 400 dollars that would otherwise be committed to his car... if that makes sense). Having paid extra into all of them is great and means that your debts collectively would be paid off sooner, but it doesn't drastically reduce one loan amount to where you no longer have that installment requirement.

I'm all for having the option of keeping more of my money sooner if I have an immediate need.

I'm hoping that makes sense on here like it does in my head? lol

kyrgyzstan · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:55270216-a8f7-4493-9e2c-757f83bcc772">Re: Opinions/advice on finances please!</a>:
[QUOTE]I can see merit to any strategy that means you'll pay them all off sooner, however to just play devils advocate, the benefit of focusing on paying one in particular off early is that if you get in a bind a year or two down the road, you have a debt you've already paid off and you could reduce your monthly payments on the next debt you're tackling to pay off early... so, for example, once FI's car is paid off, you'd have the 800 dollars you'd been paying toward his car that is above and beyond your required minimum payment for your car; while it is beneficial to roll this into paying for your car, you could, if you needed to, only pay 500 dollars a month extra on your car instead of 800... whereas if you're increasing your payment a little across the board on all of them, it's going to take longer to have more accesss to funds (IE all you could do is stop paying the 400 dollars a month extra because you'd still have FI's car loan, even though you'd paid it down some; whereas if FI's car is paid off, you not only have the 400 a month you'd added to the minimum payment, you also have access to the 400 dollars that would otherwise be committed to his car... if that makes sense). Having paid extra into all of them is great and means that your debts collectively would be paid off sooner, but it doesn't drastically reduce one loan amount to where you no longer have that installment requirement. I'm all for having the option of keeping more of my money sooner if I have an immediate need. I'm hoping that makes sense on here like it does in my head? lol
Posted by firemedicrr[/QUOTE]<div>
</div><div>It's snowballing, it makes PERFECT sense!

</div>

SamiJoeB · November 2011

This whole thread made me feel really dumb. I just learned all about consumer math and decided I don't want to be a consumer anymore! I'm kidding (mostly) but seriously? I don't want to buy a house ANYTIME soon because yes, it used to be a good investment, but I know wayyy to many people who are losing money and some who are even having to walk away from half a million dollar homes because they can't sell for what they owe on them (or even come close after 5 years on the market, one couple in particular has divorced and both now live out of state). I really don't have anything useful to add to the post other than I'm really glad that Binxy has such smart Ladies to give her advice!! (And Stan, I totally book-marked that link for the future!)

BinxRose · November 2011

Wow fire, I had never heard of snowballing before. I had to read through it a couple times to understand it, but I think I kinda get it now! I will definately bring it up to a finncial advisor! Stan- I will be sure to check out those websites. Thank you! Thank you to everyone for your input! It gave me different perspectives to look at. You ladies are the best!

kmmssg · November 2011

I'm a huge fan of snowballing and Dave Ramsey. I haven't started his envelope strategy yet but my BFF and my BIL and SIL do that and swear by it. You work on a cash only basis. You have an envelope for gas money, groceries, entertainment, etc. When the cash in that envelope is gone you are done so you really need to manage it.

BFF's are debt free with the exception of their home and ditched all their plastic except for debit cards. I live on my debit card since my pay is direct deposit. I think I'm just procrastinating on the envelope thing because it will be so different. I think it would be a great idea just gotta move on it.

Also OP - don't forget to work on an emergency fund. Snowballing is VERY important but you need to build that e fund as you go. Your car's tranny could go, you could have a major repair expense, home expense, etc. Don't forget the e fund!

BinxRose · November 2011

Well I have a 7-year/70,000 mile warranty, so I don't have to worry about my car whatsoever. But yes, an e-fund is still needed for whatever! ETA: I have awesome credit thanks TO my credit card. I got it in college to start building good credit, and it worked. I mostly put gas and groceries on it, then pay it off right away. And last month my FI needed car repairs but we didn't have the money right then, so we put it on my card. We had the money next paycheck so we paid the car repair off. If we didn't have my credit card, I don't know what we would've one. Getting rid of/never getting a credit card isn't the answer. Being responsible with it is.

BinxRose · November 2011

Stan- I used the sowball calculator website, and it is very neat! I liked seeing an actual chart of how it would work. Thank you!

Irishcurls · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:27826802-1fc8-4e75-a868-f8116e8d334a">Re: Opinions/advice on finances please!</a>:
[QUOTE]Go to <a href="http://www.whatsthecost.com/snowball.aspx" rel='nofollow'>http://www.whatsthecost.com/snowball.aspx</a> put all your info in. Make sure to make an account and save the snowball. It's my favorite thing.
Posted by WishIcouldbeinthe'stan[/QUOTE]
I love you. This is incredible, I just calculated that I could pay off my student loan by April 2015. My jaw is on the floor.

firsttimersluck · November 2011

ack irish.. Is that good or bad? I can't tell..
This is why I didn't do loans for college. I went in wanting 0 debt for it, and have been successful. (Of course not everyone has thsi option, I definitely understand that!)

Efunds are definitely important, of course as long as he's in the military you guys are good there. We have a lot of investments spread out, and our mutual fund is our "e fund" since it's easily liquidated.

Irishcurls · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:e191f7f4-cf78-4a2a-93ff-1b235674c88e">Re: Opinions/advice on finances please!</a>:
[QUOTE]ack irish.. Is that good or bad? I can't tell.. This is why I didn't do loans for college. I went in wanting 0 debt for it, and have been successful. (Of course not everyone has thsi option, I definitely understand that!) Efunds are definitely important, of course as long as he's in the military you guys are good there. We have a lot of investments spread out, and our mutual fund is our "e fund" since it's easily liquidated.
Posted by firsttimersluck[/QUOTE]
Oh haha thats AMAZING. They give you like, 30 years to pay it. I was "planning" on it taking me at least 15. This would be about 8. I'm sure I could have figured it out myself but it's really helpful to have the payments all shown for me. I don't have undergrad debt but grad school wasn't coming out of pocket. I'm comfortable with the decision though; I feel like I was old enough to know what I was getting into etc. Kwim? Still blows hard though. :)

firsttimersluck · November 2011

oh yeah, absolutely.
ok good.. That's what I thought but I wasn't sure

haha
so YAY! for that :P

firemedicrr · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:62989d15-9713-4781-a414-4d546765717c">Re: Opinions/advice on finances please!</a>:
[QUOTE]Stan- I used the sowball calculator website, and it is very neat! I liked seeing an actual chart of how it would work. Thank you!
Posted by BinxRose[/QUOTE]

<div>Yeah, it's amazing. I paid off my 5 year car loan in 2 years (and actually, I could have paid it off sooner- for the last year, I paid only minimum payments, because according to a fin advisor I talked to, it doesn't really benefit your credit positively to pay an installment loan off in under 2 years.</div><div>
</div><div>Because of how well I managed my car loans and my credit cards (I pay them off every month) I was able to get an unsecured personal loan at the age of 20 for 15k with an interest rate lower than some people get for their car loans. </div><div>
</div><div>I personally will never stop using credit cards, but that's a personal decision and I manage mine well and I am very careful. I don't put anything on them that I cannot pay off, and if something big comes up and I don't have the influx of money to pay for it that month, I have a sizeable emergency fund. My credit card gives 5x rewards on gas, groceries and things from a drug store... so with my card, every 20 dollars I spend I get a free dollar basically. I cannot tell you how much "free" gas I've gotten this way.... and also, my plane ticket for my trip to mexico last year was "free" because I got it with rewards points. Credit cards will kill you if you don't know what you're doing and aren't careful, but if you do know what you're doing and you are careful, it's "free" money (I mean, obviously you spend money, but if you were paying cash, you wouldn't get a reward for it). </div><div>
</div><div>If my calculations are correct, I think I will be able to get FI's and my round trip tickets for our honeymoon for "free" because of my CC. Can't beat that. </div>

Irishcurls · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:3438042d-d6ed-4f61-9176-1b1dca4766b9">Re: Opinions/advice on finances please!</a>:
[QUOTE]oh yeah, absolutely. ok good.. That's what I thought but I wasn't sure :) haha so YAY! for that :P
Posted by firsttimersluck[/QUOTE]
Haha it sort of sucks to see it all out there though. Though what that DOES mean is that could be paid off before we look into purchasing a house...which I'm not 100% will be on the table for awhile, but I don't love the idea of having two huge loans, you know? So by the end of H's next rotation completion, my loan could be gone and we could reevaluate where we're at. So I'm pretty happy!!

Irishcurls · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:4263f18c-a33f-4cee-8493-e1b6834e65a1">Re: Opinions/advice on finances please!</a>:
[QUOTE]In Response to Re: Opinions/advice on finances please! : Yeah, it's amazing. I paid off my 5 year car loan in 2 years (and actually, I could have paid it off sooner- for the last year, I paid only minimum payments, because according to a fin advisor I talked to, it doesn't really benefit your credit positively to pay an installment loan off in under 2 years. Because of how well I managed my car loans and my credit cards (I pay them off every month) I was able to get an unsecured personal loan at the age of 20 for 15k with an interest rate lower than some people get for their car loans. I personally will never stop using credit cards, but that's a personal decision and I manage mine well and I am very careful. I don't put anything on them that I cannot pay off, and if something big comes up and I don't have the influx of money to pay for it that month, I have a sizeable emergency fund. My credit card gives 5x rewards on gas, groceries and things from a drug store... so with my card, every 20 dollars I spend I get a free dollar basically. I cannot tell you how much "free" gas I've gotten this way.... and also, my plane ticket for my trip to mexico last year was "free" because I got it with rewards points. <strong>Credit cards will kill you if you don't know what you're doing and aren't careful, but if you do know what you're doing and you are careful, it's "free" money (I mean, obviously you spend money, but if you were paying cash, you wouldn't get a reward for it). </strong> If my calculations are correct, I think I will be able to get FI's and my round trip tickets for our honeymoon for "free" because of my CC. Can't beat that.
Posted by firemedicrr[/QUOTE]<div>Exactly. In fact, I might switch cards because mine's not really "working" for me as well as some others out there. I just had this conversation with a girlfriend of mine--I never carry a balance but get rewarded for buying the things I would anyway. Win win.

</div>

BinxRose · November 2011

Fire- Thats awesome! FI looked up our exact numbers for payoff amounts, monthly payments, and APR, and put it in the calculator. According to the number I put it for what we could pay each month for now, we will be debt free in 44 months! It's amazing. But when my FI goes on cruise next year, there will be even more money available because the pay isn't taxed, we'll be getting more BAH since we'll be married, and he'll be getting extra pay for sea duty and family separation. So we can pay even more those months, therefore debt-free even sooner!

firemedicrr · November 2011

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_military-brides_opinionsadvice-finances-please?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:13Discussion:470dd5b0-be8a-49c3-96de-140e27a20aabPost:0639138e-a476-4a05-a9ee-e1c1c2f1da91">Re: Opinions/advice on finances please!</a>:
[QUOTE]In Response to Re: Opinions/advice on finances please! : Exactly. In fact, I might switch cards because mine's not really "working" for me as well as some others out there. I just had this conversation with a girlfriend of mine--I never carry a balance but get rewarded for buying the things I would anyway. Win win.
Posted by Irishcurls[/QUOTE]

<div>I get pre-screened offers ALL the time. Recently, I opened a card with decent cashback, but not the best, simply because it's interest-free for 18 months.... and the balance they gave me on the card is equal to the total amount we're going to spend for our wedding. This means I can charge most of the wedding related stuff to it and wait until after the services are rendered to actually pay the CC company for it; meaning that if our vendors don't live up to their contracts, I can dispute the charges and it's more legally defensible because the CC company will help me to do that. Another score in my book that you don't have if you are only using cash/debit cards. </div>

LOLways · November 2011

Binx, do you have an idea of how much $/ how often your FI wants to go out before he leaves? Knowing what he wants to do might be helpful in figuring out a budget for that expense for him to try to stick to. Plus, that way you don't have to be the bad guy telling him that no, he can't go out.

Also having parties at your house might be a cheaper alternative to going out sometimes for your FI. If you do it potluck, there sholdn't be that much you have to pay for besides some beer. And maybe your FI's friends will get the hint and start doing the same thing

I'm sure the rest of his buddies that are deploying with him are feeling the same way.

calindi · November 2011

I never heard of snowballing or the envelope theory, but we've followed both of them unofficially. FI operates under an envelope theory, except he keeps track of everything on a series of print outs that he has taped to the back of our bedroom wall. He's meticulously organized, and knows down to the penny how much money he's spent and how much he has left in his budget for any given thing at any given time. It's amazing, I need to try harder to be more like him.

I used to be great with credit cards, but being unemployed this summer let them snowball on me (rather than the good kind of snowball) rather quickly, and FI paid them off so I'm paying him off, but meanwhile I'm not paying my credit card off as much (way more than minimum payments each month, but still not as much as I spend on them) so it's slowly snowballing again. Granted, in the scheme of things it's a small amount of debt as I own my car outright and have no student debt, but it still keeps me up at night. I'm definitely going to look into those books! I'm struggling to find a way to pay for the things I need, pay FI back for paying off my credit card, AND pay off new credit card debt!

Opinions/advice on finances please!

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