Debt Advice Before Starting a Family

[Future101]

Here is you saying you aren't saving for retirement will work while you start a family.

You need to rethink your priorities. Getting out of debt and deciding on a budget which includes retirement is necessary. You can't justify not saving while spending everything.

You've quoted me asking a question not a statement. It was me saying "Yes I can do this right now!" but "would it be acceptable to lower that percentage while we have kids?" - sorry I wasn't very clear. I'm often posting on my cell phone.

My employer is set up with Vanguard. I changed my contribution to 6% today. For now it's 50% into a stable bond and 50% into a mutual fund. I'll work on my wife's account today also. I'll see what our paycheck looks like and how I can modify our budget.

[Nutria]

Or you could work to lower expenses and be able to direct more of your current income toward the debts if becoming debt-free was a priority for you (which may or may not be the case).

Three years ago, we had $50K more debt than we do now. $30K of it was high-rate CC.

We've already done the "cut all the waste, make a budget, stick to it and pay off those card" dance. That's how we got rid of the $50K debt and saved up $17K cash at the same time, while increasing 401(k) contributions.

There just comes a time where you don't need to obsess over debt reduction any more, because what's left is relatively small, cheap, and other liabilities have to be paid for.

In case you didn't notice, we'll be debt free by the middle of next year. $22K in 15 months isn't shabby at all.

[tripods68]

Mortgage  $15,044   5%  (Sept 2017)
CC         $1,218   0%  (Oct 2017)
Minivan    $3,479   3%  (Novem 2016)
Camry      $2,500   5%  (Aug 2016)
TOTAL:    $22,241

You're ignoring cash flow and liabilities beyond debt. I could pay off the CC, the minivan, the Camry and 2/3 of the mortgage with cash immediately on hand!

But where would we get the semi-annual car insurance payment from? And our kids' ($10K each) parochial school tuitions, and property taxes? And what if I lost my job or we had a big medical bill?

Sometimes you've just got to carry the debt even though you could pay it off.

EDIT: Sometimes you've just got to carry cheap debt so that you don't get into expensive debt.

I've been in your shoes. It wasn't that long ago we had a car loan, credit cards instead we rolled our sleeves and got to work and focus in tacking our debt. We were sick and tired. I created a zero-based budget. We made the sacrifice to reduce our entertainment; restaurant/movies, cook more at home, brown bag, sold my WRX and got me instead bought 14 year old SUV commuter that we paid cash. In my world there is no good debt. On the flip side of it, we have increased our retirement contributions, fully funded our vacation, x-mas for the year with 6 months of EF set aside. Any additional leftover from our budget, we are throwing it as extra payment (mortgage).

There's always options (how bad do you really want to get out of debt?) in your budget to save, try to eliminate. You can stop retirement contributions temporarily; pay off debt faster, or another job maybe.

[Nutria]

There's always options (how bad do you really want to get out of debt?) in your budget to save, try to eliminate. You can stop retirement contributions temporarily; pay off debt faster, or another job maybe.

You must have missed the post where I specified how much debt I've eliminated, while increased savings.

[disneysteve]

Three years ago, we had $50K more debt than we do now. $30K of it was high-rate CC.

We've already done the "cut all the waste, make a budget, stick to it and pay off those card" dance. That's how we got rid of the $50K debt and saved up $17K cash at the same time, while increasing 401(k) contributions.

There just comes a time where you don't need to obsess over debt reduction any more, because what's left is relatively small, cheap, and other liabilities have to be paid for.

In case you didn't notice, we'll be debt free by the middle of next year. $22K in 15 months isn't shabby at all.

No argument here. It sounds like you're doing great. I am not a Dave Ramsey supporter. I don't believe all debt is bad in any form. We have a mortgage. We have a car payment. Very soon we will be back into the world of student loans with our daughter. My comments weren't necessarily for you but just more general comments about all the folks who say, "We can't" when what they really mean is "We're choosing not to".

[Nutria]

more general comments about all the folks who say, "We can't" when what they really mean is "We're choosing not to".

Subsets of "We choose not to":

• "I don't want to get in an argument with my spouse"
• "I'm afraid of what we'll find."
• "I'm a grasshopper, not the ant."
• "It's my right to live like the beautiful people on TV."

[Future101]

I just posted a payment of $2,730.57 which will pay off the two high interest student loan accounts (had paid ahead a little). Still working on my wife's vanguard account.

Edit: My wife and I are now officially adding 6% to our 401k plans. I'll look into Roth more too.

[tripods68]

The difference here is the intentionality. Personal finance is about 90% behavior and 10% knowledge. Change your mindset, it will change your behavior.
We know the top reasons couple divorce: poor communication and money fights. Not working towards the same goal is huge in a relationship. All important reason why people should get out of debt a lot sooner or simply avoided.

[LivingAlmostLarge]

set up saving at 6% or higher now and don't let yourself lower it when you have kids. Just pretend the money is gone permenently.