Suggestions welcome: debt reduction vs. saving/investing

[ceejay74]

Thanks guys, those are all great suggestions. Right now our assets are pretty evenly divided because we haven't been together (in this way) that long, but as we become more intertwined we'll need to make sure we're all protected. In a certain sense, since we exist in a structure outside of legal definitions, it will just be luck of the draw, legally, should anything happen. That's another great motivator to dig out of this debt, so we can afford legal assistance.

[disneysteve]

as we become more intertwined we'll need to make sure we're all protected

it will just be luck of the draw, legally, should anything happen.

I think you need to make sure you are all protected BEFORE you become more intertwined. It can be much more difficult to separate things once they have been merged. Far easier to keep them apart from day one.

And I don't think "luck of the draw" is the way to go either. It is exactly because your situation is somewhat unique that you need to address these issues.

[ceejay74]

I meant spiritually and lifewise intertwined. I already agreed on the financial front, remember?

I agree, you just misread. It is luck of the draw until we get everything straightened out. There are other things we need to focus on first, but that is high on our list.

[disneysteve]

I meant spiritually and lifewise intertwined. I already agreed on the financial front, remember?

I agree, you just misread. It is luck of the draw until we get everything straightened out. There are other things we need to focus on first, but that is high on our list.

Gotcha. Sorry for misreading that.

[RedHotLama]

I found a good snowball spread sheet. Although it may be difficult to calculate the extra charges for sending money.

But basically pay off the highest interest first. You may also want to pay off those 0% ones before the time is up if you can, because if you dont they may tack on the interest once the time is up since you don't pay it all off.

Heres snowball worksheet. need to remove spaces in w w w

w w w .geocities.com/schizeckinosy/Snowball.html

[Scanner]

Probably in this cases of "partnering", it's best to not think of them as "partners" in the corporate sense (like a law firm or something).

Really, it's 3 single people living together.

Call it a "joint venture."

He's handling the finances but really, that's probably not the best approach.

Each adult should have his/her assets, be responsible for it, be educated on it and if there is a death, disability, seperation etc., have it laid out in his/her will, power of attorney, life insurance policy, etc. where assets are to be distributed if there is mutual affection and love circulating here.

Expenses should be split, debts named in one name, and assets named in other names so on.

It won't be a perfect 33% split on everything but I guess you do the best you can.

Anyway, based on this, I think calculating a "joint net worth" is an illusion.

I am not making moral judgement on your situation, just rather an amateur legal judgement.

Of course, you are in the UK; I'm in the US. Things could be different there.

[disneysteve]

Of course, you are in the UK; I'm in the US. Things could be different there.

OP's location is listed as Minneapolis. Last time I checked, that was part of the US.

[Scanner]

Oops. Sorry. My bad.

[veronak]

I did the D. Ramsey plan first saved $1000 for EF and then worked on debts smallest to largest. Good luck

[ceejay74]

Thanks guys. Really, my situation makes a lot of sense, but it would take too much explaining here. I've got it figured out. Next time I need financial advice I'll just say I'm one person with a big income and an absolutely staggering amount of debt. :-) Or that we're a couple. I just needed advice on debt repayment vs. savings.

Thanks again; on that front, I have a much clearer idea of how to proceed!
CJ

[Seeker]

Ultimately, I think not a lot of people understand that while there are risks involved with this relationship, there are the same risks involved with the traditional "partner" (2-people) relationship.

In a way, a three-person relationship would be less-devestated by one of the three losing work, becomine disabled, or leaving. Because they've then lost 33% instead of 50%. Can you see the advantage there?

If one wins the lottery, they all do.

I'm not a lawyer and do not "know" the real legal implications, but I could logically see the law treating this as a 33% division. These three have committed to each other; though it may not be on any legal document, common-law marriages are not documented either.

Ceejay74 originally asked whether it would be best to save or to pay off these debts. The goal never changes, only the specifics change. The only specifics are the interest rates on the debts. So you start there.

The basic goal is to pay off those debts that cost more than you can make by saving. So whatever rate you can earn by saving is what you need to determine.... you already know the interest rates that have to be paid.

When your debt interest rate is the same or lower than what you can make by saving, then you have a choice -- continue to pay off the debt or start saving.

That's all I can offer.

[TBH]

Really, my situation makes a lot of sense, but it would take too much explaining here. I've got it figured out.

CJ sounds very savvy, and I'm sure s/he is aware of the legal and financial and tax implications of being in an unmarried partnership.

It's tough, but not impossible, for unmarried partners to navigate a system that only understands a very few kinds of domestic relationships--single, single parent, married with no kids, married with kids. It's ludicrous that legally I'm single, and my partner is single, and yet we live in the same house.

My partner and I sprang for a lawyer who specialized in unmarried family law when we had our wills and powers of attorney done. But you don't have to do anything too special. You name each other in your wills. You give each other powers of attorney. You put some stuff in each person's name. Maybe you get a little extra life insurance because you may have to pay inheritance taxes where married folks wouldn't, and because you won't get your dead partner's social security. Other than that, you just work hard on your relationship like anybody else and have faith that you won't break up.

I do think unmarried partners, if they have combined their finances, should definitely look at their net worth as a joint thing. Why wouldn't they?

[Scanner]

I do think unmarried partners, if they have combined their finances, should definitely look at their net worth as a joint thing. Why wouldn't they?

Because. . .like I said, they aren't partners. They are "joint venturists."

They are sharing the house, the bedroom, the vacations, but they aren't partners.

I don't have to tell you that many people here have probably lived with a spouse before getting married and realize that being married/partnering and living together are two entirely different balls of wax.

[hellodeli1]

Saving vs. Debt Reduction

Um, saving and debt reduction are identical when you look at it from a bottom line fiscal standpoint. If you have debt that carries a higher interest rate than you can earn, paying down that debt saves you the money that you would have paid toward interest.

[TBH]

Because. . .like I said, they aren't partners. They are "joint venturists."

Then in your opinion, are married people are "joint venturists" too?