Retirement Options for the GF

[cardtrick]

I've made the decision to jumpstart my retirement savings and thanks to you folks, I know exactly what I need to do. Hoping I could also get advice for the gf's retirement account

She has no savings and 50K in student loans and another 20K in a personal loan that she got to consolidate CC debt. She also owes the IRS 8K this year. Hoping that I can clear out her IRS debt this year and maybe the 20K next year. I am also looking to transfer her 20K at 20% interest onto my CC which has a 7.49% APR. That way, we can save on interest while working on paying it off.

Wondering what her options are for retirement savings. She has 2 part-time jobs. She teaches at community college/vocational school. One of them gives her a W-2. No benefits whatsoever and she probably makes less than $5K here. Another gives her a 1099 (independent contractor) and she makes around 28K. Taxes aren't taken out of this, so she ends up owing the IRS a ton of money every year. Does she qualify for Roth IRA and Roth solo 401K? If I reach my limits for Roth IRA and 401K, I was hoping to contribute some to hers as well.

She was an English major and had her teaching certificate (not valid anymore). She has also taken a bunch of classes towards her Masters in Education. We're in Illinois and they laid off thousands of teachers a while back. Any teaching jobs that become available, she just can't compete with all those experienced people. Any out-of-the-box suggestions on how she can find a full-time job? She's open to almost anything, although she prefers editing, technical writing. She's super smart and can pick up stuff very fast. I work with some technical writers and some of them are so clueless. And it baffles me that no one will give her a chance...

[My English Castle]

Alumni Association or University Contacts

As someone who teaches technical writing, can I suggest your GF contact her university's career center? Most people never think of using them years later, but our career center does a fabulous job with alums. I like to see technical writers that have a portfolio of work. Can she put one together? For students, I suggest they do some volunteer grant/technical writing for organizations they're interested in. That work is a great addition to a portfolio.

If she likes to write and is good at it, I think that's a very solid career path.

[bjl584]

I would not take on any of your GF's debt. What happens if you two break up? You will be screwed. She needs to clean up this mess on her own. Or at least start to clean it up on her own. If you plan to marry her one day, then you need to be certain that she is displaying some form of responsibility in cleaning up her own finances and not just letting her BF do it for her.

[disneysteve]

Hoping that I can clear out her IRS debt this year and maybe the 20K next year. I am also looking to transfer her 20K at 20% interest onto my CC

NO, NO, NO!!!!!

Do NOT do this. This is NOT your debt. It is HER debt. She is not your wife. Don't go paying off her debts.

To address your actual question, why the heck is she worrying about retirement savings when she's broke? She is $78,000 in debt and only earns $33,000/year, if that. She has no money to put into retirement and forget that idea of you funding her retirement for her. Just wipe that out of your head.

If and when the two of you get married, then and only then can you start handling your finances jointly. That's when "her" debt and "his" debt become "our" debt and "her" retirement and "his" retirement become "our" retirement, but not until the rings are on the fingers.

[cardtrick]

I understand everyone's concerns and with any other girl, I would have never ever even thought about this. This one is different. We're likely gonna end up getting married and even if things didn't work out, I wouldn't mind helping her out. Everyone's got their flaws. The CC debt that she racked up was due to being unemployed for a long time. Otherwise, the only thing she splurges on is family. She goes to see her mom 3 times a year. That's her only big expense and I don't mind it.

She's been discouraged because of not having a job for so long. And now, she is so dedicated to her crappy teaching gigs that she spends way too much time preparing for that, not realizing that they're taking advantage of her by not hiring her on full-time. She's won "best teacher" awards for the past 2 years. I just need to keep pushing her to apply for new jobs. I will definitely suggest getting a portfolio together, maybe look into volunteering... She needs to stop "wasting" so much time preparing for her classes because she has no future there.

She can't go back to her school's career center because she went to school is a state very far away. I don't think they'll be of much help.

At 20%, she's paying $4000 in interest every year. She'll never be able to dig out of that hole, unless she got a full-time job. And she still has to pay the IRS...

[cardtrick]

As someone who teaches technical writing, can I suggest your GF contact her university's career center? Most people never think of using them years later, but our career center does a fabulous job with alums. I like to see technical writers that have a portfolio of work. Can she put one together? For students, I suggest they do some volunteer grant/technical writing for organizations they're interested in. That work is a great addition to a portfolio.

If she likes to write and is good at it, I think that's a very solid career path.

I found a local STC chapter and I was going to ask her to join and offer to volunteer and help other members out with their work. Maybe, she'll make some connections there and find a job? At the same time, she can put a portfolio together. I don't know what that involves. She has done some volunteer work, but I don't know the extent of the work or what exactly is needed for a portfolio.

[disneysteve]

We're likely gonna end up getting married and even if things didn't work out, I wouldn't mind helping her out.

So if you pay off her 8K debt to the IRS this year and her 20K in credit card debt next year and then she dumps you, you'd be okay with that?

I'm curious what your finances look like that you've got that much money that you can afford to give away like that.

[cardtrick]

Yeah, I would be fine with that. I honestly wouldn't have been in the somewhat good situation that I'm in, had it not been for her. My last semester of college, I couldn't graduate because I was so broke i couldn't pay my tuition. I was an international student, so no student loans or financial aid was possible. She bailed me out by putting my tuition on her CC. Back then, we had only been dating for 4 months and the plan was for me to move away after graduation. We didn't even think we would continue dating. And if she were back in her home state, she would have had no problem getting a job. She moved here because of me, so in a way, I screwed up her career.

I'm a total cynic, but even I see that she's worth helping out. And besides, she was the only one who helped, when I needed it the most. If there's anything called "true love", that is it.

Here are my current numbers:

$20K in cash will be coming soon - Sold a big part of my collection
$5K in bank account
$3.5K in ESPP that i withdrew from. Cash should be in my bank in about 2 weeks.
Escrow refund from refi - $2.5K, should get the check in the next month

Liabilities
$3300 401K loan
$12k 2nd mortgage - 7.9%
132K primary mortgage - 3.75%

My paychecks are only $1070 every 2 weeks currently, because I'm putting in $940 into Roth 401K. Planning on putting in 15K into Roth 401 and another 2.5K into regular 401K, to get match. My company doesn't match Roth contributions.

My expenses are $910 per month in mortgage paymentsm insurance and HOA dues, $40 phone bill, about $200 in misc spending and currently $410 in property taxes. If my tax appeal goes through, this should drop to around $230.

I have a CC with a 7.49% rate and a 10K limit. I'm planning on transferring $9K of her loan onto that and using up some of my cash to clear out her 20K loan. We'll deal with the IRS later in the year, or with my bonus money.

Also expecting around $3K later in the year when my stock grant vests.

[LivingAlmostLarge]

When do you plan on getting married? Maybe you should get engaged at least and then pay off her debt? Although she does sound like a keeper.

[cardtrick]

When do you plan on getting married? Maybe you should get engaged at least and then pay off her debt? Although she does sound like a keeper.

She's ready, but i'm not. I've never felt comfortable with commitment. I freak out every time I need to renew my phone contract.

[snafu]

Teachers credentials are flexible enough to slide into other careers. I hope she's on LinkedIn and every legitimate on-line site. She needs to apply for every job opening that she possibly has the ability to perform. Her job needs to be to get a job. HR managers admit they often make their final decision for an individual whose network influenced the decision. It's that teeny bit more when someone they know has made the referral.

Private Schools, Charter Schools, for profit like Kumon or Sylvan hire teachers. Tutoring earns extra income. Teachers are often successful as 'Trainers.' As an English major she can align career goals with that path which includes Public Relations, Communications, Marketing Assistant, Copy Writing etc.

[bjl584]

Before you help anyone else, you should probably help yourself by first paying off the 401K loan and then doing something about that 7.9% second mortgage.

[disneysteve]

Before you help anyone else, you should probably help yourself by first paying off the 401K loan and then doing something about that 7.9% second mortgage.

I agree. You've got a negative net worth of -$116,000, a 401k loan (which is never a good idea) and a high interest 2nd mortgage. I really don't see where you can afford to be paying off somebody else's debts right now.

[cardtrick]

Yeah, the 401K loan has got to go. I have the cash in the bank, so I will probably pay it off within the next 2 weeks. I also want to get rid of the 2nd mortgage, but I think I'll hold off on that and pay off my gf's personal loan. And then I will have her make the $100 payments towards my 2nd mortgage ($100 payments for 20 years at 7.99% interest). So, I'll be lending her 12K at 7.99%.

I'm pushing her to spend more time looking for jobs and try to make connections in technical writing/building up a portfolio by volunteering.

I will provide an update again after the new year.

[cardtrick]

Teachers credentials are flexible enough to slide into other careers. I hope she's on LinkedIn and every legitimate on-line site. She needs to apply for every job opening that she possibly has the ability to perform. Her job needs to be to get a job. HR managers admit they often make their final decision for an individual whose network influenced the decision. It's that teeny bit more when someone they know has made the referral.

Private Schools, Charter Schools, for profit like Kumon or Sylvan hire teachers. Tutoring earns extra income. Teachers are often successful as 'Trainers.' As an English major she can align career goals with that path which includes Public Relations, Communications, Marketing Assistant, Copy Writing etc.

Yeah, I agree. I just need to keep pushing her to apply for more jobs. She's on LinkedIn and I will get her to update her skills this weekend and apply through there as well. I agree that she needs to get very aggressive with her job search. When you look at these crappy teaching gigs that she has, she doesn't even make $10 per hour because she spends so much time at home preparing for it. Her school doesn't set these high standards. She does! She tries to do the best job she possibly can