Need Help with Student Loan/Financial Plan

[4n6]

Hi everyone,

First-time poster, long-time lurker here. I have been reading these case studies over the past few months and I was hoping I could get advice from the forum on our situation. Specifically, I am trying to figure out a plan for my wife's student loans/mine as well.

Background. Wife and I are both teachers. I am a tenured professor, my wife is an adjunct. However, there is a good possibility that my wife will be leaving academia (primarily forced out) to potentially pursue other job pursuits. We are currently on Income Based Repayment plans for student loans and both enrolled in the Public Student Loan Forgiveness plan (PSLF) but will still have 7-8 years left. Adding to this is that we are trying to have a kid. We are doing rounds of IVF (although our insurance covers it) and if that doesn't work we will be probably going to adoption. So that aspect of our lives is in a bit of flux, plus my wife's job situation.

I am just trying to figure out what is the best financial plan, particularly my wife's student loans.

Ok, here are the financial stats:

Income:
Me (110k)--I teach extra classes
Wife (50k)--adjunct and unemployment

We average about $7100-$7500 per month take home expenses. I max out my 403b and I also have a 401(a) that I am required to contribute too (about $900 a month including the match) so retirement savings for me are about $28k per year give or take. I can, obviously, reduce my 403b contributions, but I cannot do anything about the 401(a) because I am contractually required to do so (the 401a is replacement for a pension).

Assets:

$161k (401a)
$81k (403b)
$31k (Roth IRA)
$3k (457)
House--$220k

Liabilities
Mortgage--$144k--2.875% (paid off in 10 years)
Student Loan #1--$60k (Me)--4.5%
Student Loan #2--180k (Wife)--6.25%
Car Loan--18.8k 2.19%

Monthly expenses

Mortgage (PITI)--$1700
Student Loan #1--$421) (ME)
Student Loan #2--$762 (wife)
Car Loan--$625
Gym--$21
Dog Wellness Plan--$39
Cable/Internet--$150
Phone--$100
Utilities (Gas, Water, Sewer, Electric)--$300
Netflix--$10
Dogfood/Treats--$50
Gas--$300 (we have a 45 minute commute each way)
Food/Entertainment--$1200 (yes I know that is WAY too much for just two people and we need to cut back on the groceries, going out. My wife likes to consider going out to eat entertainment....it is about 1/2 and 1/2 over the past two months still way too much).
Medical Bills--$300 (even though IVF is covered by insurance we still have all kinds of ticky tacky costs # and that includes some of my wife's medical ailments).

$Total--6k give or take.

My big dilemma is a couple of things. 1) The student loan payment we are making for my wife's student loan isn't keeping up with the interest and the interest rate is high;
2) should I curtail my retirement savings to push and pay down some of the debt to have more breathing room. However, I am 43 and already feel WAY behind on retirement savings. I would like to not curtail that if possible.
3) My in-laws know about my wife's student loans and have offered to do a cash-out refinance for most of the amount (about $150k). Then we would pay that mortgage of about $1000 a month until it is paid off. My wife is an only child and the house would be hers anyway if/when my in-laws were to pass away.
4) I am ok being on the PSLF program no matter what. I did the back of the napkin math and even if I went to the standard payment plan and made payments for the next 7 years then that would be "cheaper" than paying them off totally (when you include payments and interests and the like).
5) I am thinking about trying to kick up my mortgage payments much more quickly and then doing my own cash-out refinance to get better terms for my wife's student loans.

Thoughts? There is the possibility of refinancing the student loans with a private company. However, I tried SoFI and because of her low income they wouldn't even consider my wife's application (not sure why they didn't take our combined income).

What is the best way mathematically to get this done? Recommendations for how we should proceed with debt payoff, in particular student loans...and I know we have to cut from our budget as well.

[disneysteve]

First-time poster

You aren't a first-time poster. You're first post was back in 2015. More importantly, you posted a fairly similar question back in March. It doesn't sound like much has changed since then although you did give a much more detailed breakdown this time around.

You said back then that you know $1,200 for food and entertainment is way too high, but it sounds like you guys haven't done anything about that yet.

What's the deal with your wife? First off, taking out at least 180K in loans to become a teacher certainly wasn't a wise decision but she's stuck with it now. You mentioned earlier that she might be unemployed in the fall. Now you're saying she may be leaving teaching all together. Why? What other "job pursuits" does she have in mind? They better be darn good if she ever hopes to pay off 180K in debt.

You guys need to get serious about this. I really don't get the impression that you are. You've got a huge car loan, a big cable/internet/phone bill, and spend a ridiculous amount on food/entertainment. Despite all of that, you're asking if the answer is to curtail retirement savings. NO. The answer is to stop all of the frivolous spending!

Regarding your in-laws mortgaging their home to help pay your wife's debt is pure insanity IMO. I also don't see how it even helps you. Her loan payments currently are $762 but you say the payments on that mortgage would be $1,000. What good would it do you to increase your monthly payment by $238?

How much is the car worth today? If you can sell it and break even (or come close), that's something to consider.

Otherwise, cut the food budget in half to $600. That gives you an extra $600/month for debt repayment. Are the phones on contract? If not, drop them and switch to prepaid phones used strictly for emergencies. See if you can cut back the cable bill by reducing your channel package. Drop Netflix. It's nice to have but you have cable and internet. You can live without it for a while.

You need to go bare bones, scorched earth, and clean up the mess she got you guys into.

[Gailete]

Goodness! My husband and I don't even get $50 worth of treats a month but your dog does! Plus it's own insurance plan?! Won't say any more since I know that to some their pets are more important than children, but when you can't afford your bills, you also can't afford pets.

For sure you have to cut that food amount. I assume those going out to eat meals aren't at Micky D's. You need to eat at home and if yu did consistently you would probably find, unless you go gourmet all the way, that you literally can't eat that much in food from the grocery store in a month unless it is junk.

I too am concerned about the amount of your wife's student loan. I don't know what she got out of her college years, but she obviously didn't work her way through or work at all. Her loans are almost 4 times her yearly income which seems really screwed up to me and like Steve, I say no way to paying off her folks mortgage at a $1000 a month which means you are paying more that currently. Will you be responsible for the taxes on the house and will you get to declare the interest as a second home on your taxes or will her mom and dad continue to get the benefits of ownership? I still say no since paying more money out doesn't help you out at all. It does help your in laws plenty.

It is possible to get along without $150 for cable and internet. No one needs cable. You two would or should be consider intellectuals and so I would think are spending your time reading and studying and doing scholarly pursuits, not wasting your brain on garbage on the TV. You seem to very high on the hog. You didn't mention if your income is before or after taxes. If before it means you don't have nearly the income to work with as you think. You also seem to have around a thousand $$ unaccounted for monthly yet your letter presents as someone in big trouble. Where is that money going. One other small question, were you aware of your wife student loan debt when you got married and how had she been handling that up to then?

[LivingAlmostLarge]

If you cut the eating out and spending in half like DS pointed out you'd make good headway into all debt. Plus once you see it going down I bet you'd make more cuts and really get serious. With that income and that mortgage? It should easily happen.