Student loans: paying off loans with different interest rates
Student loans can come with different interest rates. Is it better to pay off students loans that you owe the most on, or that have the highest rate first? Look to question No. 6 of the reader mailbag.
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Show me a politician with the courage to work directly to make this type of thing happen (not just pretty speeches, but actual legislation) and I’ll show you someone who will vote for that politician.Skip to next paragraph
The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.
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Q1: Guilt for every little purchase
Here’s my specific situation: I’m a recent college grad, living at home with my parents, working full time while paying off student loans. I really dislike living at home and want to move out, but the cost of living in Los Angeles is so high, I feel so afraid. Especially when there’s a lot of uncertainty in my future–I have no idea what I want to do for a living, but I know I don’t want to be at my job forever.
I feel guilty every time I spend money, even if it’s just on a bag of chips–I think to myself, those few dollars could go towards a down payment on a house. I know I need to reward myself once in a while or I’ll be miserable, but when I have such a large financial goal in such an expensive city, how am I supposed to decide when and how much I’m allowed to spend money on unnecessary wants?
At first, I faced this exact same problem. I felt guilty every time I spent any money on anything that wasn’t absolutely necessary. After a while, I somewhat resented that guilt and would sometimes spend money just to show that I “could” do it.
As time passed, though, I began to realize that guilt and resentment weren’t taking me to where I needed to go.
My solution was to simply budget a certain amount per month for frivolous purchases. I usually did this by keeping that amount in cash in my wallet. Once a month, I would withdraw that amount from my checking account. Then, if there was cash in my wallet, I knew I could freely spend it without guilt or worry.
I still do this, except without directly using cash. I’ve just become accustomed to keeping my frivolous spending in reasonable check.
Marissa has a second question.
Q2: Handling partner without money skills
I’m in a relationship of almost three years, and we believe we’re in it for the long haul, although we’re nowhere near ready for marriage (both still living at home, not ready financially, etc.). He has $50,000 in student loan debt, and his part time job barely covers the payments. I’m really concerned for his financial well being. Although he isn’t a reckless spender, I still feel that he’s not saving enough, earning enough, or making large enough payments on his loans (at his current pace, interest will add on over $20,000 by the time they’re paid off).
I’ve nagged about finances, but he feels comfortable with how things are. But I think the only reason he’s doing okay is because his parents are supporting him. He plans on going to grad school and would like to move out of home as well, which would add to his expenses and debt. I feel like his financial decisions now will affect both us in the future, but what is my role, given that we’re not married or living together? Do I have a right to tell him to spend less money, when he doesn’t even splurge much in the first place? (I do feel like he should be spending even less–as little as possible–since he’s $50,000 in the red)
Your role is to figure out whether this is a person that you want to be with over the long haul, given both his good traits and his bad ones. Trying to “mold” someone to be something you want does both of you a disservice.
The most impact a partner can really have on the other person is to help them find new channels for the person that they are. You can’t really change the person, but you can change the situation.
It sounds as though you’re deeply concerned about his personal finance decisions. Is that a deal breaker for you? I can’t tell you that, particularly since I don’t know what you value and I really don’t have a full picture of his behavior from your description. It’s going to require some soul-searching.