The Finances and Debt Thread

[AllforOne]

700 credit score, gonna have to start paying back student loans.


Except I'm 1099 and basically write almost everything off. I'm down to like 20k agi and my student loan forgiveness plan calculates that I don't have to pay anything at my current income for twenty years and it's forgiven.

Likely option.

However, my friend is down to owing 1/4 of what she initially did by not paying and getting deals her credit dropped 200 points though.

How quickly would you be able to raise it up should you start paying back on your loans etc? Figuring out exact details before I can even ascertain if I could live with a 500 credit score and then decide whether it's morally acceptable to do this.

I think you have it backwards. The moral issue is first, in my mind. I'd never take out a loan with the intent of defaulting on it. That would keep me from ever considering the issue of "how long would it be before my credit was restored?"

If you did go that route, my guess is that it would take at least a couple of years for your score to recover (assuming you have no other dings in the meantime). And you'll have a lot of 'splainin' to do if you apply for any credit, try to rent an apartment, or anything else that may require a credit check, within the next seven years. Never mind that other annoyances (like debt collectors) will become a part of your life for some time.

Finally, I'll suggest that your plans give you zero flexibility ... and that's a lot to assume for the next 20 years. You say your loans will be forgiven if you continue to maintain a low AGI as a 1099 contractor. That may work for you today ... but there are a number of ways that apple cart can be tipped over:
* Are you sure you'll always be a 1099 contractor? What if your client(s) go belly up? (From your comments, it doesn't sound like you've ever lived through a recession. We haven't had one in about a decade -- but we will.) What if you get approached with a dream job, one that would require you to become a W2 employee?
* Are you sure your AGI will always be that low, even if you stay 1099? Twenty years from now, you'll likely be earning at least a couple times what you're bringing in today.
* Are you planning on getting married within those 20 years? If so, and if your wife works, then that raises AGI as well.
* Student loan forgiveness programs have a terrible record of actually coming through. The promises sound great -- but then you make one little misstep in those 20 years, and they won't pay. Maybe yours will -- I'm just saying that you're playing with snakes, so don't be surprised if you get bit.

If it were me, I'd slice all the fat out of my budget and smash through the loans as quickly as possible. YMMV.

 

[FiveThous]

How do I close out a checking and savings account?

 

[BMAN]

Does anyone have life insurance? Is it really necessary? I’m 28, got it when I was young since the union is partnered with a company and everyone said I should get it. I’m getting married this year if that helps. Trying to unload shit I don’t need.

 

[Triplethreat]

Does anyone have life insurance? Is it really necessary? I’m 28, got it when I was young since the union is partnered with a company and everyone said I should get it. I’m getting married this year if that helps. Trying to unload shit I don’t need.

If you’re getting married yes.

 

[BMAN]

If you’re getting married yes.

Damn alright.

 

[Huber.]

Does anyone have life insurance? Is it really necessary? I’m 28, got it when I was young since the union is partnered with a company and everyone said I should get it. I’m getting married this year if that helps. Trying to unload shit I don’t need.

It all depends if your wife can live on her salary alone and vice versa. If you have a lot of debt like a house, kids or a couple of car payments then it makes sense. Some people that plan on buying a house want to lock in their term rate before they turn 29.5 which is when it jumps I was told. Don't let someone at Panera talk you into whole life @The Oi

 

[BMAN]

It all depends if your wife can live on her salary alone and vice versa. If you have a lot of debt like a house, kids or a couple of car payments then it makes sense. Some people want to lock in their term rate before they turn 29.5 which is when it jumps I was told. Don't let someone at Panera talk you into whole life @The Oi

So term life is the way to go?

 

[Huber.]

So term life is the way to go?

Yes for someone young. Whole life premiums are 10x more so you're better off investing that money elsewhere over the 30 year policy. Hopefully when it expires you don't have a bunch of debt and your children are no longer dependents.

 

[BMAN]

Yes for someone young. Whole life premiums are 10x more so you're better off investing that money elsewhere over the 30 year policy. Hopefully when it expires your don't have a bunch of debt

We’ve gotten a lot better with our money/budgeting so should be good. Pretty sure I got roped into universal when I was younger. Fuck em

 

[AllforOne]

Does anyone have life insurance? Is it really necessary? I’m 28, got it when I was young since the union is partnered with a company and everyone said I should get it. I’m getting married this year if that helps. Trying to unload shit I don’t need.

@BMAN : the one question to always ask yourself re: life insurance is "who is depending on my income?" If that answer is nobody, then you don't need life insurance. So start from there.

If you do need life insurance, then the next question is: term or whole life? Basically: term insurance is just what its name suggests -- you are insured for a specific term (typically something like 10, 20, or 30 years). If you buy a 10-year term policy today, and you die 10 years and one day from now, your beneficiaries will get nothing. Whole life adds an "investment" component that builds up a cash value over time.

The difference is that whole life is way more expensive than equivalent term insurance. Probably because it is so confusing, and because it pays really good commissions to the people who sell it, there's no shortage of salesmen pushing it as a "responsible" investment. Ignore them. If you need insurance, term is all you need. Take the money you save versus whole life and invest it, and you'll come out way ahead.

One more piece of advice, and this is general advice that applies to life insurance, other financial decisions, or any other area of life: don't listen to "everyone." What might be right for them, may not be right for you. Maybe they're all wrong. Or maybe they are in fact right ... but it is always better to look into it for yourself and decide for yourself what's best for you.

Hope this helps -- LMK if you have more questions.

 

[ariolkasosok]

I hear you on trying to unload some unnecessary stuff, especially when it comes to finances. I totally agree with the advice given to you by the previous poster about asking yourself who is depending on your income. That's a major key when it comes to life insurance. If you do need it though, term insurance is the way to go. Whole life can be hella expensive and confusing, plus the commissions for the salespeople are ridiculous. Ain't nobody got time for that, especially if you're trying to get out of turbo debt. Don't just listen to "everyone" either. Read more turbo debt reviews and choose a reputable company to help you with your debt.

 

[Chris]

This is the kind of thread I need honestly. I’m extremely anxious about money, debt, and retirement, and my partner comes from a background of very little financial accumen, to put it kindly. Her parents are in their mid 60s struggling to retire and they let my wife take out $100k in private loans to pay for school to … be a teacher. So that debt is now my debt, obviously, and I’m not complaining as I always knew about it. But it adds to my anxiety about finances overall.

I turn 34 soon and feel shitty because while I’ve put effort into managing a 401k (and recently opened a Roth), I’ve only gotten into an actual well paying career as of last year, and haven’t managed to save a ton compared to my peers due to this. With my wife being a public school teacher it’s nice to know she will have a pension (uh, hopefully?) and the pay scale for teachers here seems to be very, very solid, so I keep telling myself … right now is the hardest to save that it’ll be, it’s only up from here. Which is hopefully true.

But we ain’t that young anymore so it’s always in the back of my mind. I can’t imagine where I/we’d be if I’d gotten into data analytics out of college instead of fucking around for a decade. Or if my in laws didn’t get their 18 year old 100k in loans to go to a private school to become a school teacher. Smh.

Can’t change the past though so I’ve accepted it and am just trying to keep the trajectory moving upwards. It took a herculean effort to get a Masters and make a career pivot at 32, so I’ve gained a lot of confidence all will be okay.

 

[Randolphkeys]

@Chris maybe your wife can teach you to chill the fuck out. You are 32? You care about finances? You can figure this out.

BTW - if your wife teaches long enough as a public school teacher, she gets her loans wiped out and forgiven.

If Republicans ever take that away from public school teachers, we will change our stance on the second amendment debate, believe me.

 

[Chris]

@Chris maybe your wife can teach you to chill the fuck out. You are 32? You care about finances? You can figure this out.

BTW - if your wife teaches long enough as a public school teacher, she gets her loans wiped out and forgiven.

If Republicans ever take that away from public school teachers, we will change our stance on the second amendment debate, believe me.

No, I’m turning 34.

Yes, I know, I’m still “young.” But I was raised to plan this shit early, that is why I got to see my parents retire at 58 and live their best damn life. So just curious when is it time to start giving a shit about finances? I probably do think about it too much now but having bought a house and had a kid recently it’s definitely put a strain on things, and he economic climate of course.

As for my wife. Shes been teaching for ten years and her loans are private not federal. Her district also didnt honor her out of state teaching experience so she’s paid like a first year teacher since we just moved to Cbus a year ago.

 

[RonG]

No, I’m turning 34.

Yes, I know, I’m still “young.” But I was raised to plan this shit early, that is why I got to see my parents retire at 58 and live their best damn life. So just curious when is it time to start giving a shit about finances? I probably do think about it too much now but having bought a house and had a kid recently it’s definitely put a strain on things, and he economic climate of course.

As for my wife. Shes been teaching for ten years and her loans are private not federal. Her district also didnt honor her out of state teaching experience so she’s paid like a first year teacher since we just moved to Cbus a year ago.

I was actually teaching my youngest ( 24) about the compound interest calculator and showed her if she put 500 a month a way in stocks ( buy and hold) and averages a 15% return in 25 years she would have 1.6 million outside of her 401k.