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Does this make financial sense?


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Old 5th March 2018, 1:27 PM   #1
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Does this make financial sense?

I wanted to run this by you all to see if any of this makes sense. When my husband and I got married we decided to put 50% of our paycheck into a shared account where bills like rent/mortgage and other house bills would come out of. The rest would be ours to cover our personal expenses and debts we might have had.
For a while he only had a part time job where he could only contribute $500 and I took care of the rest. I always made sure I put my 50% even if I had a lot of debt to pay (which I do because of educational expenses).

So now he got a full time job. Unfortunately the job is across the country so we are living separated. The initial plan was to have him stay with a friend for a month or so then find a place for himself and go from there. Given that, it seemed logical that he would use his income to pay his rent/bills and I use mine to pay for our mortage and bills here.

Recently he told me his friend is allowing him to stay longer completely rent/bill free. Because of that he told me he was going to use his paycheck to pay off his credit card which he will be able to pay off in a month, then move onto paying off our IVF treatment. Because he is travelling back and forth he also got a rewards credit card which we are both supposed to use for groceries etc to get more points and he will pay that off at the end of the month. Because of that he told me he will no longer contribute anything to our shared account, not even the $500 he used to when he made just $1000. (He makes a lot more now) and then wehn everything is paid off he will put more in our shared account so I can put less and take care of my debt.

On the one hand I see his point of wanting to get rid of debt as fast as possible and taking this opportunity to do it. He also wants to save up so that we can refinance our house and lower our monthly payments. Plus because he has less debt he can pay thing more quickly. However wouldnt it make sense tonpay off the largest debt first??. He said that if it would make me feel better he would put his %50 and pay off his the debt slowly instead so I can pay off my debt faster.

I guess Im annoyed that it never occurred to me to cut back on what I put in our shared account to take care of my personal stuff but I guess I can see his logic too. Thoughts??
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Old 5th March 2018, 1:35 PM   #2
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I can't say based on the info you provided.

What you two need is a spread sheet & a budget. You need to know exactly what is coming in on both sides & what is going out. Look into a concept called snowballing. Use the formula where you list all the debts from highest interest rate to lowest. Then you work together to pay them off as follows:

High CC 19.5% min payment $50

Medium CC 9.5% min payment $40

car loan 6.0% min payment $250

mortgage 3.8% minimum payment $1,000

student loan 1.9% minimum payment $300

So you make the minimum payments on everything. When you pay off the 1st one you take that $50 & now pay $90 toward that next bill. Then you add that $90 to pay $340 on the car loan, then $1340 to the mortgage & finally $1640 to the student loans. You also avoid new debt until everything is paid off.
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Old 5th March 2018, 1:38 PM   #3
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Hmm. Sounds overly complicated to me. When married, I think money income should be shared more, but yes, you each have a need for your own money to with as you wish, and your separate past debts. That said, it is usually best to pay off the debt with the highest interest rate first (as fast as possible), then go on to the next debt (making the normal monthly payments on all the rest in the meantime, of course). Fairness becomes somewhat difficult to decide since you're married but each bring your own past debt, which it's best not to mingle unless you choose to do so.

Maybe you could make a maximum affordable payment on his highest rate debt one month, then do the same for yours the next month, and alternate.
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Old 5th March 2018, 2:58 PM   #4
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Thank you for your responses.

I guess what I was trying to get at is that for me, personal debt is each of our responsibility and should not affect our agreed upon responsibility of funding the account that takes care of our house etc.

Ive always been very mindful of ensuring that the account always gets 50% of my paycheck even if it means I cant pay off my credit card as fast as Id like. For me, our family finances comes before my own personal debt. But clearly my husband is not doing that and instead is focusing on trying to get rid of the debt even if it means the house account doesnt get funded (and potentially I end up having to put more in). Im trying to figure out if I should agree to this approach or insist that we both put 50% in and work with what we have left over to pay off our personal debts...
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Old 5th March 2018, 3:05 PM   #5
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Explain it to him that way & see what he says. He needs to be contributing something to the household.
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Old 5th March 2018, 6:11 PM   #6
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I think his proposal is a solid one as long as the funds are used to pay down the debt and not for any other expenses.

However the amount that should have been contributed to the household funds should accrue as interest free debt. He should pay off the cards, and once they are paid, he should increase his 50% to include back payments.

Once he is home and paying the back pay (to you), the additional funds may allow you to pay down some of your expenses quicker.

Last edited by Cullenbohannon; 5th March 2018 at 6:21 PM..
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Old 5th March 2018, 6:43 PM   #7
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No, don't pay off the largest debt first. Pay off the debt which has the highest interest rate first.

What about refinancing all your combined debts into one lower interest rate loan and work together to pay the whole lot off?
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