One of the only perks of deployments is an increased income. Based on what they do and where they are, service members can make a lot of money while they’re gone. The first time Mac was deployed, I lived off of my full-time income, and he saved 95% of his (he paid our rent and had some random things like Xbox and Netflix subscriptions). Back in 2012, I read Dave Ramsey’s Total Money Makeover and was inspired to get a better grip on our finances. We aren’t following his plan completely; we’re using it more like guidelines.
But Mac and I have a fundamental difference in money strategies. I have a lot of student loan debt (about $65,000 or so left. Yes, really. It is that much.), so obviously I would like to pay that off as soon as possible. Part of my logic in getting a job here was to have extra money to offset my expenses and to pay towards my student loans. Mac would like to save the majority of his income. We’re both looking to the future (we plan on buying a house at some point) but with different perspectives. I want to pay off my loans then have that extra money every month. Mac wants to save so that we can easily afford a down payment and a mortgage while continuing our current plan of paying more than my minimum payments each month. I think some sort of happy compromise can be reached, but we haven’t figured it out yet.
If you were in our situation, would you save or pay off debt?
I would pay off debt, yes saving is good too. The sooner you can get the debt paid off the better.
Pay off debt, definitely.
We are kind of in your situation right now, and I hear on how high student loans can be! My husband is leaving on Deployment and we have talked about that while he is away of what to do. We are planning on doing a little bit of both. We will be making higher payments, but not to the point of we don’t have any savings left in case of an emergency. We have about two paychecks saved up and that money is not going any where. As well as we are continually adding it to it each month.
Pay off the debt, will save you money in interest!!
Pay off debt! Also saving a little doesn’t hurt-always good to have a cushion.
Debt. Definitely. Usually, you’re better off paying the debt first to avoid all of the interest. I’m assuming the interest you’re paying on the debt is probably higher than the interest you’d be making with the money in savings. Plus, if you use a VA, you won’t need a down payment. (:
We were in a similar situation. Paying of debt is good, but school/education loans are seen as “good debt” and won’t affect you when you go to get a mortgage (as long as you have made the loan payments on time). Yes, if you pay off the debt you will save on interest, but you want to try to save enough to have at least a 3-6 month safety net, meaning that if you were both to lose your jobs you’d be able to live off your savings for 3-6 months. I wouldn’t suggest paying extra or higher amounts on loans and not saving.
~Ashley @ A Cute Angle
acutelifestyle.blogspot.com
I agree with the other comments, that debt should be paid off immediately. As long as you have a little bit of money in savings ($1000 or so), focus on getting debt paid off. One thing I have learned is that both husband and wife need to have the same financial goals. I tried to do Dave Ramsey’s system, but my husband wasn’t as enthusiastic about it as I was and it caused some friction. Student loans are serious business. By the time we get my husband’s paid off, we will have paid tens of thousands of dollars in interest. It makes me sick to think about it. The sooner you can get student loans paid off, the better. Once you are debt free, saving money for a house down payment will go quicker and be a lot easier.
Pay off debt. My hubby paid ours off and we now put all of our extra money into savings!
Pay off debt. You have to think about the interest that accrues over time. So if you look at that and it doesn’t matter either way, then I would say figure out how you can split payment so that you are both saving and paying off debt. There are ways to do both. We thought about the Ramsey theory, but Tom couldn’t get on board with it so we had to devise our own system ourselves and adjust when needed for emergencies. We kind of run by the rule of thirds with paychecks: a third to bills, a third to savings, and a third for fun. It has really worked for us!
I’m with you! I spend all my extra money paying off my student loans. At the amount I’m paying I’ll have them paid off in about 5 years. It feel like forever, but really isn’t that much more. And knowing how much money I currently put towards them every month, I’ll definitely have more than enough to save and even splurge once they’re gone!