Since The Banker and I combined our finances this month, we had to have a discussion about how we were going to pay off our debt. We had a few options. We could continue to pay the same amounts we had when our finances were separate; we could change my monthly student loan payment back to the minimum, and put the difference on his loan; we could aggressively pay back on specific debt while paying the minimums on the rest.
I’m happy that while The Banker is in the field, he still took my opinion into consideration, and we were able to have a good conversation about what to do. While what we’ve decided will work for us probably isn’t what works for everyone, I think it’s very important to have the conversation. There is no reason to hide anything, we’re in this together! (I just keep thinking of the How I Met Your Mother episode when Lilly has a ton of debt she’s hiding from Marshall – what a mess!)
In the end, what we decided to do was to pay off any remaining balance on our credit cards with The Banker’s Line of Credit. We did this because the LOC has a much lower interest rate than the credit cards. Also, it gets rid of 2 other payments we would have had to consider paying each month. (Now, these balances weren’t high, and we will continue to use our credit cards for the rewards, we’ll just be paying them off as soon as we make a purchase.)
We also decided that I will continue paying my student loan at the rate I have been, and that The Banker will continue his payments as usual as well. However, now that everything is together, when we have extra money (hopefully that’s often!), it will go towards The Banker’s student debt first. The reason we chose to pay that off quickest is that it has a similar balance as his LOC, with a higher interest rate. Also, his student loan is less than half of what mine is. So, while I am accruing more interest, we thought it would be best to get one fully paid and out of the way. Once his is paid off, we can take the amount we are used to putting towards his student loans and put it towards mine.
This is our plan for now, it may change as we adjust. We will also continue to put money towards savings, for a house, for the wedding, and for emergencies. How did you decide where to allot your funds when you combined? Or how do you think you’ll go about it?