Debt Payment Strategy

We just hit our halfway mark in December. This fall DH interviews then the rat wheel of finding a home and all that fun stuff goes full throttle. We have kids, so our debt is well not what single people have. It makes me ill. I want to pay it off and quick, but you can't hardly live in the hood and live on rice and beans when you have kids who are in school. We could live on rice and beans and live in a good school district though. I think of renting that first year of attendinghood, but DH doesn't think we'll save enough money as a 3 bedroom apt isn't cheap.

Any sage advice? I have lots of family friends who love Dave Ramsey and his payment ideas. But, he has no advice online for those in medicine.

:anyolne:

[ladymoreta]

Re: Debt Payment Strategy

Congratulations on seeing the light at the end of the tunnel! As long as you can get a loan for it, I would recommend getting into a house first. (Who knows what kind of down payment they're going to require soon...) If you rent, you might end up moving school districts, and that would be harder on your kids.

Our plan is to hopefully stay in the same city where he's doing residency, so we can live in our current house for a year or two after training. If we end up moving, though, we'll get something less than the maximum amount they'll lend us, since we have school debt and a LOT of retirement savings catching up to do.

[JaneDoe]

Re: Debt Payment Strategy

I voted for the strategy of taking on a mortgage and paying down debt starting with the highest interest rate first. We have been out of residency for just over two years. I can honestly say that we are on the brink paying off a lot of our debt. I think it was Kris who once said that it takes 5 to7 years after residency before you feel comfortable financially. I think she was right on with that point. I think a good strategy is to plan ahead and take baby steps. Don't overwhelm yourself by looking at the entire debt load. Pay off one little bit at a time. If you know of a big purchase on the horizen like a new car, plan for it. The same goes for retiring debt, make a plan. That is what has helped us.

Here is what we have done. After residency, DH and I had student loans totaling around $130000 or so. We didn't/don't have any cc debt. We took out a first and second mortgage for a new home, but we didn't go crazy on the purchase price. We also needed to purchase new cars since ours were over 10 years old and begining to need spendy repairs. Our strategy to tackle all of this was first and formost, after the mortgage, we would not be taking on any more debt. About a year into Dh's practice we had saved up some money, used our tax refund and bonus money from Dh's work and paid for new cars in cash. We just paid off my perkins loan, which had the smallest balance but the largest interest rate. We have paid off a chunk of Dh's perkins loan ahead of schedule and have rolled the money alloted for paying my perkins loan to pay ahead on Dh's perkins loan. That should be paid off in several months. At that point, we will roll that money over to pay off our second mortgage and so on.

We do have catching up to do with retirement savings. That will probably begin in earnest in the next couple of years after Dh's buy-in with his practice is complete.

Re: Debt Payment Strategy

We plan to buy a home when we move after residency, assuming we can get a mortgage of course, but continue to live frugally. We also don't expext to contribute much to savings/retirement the first few years out of training as paying off loans (and any credit card debt that we have by then) are a priority. Our student debt is high.
We plan on putting as much money as possible into the higher interest (private) loans first, so I picked option 2.

[ides]

Re: Debt Payment Strategy

I chose #2. We would like to get a place first thing and then work on the loans. Not sure, depending on where we live if we will be able to get a mortgage, and dh's student debt is high, but that is our goal. I would love to stay in nyc, but honestly we could most likely never afford to buy. You need something like 1 million for a two bedroom apt in Manhattan and it's not much cheaper in the non gheto areas of the boroughs either. I've lived in the ghetto but with us not being so young and requiring a good public school for the little one, its not an option.

[GrayMatterWife]

Re: Debt Payment Strategy

I think of renting that first year of attendinghood, but DH doesn't think we'll save enough money as a 3 bedroom apt isn't cheap.

If you'd like to rent for a year or two, stack the two kids into one bedroom and rent a two-bedroom place. Way cheaper than a three-bedroom.

Re: Debt Payment Strategy

I think of renting that first year of attendinghood, but DH doesn't think we'll save enough money as a 3 bedroom apt isn't cheap.

If you'd like to rent for a year or two, stack the two kids into one bedroom and rent a two-bedroom place. Way cheaper than a three-bedroom.

That would be fine, but we still would need a third room for a study. Our last apt was 1000 sq ft and the study was in the livingroom, there was crap everywhere, and there is no way we could live in such a small place without killing each other. My son needs space to move, very active child. It's possible for a house rental though... I'd have to look into it though, because our last time looking at small houses to rent in good school districts was quite high 6 years ago. We're taking $900 for a small Kirkwood house with NO upgrades and I'm willing to bet the rent is higher to pay off they over inflated mortgages. Still it's something to consider. It's expensive in STL to live central and in a good school district, inflated waayyyy to much IMO. Though, since your in STL I'm sharing, our real hopes is to buy in U-City. The homes have gone down as much as $80K for some, making it closer to what we would want to buy. There is worry if we wait a year we'll loose our buyer market. Ack, I hate being a grownup, it's tough! We are looking for a small house, one w/no upgrades if possible, in U-City that has either already enough room, a tad bigger lot for an addition for the future. But DH thinks with moving costs, renting a storage unit, extra that our savings won't be all that much. . . I'm more flexible in this department than he is. He is pretty much over renting, I'm just about the debt. No new cars for us for a looonnnggg time!

[GrayMatterWife]

Re: Debt Payment Strategy

[quote=Color_Me_Sulky]

I think of renting that first year of attendinghood, but DH doesn't think we'll save enough money as a 3 bedroom apt isn't cheap.

If you'd like to rent for a year or two, stack the two kids into one bedroom and rent a two-bedroom place. Way cheaper than a three-bedroom.

That would be fine, but we still would need a third room for a study. Our last apt was 1000 sq ft and the study was in the livingroom, there was crap everywhere, and there is no way we could live in such a small place without killing each other. My son needs space to move, very active child. It's possible for a house rental though... I'd have to look into it though, because our last time looking at small houses to rent in good school districts was quite high 6 years ago. We're taking $900 for a small Kirkwood house with NO upgrades and I'm willing to bet the rent is higher to pay off they over inflated mortgages. Still it's something to consider. It's expensive in STL to live central and in a good school district, inflated waayyyy to much IMO. Though, since your in STL I'm sharing, our real hopes is to buy in U-City. The homes have gone down as much as $80K for some, making it closer to what we would want to buy. There is worry if we wait a year we'll loose our buyer market. Ack, I hate being a grownup, it's tough! We are looking for a small house, one w/no upgrades if possible, in U-City that has either already enough room, a tad bigger lot for an addition for the future. But DH thinks with moving costs, renting a storage unit, extra that our savings won't be all that much. . . I'm more flexible in this department than he is. He is pretty much over renting, I'm just about the debt. No new cars for us for a looonnnggg time! [/quote:ac364]

WHOA WHOA WHOA!! You're in STL? I'm so sorry...did I know that?? Ah, wait...I did know that! I am just terrible at remembering stuff like that...especially on the web! We TOTALLY have to get together!! I would love to meet an iMSNer in person! Please PM me if you ever have a chance to grab a bite or something! By the way, we have something else in common: my DH also hit the half-way mark in December! Whoo hoo! Hey, where do you kids go to school?

Re: storage unit--your hubbie may have a point. Storage can get pricey. Yeah, you should look into how much that will run, to add it on as part of the housing overhead if you rent.

U-City is a pretty nice area, although my friends who live there all send their kids to private school. I think the public schools are not nearly as good as in Clayton or LaDue ($$$!!). But then, what schools are?

We live in the CWE, but in a two-BR...but it has a study "room" (which is really a carved-out room that previously was the laundry room) for DH. I understand the desire (NEED) to have somewhere for him to keep all his stuff!

I wouldn't sweat the thought of the market turning around so dramatically that you'd be disadvantaged with a seller's market. Maybe in a couple of years. But that's just a guess.

[madeintaiwan]

Re: Debt Payment Strategy

WHOA WHOA WHOA!! You're in STL? I'm so sorry...did I know that?? Ah, wait...I did know that! I am just terrible at remembering stuff like that...especially on the web! We TOTALLY have to get together!! I would love to meet an iMSNer in person! Please PM me if you ever have a chance to grab a bite or something! By the way, we have something else in common: my DH also hit the half-way mark in December! Whoo hoo! Hey, where do you kids go to school?

She could answer for herself but I know school started up for her again. Julie isn't in STL anymore. She grew up there and was visiting family and has hopes/plans of moving back after residency.

Re: Debt Payment Strategy

Davita's right, we are hoping to go back in a year and a half. The real worry about counting all the pennies, is that in U-City there is only 1 good elementary school and no good middle or high schools. So if we can't get in that one neighborhood, it will mean private school for us. I'm already leaning towards private for our kids, but it would be nice not to have to pay the fees right out of residency. It's really a numbers game, truth be known. We lived in Clayton, in a wwaaayyyy old apt, for four years. My son went to UUM Preschool in the Loop, right across from COCA for three years. We loved the area, and despite being right at the city lines, we felt very safe. I like the area, as it's probably one of the more diverse places to live in STL, CWE being another. And I plan to go to Fontbonne, which is right there as well.

Another new worry for me is that my daughter's birthday is like 8 weeks past the cut off and I was really wanting her to go to kindergarten so I could enter class full time. She loves preschool so much right now, that I know by then she will be just as ready as her brother was for kindergarten. That means I'll be looking for private for her after all.

I know $$$ isn't unique to us, everyone has a list of issues that they have to flush out. I just am trying to prepare slowly for all this, because once the fall comes, we have to have the big questions answered, and work on everything else.

Man where did the time go, we just got here!

[rainbabies]

Re: Debt Payment Strategy

I don't know if it's our desire to return to rural new england or if it's a common practice....but most of the jobs dh has looked at and intends to show interest in, have loan repayment options. Hopitals, practices, the state...A job that dh recently looked at in maine, is offering $10,000/yr for 8 years. That is the hospital/practice only. The state offers a yearly amount as well. It's not a huge amount in the grand scheme of things, but every little bit helps. As far as buying or renting right out the gate...it depends on where we go. If we know the area, buy. If we don't, we rent until we do.

[GrayMatterWife]

Re: Debt Payment Strategy

WHOA WHOA WHOA!! You're in STL? I'm so sorry...did I know that?? Ah, wait...I did know that! I am just terrible at remembering stuff like that...especially on the web! We TOTALLY have to get together!! I would love to meet an iMSNer in person! Please PM me if you ever have a chance to grab a bite or something! By the way, we have something else in common: my DH also hit the half-way mark in December! Whoo hoo! Hey, where do you kids go to school?

She could answer for herself but I know school started up for her again. Julie isn't in STL anymore. She grew up there and was visiting family and has hopes/plans of moving back after residency.

Oh, thanks. I'm bummed. I was really hoping she was still here!!

[GrayMatterWife]

Re: Debt Payment Strategy

I like the area, as it's probably one of the more diverse places to live in STL, CWE being another.

I LOVE LOVE LOVE living in the CWE. We don't have a gigantic, 5000 sq. foot spread, but it is just such an awesome environment--in the center of everything. And three blocks from Barnes. Plus, we live right across the street from Forest Park (all the grass, none of the yard!). I would never move to the 'burbs if we stayed here. I am in love with city living (although, I was a city girl before moving here, anyway). I might consider moving into a house in the CWE, though, if we were to stay.

Honestly, it all kind of shakes out financially. Although a condo in the CWE is more expensive than one further out, the building retains its value for consistently. And our gas costs are nominal, our schools are close, and are taxes are lower than in, for example, LaDue or Clayton. So it is just a matter of: do I want to be paying more for a big house in Clayton/gas costs to commute but send the kids to a great public school, or do I want to stay in the CWE but have to pay for private schooling...

Re: Debt Payment Strategy

Clayton/gas costs to commute but send the kids to a great public school, or do I want to stay in the CWE but have to pay for private schooling...

Exactly. The homes we've looked are right on the border of Clayton, that no one would know it's U-City w/out a map, but the price can be 100-200K less, or more. Even with private school you keep more money in the pocket. We have known several families that have rented in Clayton just for the schools, but the rent isn't cheap for a house. I figure if we stick to our guns and get a place not updated, we could save ourselves loads. Webster Groves is our backup, the schools are great, community awesome, my old church is there - but... it's not the city, which we love.