Financial Problems in MarriageWhen financial times are tough, it adds to the stress we deal with on a daily basis. This section is for talking about how financial problems affect our relationships and ways to cope.
Background: My wife got into veterinary school. I'm keeping my job, make enough money to support both of us comfortably, but not enough to pay for her schooling. We're looking at 90k-110k in student debt to get her through vet school. Yes, it's very expensive.
Our credit is outstanding, our spending is well under control, and we have various emergency funds and targeted savings funds. IOW we're financially responsible. However, we did buy two motorcycles a couple years ago, which we're still paying on. That and our house is the only debt we have currently before we take out the loans for my wife's school.
So my question is this: What are the viewpoints on taking out extra in the loan to pay off the bikes? The rate on the student loan (an unsubsidized Stafford) is 6.8% APR, the rate on the bike loans is 6.99% APR, so not much difference there, but I do like the idea of consolidating the debt down.
Our credit is outstanding, our spending is well under control, and we have various emergency funds and targeted savings funds. IOW we're financially responsible. However, we did buy two motorcycles a couple years ago, which we're still paying on. That and our house is the only debt we have currently before we take out the loans for my wife's school.
You may not like this answer, but if all of the above were true, you would not even wonder about using a student loan to pay off motorcycles.
The taxpayers front that loan and I would rather have my tax dollars used for school, not your toys.
Every Vet or Med doctor that I know needs to take out a lot of big loans to start the practice unless they have family.
Vet doctors don't make a ton of money.
Why do you want to take out more loans on something that isn't generating income!
Think Posted via Mobile Device
Another good viewpoint. I doubt we'd want to start a practice straight out of vet school, but the state of the industry for vets right now is that there's a glut of new grads. Therefore, starting salaries are dipping, so you have a good point there. Jobs are a little harder to come by, as well, though not nearly at the levels of other career fields. I think it's something like 90% of grads are finding a job right out of vet school.
Assuming you are here in the U.S., consider that student loans are not dischargeable in bankruptcy. That loan will be paid off or be with you until the day you die. Also I think that student loan rates are adjustable whereas the vehicle loan probably is fixed.
Seems like a lot of risk to take for 0.19%, or about $1 extra in interest per year per $1,000 borrowed over the life of a fully amortized loan. Does not seem worth it in my opinion.
Assuming you are here in the U.S., consider that student loans are not dischargeable in bankruptcy. That loan will be paid off or be with you until the day you die. Also I think that student loan rates are adjustable whereas the vehicle loan probably is fixed.
Seems like a lot of risk to take for 0.19%, or about $1 extra in interest per year per $1,000 borrowed over the life of a fully amortized loan. Does not seem worth it in my opinion.
That's true, I had forgotten about the fact that student loans are bankruptcy proof. Student loan rates are adjustable in the sense that every year, the rate changes on the money you are borrowing at that time, but as I understand it, once you borrow it, that rate is locked. However your point is still valid in that next year when we borrow the rate may be above that of the bikes.
If you are only using the motorcycles recreationally then I would sell them. You can also take some of your emergency funds and pre-pay the motorcycles down so that the long term effect on interest equates to the student loan interest or lower.
Look at your student loans. Are some of them unsubsidized? If so, you are heading for trouble. Having to take an unsubsidized loan to finance education, means you should be drastically reducing your debt, if I were you I'd sell the motorcycles and also take in a tenant in your home, anything to avoid debt on which the interest is going to accrue while your wife is in school.
Remember, if anything happens to your wife and she cannot complete school, payments are going to start 6 months from when she disenrolls. Make sure you check her disability coverage. Make sure you have enough savings to start paying back the loan if you need to.
No unsubsidized student loan debt. That is my motto. Just because you qualify for something doesn't mean it is a good idea. Just because others do it doesn't mean it's a good idea.
Has your wife thought about going to school part time and working part time, maybe in a field that will support her education in a practical way?
I took out subsidized student loan debt, it is used to support myself during the summer months but what I am doing is working and also doing unpaid work and writing and other activities that are to build my portfolio and also speculative writing, for publication and contests and towards building a career. That's way different than paying for motorcycles when you want to be a vet. :-(
You won't get my stamp of approval for that one, sorry.
Has your wife looked into the possibility of getting a vet job with the government? I know that usajobs.gov which lists federal jobs, frequently they look for vets, and you can investigate some of the loan forgiveness programs and plan better. You have a house, well, guess what, the radius of getting a job is limited. You don't say about equity in the house...these days most homeowners don't have as much as they like to think. What you owe on a loan might even be less than the fair market value of the house, regardless of what % of the loan you've paid off, it's a zero or negative equity situation.
If you are only using the motorcycles recreationally then I would sell them. You can also take some of your emergency funds and pre-pay the motorcycles down so that the long term effect on interest equates to the student loan interest or lower.
Look at your student loans. Are some of them unsubsidized? If so, you are heading for trouble. Having to take an unsubsidized loan to finance education, means you should be drastically reducing your debt, if I were you I'd sell the motorcycles and also take in a tenant in your home, anything to avoid debt on which the interest is going to accrue while your wife is in school.
Remember, if anything happens to your wife and she cannot complete school, payments are going to start 6 months from when she disenrolls. Make sure you check her disability coverage. Make sure you have enough savings to start paying back the loan if you need to.
No unsubsidized student loan debt. That is my motto. Just because you qualify for something doesn't mean it is a good idea. Just because others do it doesn't mean it's a good idea.
Has your wife thought about going to school part time and working part time, maybe in a field that will support her education in a practical way?
I took out subsidized student loan debt, it is used to support myself during the summer months but what I am doing is working and also doing unpaid work and writing and other activities that are to build my portfolio and also speculative writing, for publication and contests and towards building a career. That's way different than paying for motorcycles when you want to be a vet. :-(
You won't get my stamp of approval for that one, sorry.
The bikes are for recreational purposes but we're not selling them. I've been avidly into personal finance for years and lived a miserly existence for years to save as much money as possible. What I learned about myself then is that while I enjoy saving money, not to the point of not enjoying life. We love our bikes and are willing to take the financial hit to keep them.
Definitely no need to take in a roommate. While I definitely appreciate your response, our situation isn't nearly so dire as your answer would indicate. I avoid debt when possible, and though I make good money, I don't make enough to buy cars, bikes, a house, or vet school. Both cars were paid off early after years of cutting spending elsewhere, the house we just bought, so that and the bikes we still owe on.
But I digress, we're getting into the deeper philosophical meanings of money and how we save or spend it to satisfy inner emotional needs, which is a bit beyond the scope of my original question.
Vet school is like med school, 8-5 all day M-F. She could get a weekend job, but most vets that she's talked to say that vet school is too difficult in and of itself to have a job on the side. These are vets that have been practicing for years, so I tend to believe what they say.
Has your wife looked into the possibility of getting a vet job with the government? I know that usajobs.gov which lists federal jobs, frequently they look for vets, and you can investigate some of the loan forgiveness programs and plan better. You have a house, well, guess what, the radius of getting a job is limited. You don't say about equity in the house...these days most homeowners don't have as much as they like to think. What you owe on a loan might even be less than the fair market value of the house, regardless of what % of the loan you've paid off, it's a zero or negative equity situation.
My job is such that I can work from home, and in fact we moved across the state but I still work for my company from before. As such, movement is not a problem, and in fact we both enjoy it. Six years in the military put a bit of wanderlust into my blood, so I don't mind moving every once in a while. No kids, so no problem there. Obviously we'd want to stay in a house long enough to build enough equity to make money or at least break even when we sell, but other than that, no real restrictions on where we'd live in CONUS.
I'm not current on how school loans are handled these days, but one thing that hasn't been brought up is tax deduction for student loan interest (if it hasn't been phased out yet)...
Are you in a tax bracket which allows for this deduction by any chance?
Congrats to you and your wife for getting into vet school. I'm a big animal lover myself.
I'm not current on how school loans are handled these days, but one thing that hasn't been brought up is tax deduction for student loan interest (if it hasn't been phased out yet)...
Are you in a tax bracket which allows for this deduction by any chance?
Congrats to you and your wife for getting into vet school. I'm a big animal lover myself.
Thank you for the sentiments. Yes, we are in a tax bracket where student loan interest can be written off, and I do believe that is still the case. Who knows how much longer though, huh?
Didn't read the responses, but this is a HORRIBLE idea from a financial perspective.
You're only saving .1% on your interest rate, so that is moot. You're doing this for the convenience of having one less creditor.
Unfortunately, student loan debt can NEVER BE FORGIVEN. Which means if you both lose your jobs and something horrible happens which requires you to declare bankruptcy, you'll still owe the money for your motorcycles for the rest of your life.
There's two types of debt that you don't want to have, student loan, and taxes.
If you were paying 20% then I would consider the risk, but just for the convenience, it is a bad decision. Have the bill set to autopay and the convenience factor goes away.
1Likes
Using Student Loan To Pay Off Motorcycle Loan 
