Every so often, we get asked questions that could be instructive to many of our readers. We recently got asked some such questions by a reader named Gina, and so I thought I’d share my response in the form of this post. Let’s take a look at her situation:
I’d like your advice on the following:
- I’m off to a bad start because I have student loans that’ll be nearly 25k by the time I graduate and I’m an undergrad…If I even consider the loans I might take out to pay for my masters I’ll probably owe over 35k (without even considering interest!!)
- My boyfriend and I plan to marry in 2 years….However, his family (parents & siblings) live really far and won’t be able to afford to purchase the tickets because it’s VERY expensive. So my boyfriend has decided to take care of that…and the wedding costs. I’ll be pitching in except that neither of us have jobs yet. We’ll both graduate next spring leaving us a year of preparation for not only wedding costs but also to purchase tickets, rent an apartment and car for my in-laws (they’ll need a place to stay and means of transportation since they don’t live here and don’t have family here besides their son, my boyfriend). It wouldn’t have been a problem financially except for the fact that I’ll bring debt into the marriage and we’ll have to figure out a way to pay for all of this (in-laws living arrangements+marriage) before even beginning to get out of debt. Let’s not forget the cost of building a new life together ourselves (moving in, furnishing the place…).
We have very small savings for now…
Once we finish paying off the debt, what can we do to save a considerable amount to give as a down payment?
I probably am psyching myself out lol. I’m way ahead. But shouldn’t we be? ☺
How do you propose we go about all this? What would you do?
Setting Your Priorities
First of all, you’re not planning too early. You’re looking at some significant financial goals in just the next 2 years. The most important thing you need to do right now together with your fiancé is to determine what is the highest priority for you: 1) Paying debt off or 2) Paying for his whole family to come to the wedding. Based on what I understand, having the family come for the wedding is the priority and you are willing to delay the student loan payoff a bit to make that happen. With that assumption, let me take your questions in reverse.
Wedding & Family
It is good to see that, as far as I can tell, you are supportive of your boyfriend’s commitment to pay for his family’s entire trip plus the wedding. As long as you guys are on the same page on this obligation, you can simply focus on making it work together. Unfortunately, in most relationships the impasse is on step one where one party wants to do it and the other doesn’t. Glad you’re not there.
The most important thing here is for you two to put together a projected budget of how much this entire endeavor is going to cost. Pull up plane ticket information, housing costs, car rental, food costs, create a budget for your wedding, etc. It’s tedious and a lot of items will be rough estimates, but you’ve got to get a target figure to plan around. This is ESPECIALLY important since neither of you currently have income. You NEED to have an exact dollar amount goal so you know how much money you need to earn between now and then. Then covenant with each other that you WILL NOT go into debt to finance this enterprise.
Once you have the ballpark figure that you’re aiming for, you need to take an honest appraisal of the situation and see whether it is realistic for you two to save up that amount of money in the time given. Neither of you have jobs yet (which makes me very nervous for you), and this will determine how much you must earn in your first job out of school. You’ve got to plan accordingly because otherwise, when the wedding date comes around and you don’t have enough cash for plane tickets, swiping that credit card is going to look mighty tempting.
I would even recommend that you start working now to start saving up. I have many family members who live in far-flung places, and I know how costly those plane tickets can be. The expenses are no joke, and if you are serious about paying for a whole troupe to fly to the US plus house, transport, feed, and entertain them for what sounds like a lengthy period of time, you are looking at some serious coin. Seek for ways to start earning money now even while in school. Work during school if you can and work like a crazy woman during the summer. You can’t afford to get into anymore debt, and you won’t regret having extra cash if you end up not needing all of it. (We also had to house a large group during a trip this summer as well, and we explain how we got some fairly affordable housing in this random crumb post: Tidbits from Our Trip.)
Plus, it sort of sounds like you’re considering going straight into grad school…more on that below.
A couple of other thoughts on the wedding itself:
- You’ll need to keep your wedding expectations modest. You probably won’t be able to have the fanciest wedding in town, and that’s OK. Having your family physically present for the wedding is important to you, but that will mean something, somewhere else is going to need to be left out. You may even choose to do a small, informal wedding in order to keep costs low. Check out Deb’s series on how we kept our wedding budget to $3000, but honestly, you may want to aim for something even lower than that.
- Having said that, you also need to remember that many of your friends will be eager to help you start your marriage on the right foot. With wedding gifts and money, and a trim wedding budget, you should aim to pocket a tidy profit from your wedding and carefully utilize it for your new home (or paying off student loans!). I actually wrote a guest post on the Phroogal Blog on this very subject. You can check it out here: How Your Wedding Can Make You Rich.
Dealing with the Student Loans
As much as I hate debt, I have to say that delaying the payback of your student loans for a few years in order to make this family visit a reality isn’t going to destroy your future. You just need to understand that it will cost you in the form of more interest than otherwise. Here’s what I would do regarding the student loans if I were you:
- I would work like crazy (even if the wedding and family weren’t in the picture) to reduce the amount of loans I have to take now as much as possible. It’s a sacrifice, but you’re still young and able to put in the extra effort.
- I would hold off on grad school. Work first, save some money before you go back to school. That will massively reduce the amount you need to borrow. Then when you do go back to school, consider studying part-time and working part-time to hopefully allow you to not need to borrow any money at all. This is what I did for my Master’s degree, and it allowed me to graduate debt free.
- There are reasons beyond financial for delaying graduate studies as well. Grad school will be much more valuable to you once you have some experience in the field, and it would be a shame to get a Master’s degree only to discover you don’t like that area. It may even over-specialize you in your field and prevent you from getting certain types of jobs.
In case you haven’t picked up by now, there is no solution to any of your questions without a source of income. Right now, you have no income and so you’ve got to start earning money. I think it would be a mistake to wait and assume that everything will work out once you and your fiancé graduate next spring.
You sound eager to start your own nest! But my advice here is simply to slow down. Buying a home can be a huge financial burden if you aren’t ready for it (you may be interested in my post on your home as a financial investment), and you should get completely out of debt before you embark on homeownership. So graduate, get married (with your family to celebrate), pay off your student loans, then save up your downpayment for the house. More than likely, this will be a number of years down the road for you yet.
The secret to saving “a considerable amount to give as a down payment,” as you put it? There’s really no secret. Just earn as much as you can, live on as little as you can, and save the rest. It’s easy to understand, but not so easy to do. You’ve got time on your side, so with a little hard work and patience, you’ll get there before you know it.
Thanks for your questions, Gina! Wishing you a successful graduation from college and a happy marriage to come!