Listen, Money Matters assesses our listener Robbie Farlow’s financial life.
Robbie is getting married in a few weeks. His fiancé is in graduate school. He has no debt aside from $44,000 in student loans. The student loan payment is $165 a month but Robbie usually pays $250. The interest rate on the loan is about 6%.
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Robbie has no car payment, rent is $765, and groceries run $400-500 a month. Robbie puts some money each month into his Betterment account.
Those are the facts. How is Robbie doing?
Pretty well actually. He’s a long time listener and has learned a lot from LMM. Andrew suggests that he invest three months of living expenses into Betterment to serve as an emergency fund. The rest of the extra money will be better spent paying off the student loans.
Once Robbie’s fiancé finishes graduate school and starts working, they plan to live on one salary and use the other to pay off the loans. If they can buckle down and do this for a year or two, they will put themselves ahead of the game.
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Robbie has low expenses, paid cash for his car, and has a plan to attack the student debt in a relatively short amount of time. Another thing he should consider is filing his taxes individually instead of as a couple once he’s married. Two incomes combined are taxed at a higher rate.
Best of luck to Robbie on his new marriage! Keep us posted on the student loan progress.
Betterment: On-line investment tool.