What would you do in my situation? Lump sum of fiat

Discussion in 'Wealth Creation & Management' started by Tuatara, Jun 4, 2014.

  1. Tuatara

    Tuatara New Member

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    Not sure if this is the right place to ask but I value very highly SS opinions and If you don't mind can you give me a little advice.

    Me and my misses both 25, been together so long we pretty much married. No kids. Renting. Wanna travel Europe in the next year or so.

    -partner and I own 1/2 share in a rental property (other half is family) ticking away in the background in NZ
    -Partner has 18k student loan getting charged 5/5%pa
    -Both have a few grand ea saved, also have an emergency fund of a few grand but needs a lot more to truly be an emergency fund.
    -own a few grand worth of pm's

    -Possibility of receving a lump sum of roughly 25 thou from a super-type scheme in the next 6 months.

    What would you do if in my shoes and that cash was there? I'm a big fan of getting rid of the student loan but the other half is a bit uncomfortable using 'my' money to pay off 'her' debt, saying stuff like "you know once its gone you cant get it back". I say I know and its your debt but it affects the both of us.

    What do you reckon?

    Cheers in advance
     
  2. bloomst

    bloomst Well-Known Member Silver Stacker

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    Not so much financial advice...more on how i feel.

    Offer her to buy back her pm...at a price whichever greater (when she bought it or current spot), with provision that, 1 she used the money to make a dent on her debt and 2 she can buy back her pm from you.

    And maybe use $5k to buy into some sort of managed fund or etf and use another $5k to upgrade your air ticket.

    Maybe it leave you with $10k for your emergency fund.

    Thats how i would do it. :)

    What are you thingking?
     
  3. Elemental

    Elemental Active Member Silver Stacker

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    5.5% is a decent amount of interest to be charged on a non deductible debt. Anything you invest in has to do better then that to be worth investing in. I would pay down the loan and if she is uncomfortable then she can sign a written agreement saying the money you are putting in is an interest free loan from you. Doesn't have to be formally written up but a typed agreement signed and witnessed would probably be fine.
     
  4. aleks

    aleks Well-Known Member Silver Stacker

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    Pay off all the debt, and put the rest into the emergency fund and use the next 12 months to save up for your overseas trip and put more money into the emergency fund with whats left.
     
  5. aleks

    aleks Well-Known Member Silver Stacker

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    That is cringe worthy reading that
     
  6. goldpelican

    goldpelican Administrator Staff Member

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    Answer really depends on your personal situation - have you got combined finances or is it still "his" and "hers"?
     
  7. bull_bear

    bull_bear New Member Silver Stacker

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    It wasn't 100% clear from the post, but sounds like there is no debt owing on your half of the investment property.
    If this is the case, my consideration(s) would be:

    Are you likely to take out a mortgage (say for your own place) within a year or two? and if so will the interest rate on the student loan be lower than what you will pay on a mortgage?

    When you say "travel Europe" it sounds like a prolonged holiday - If you intend it to be a working holiday, bear in mind you may not be able to earn much as you go, (high unemployment in many parts) so id keep a bit more of a buffer with that in mind.

    If you're not looking at taking on another mortgage, and have enough saved for your trip, + buffer, id say pay off the debt
     
  8. aleks

    aleks Well-Known Member Silver Stacker

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    I guess I was being abit presumptuous by interpreting "pretty much married", even still some people choose to have their finances separate but that is the key question^^
     
  9. Elemental

    Elemental Active Member Silver Stacker

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    Yep - completely misinterpreted the opening post. Not that the money you are lending her is gone (as in you won't be able to get it back from her) but the money paid into the loan is gone. Makes much more sense. Forget that post of mine.

    It's like talking about a pre-nup. Very interesting conversations those are.
     
  10. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    Are you going to marry?

    Clear "your" debts forget about the trip overseas.

    Keep the girlfriend gainfully employed so she can pay off her own 18k debt.

    You guys don't need a trip to Europe, you need to knuckle down, save more and stay employed.

    Keep your lump sum in your own account in something like a netbank saver account and if you do marry use the money as a deposit for your home.

    If you plan on having children, you'll need plenty of cash and...if Mum wants to stay home for the first few years, you'll need that money so a trip at your young age is such a waste. Trips OS are for retired folk.

    Pay off all debts, worked hard, save and invest.



    H
     
  11. Revils

    Revils Active Member Silver Stacker

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    Is the debt just HECS/HELP?
    If it is then she's not being charged 5% interest- she's getting an extra 5% taxed on her income as it is over a certain threshold. Big difference.
    HECS/HELP are adjusted for inflation but there is no interest charged.
     
  12. bja

    bja Member Silver Stacker

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    Travel, you have no kids and no real debts. 18K at a fixed 5% should not be a concern for a university educated 25 year old (18K of credit cards debt is a different story). Back pack and enjoy yourself, you will not regret it and its something that most people dont get a chance to do.

    When that is out of your system come back to Oz or NZ, start a family and join the debt cycle that everyone else is a rush to get in.
     
  13. aleks

    aleks Well-Known Member Silver Stacker

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    How long do you want travel for? How much do you think it will cost?

    After the debt is paid, if you could put every penny you have into the emergency fund how much would that be compared to what you want to spend on your trip?

    If you could make big sacrifices for a year how much could the both of you save?
     
  14. bull_bear

    bull_bear New Member Silver Stacker

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    I hope this wasnt serious?
    So Tuatra and gf have educated themselves, invested in property, and have savings at a young age, and you dont think they should be able to kick back for a wnile?
    Tuatara, traveling os at 25 will be one of the best things you can do.
     
  15. trew

    trew Active Member Silver Stacker

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    Buy a house and stop paying rent.
    I wouldn't blow all my money on travel at your age.

    But then I'm not you - if travel to Europe is important to you then you do what you want to do.
     
  16. goldpelican

    goldpelican Administrator Staff Member

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    Travelling overseas as a young adult is a *very* enriching experience, but it's even better as a work adventure - get a visa and a job in the UK for a year or similar.

    Life hack.
     
  17. trew

    trew Active Member Silver Stacker

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    Actually +1 to this - a friend of mine did this - worked in Europe for a number of years.
    But of course depends on your occupation and overseas demand - Europe is perhaps not in such great economic shape as it used to be.
     
  18. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    Oh yes I was.

    GF is in debt...stay at work or get another job, pay off the debt and then consider going on a trip OS once you are debt free.

    Sure it's great to kick-back after becoming educated and yes, it's great to travel to see the world but don't get confused about what is nice to have and what is needed.

    Going on an un-worked holiday may be regretted down the track.

    Marriages can be expensive and so can honey-moons and of course children cost heaps of money and what about un-expected bills?

    The general attitude for some folk is not to think of the future and future expenses.

    How long does it take for the average uni-student to save 18k or 25K? Answer...most blow their savings as statistics show....

    Refresh your memory with some statistics.

    http://www.youth.gov.au/sites/youth...ustraliasyoungpeoplereportstatisticalsnapshot
     
  19. AngloSaxon

    AngloSaxon Active Member

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    Get to Europe as GP said on a UK working holiday visa. It will be a series of experiences that you'll think of and enrich you for the res tof your life.
     
  20. Tuatara

    Tuatara New Member

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    Wow thanks everyone for your input thus far, just finished work and came home to all your replies.

    I should've explained a little better by the looks. Let me try clear things a little.

    Rental property has a mortgage and we both pay a small amount into this each fortnight. Not sure I want to put any more than I have to in this as the other shareholders would have to match it and I don't think they're in a position to be able to do this.

    Will eventually be wanting to get our own place and 'settle down' but I personally think (good chance of being wrong) that housing is in a massive bubble which will pop in the future so not too keen on buying just yet. Don't have a deposit for this yet also.

    Her student loan is in NZ which if you are living in NZ then it is interest free, however if you decide to leave the country permanently you start getting charged interest. Btw I have already helped her with some cash towards her loan which does not bother me at all. I'm just glad I didn't go to uni and rack up student debt myself :p

    By travel Europe I meant travel with no income for a few months. Maybe a little bit longer than a few months if we can but either way we have decided not to work while we are there. Reason being we found packing up and moving to Oz from Nz to be hard enough even with the Trans-Tasman mutual agreement. God knows how much harder it would be on the other side of the planet haha (again could be wrong on this, but took me almost 3 months to find a job here in my industry)

    We are both well aware of our debts and want to get rid of them asap, and the extra costs of all the other life stages we have to look forward to. but at the same time we think now is the prime time to travel while we have our youth and our health. The longer we leave travelling the longer we start on those other life steps. Dam it why can't things be easy lol
     

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