Wife’s Income: $40,000
Actual take home pay: $2306/monthly
Student Loan Balance: $27,000
Goal: I really feel like this student loan debt will be a burden. I would like to get a nice reliable car right now for under $300/month. I can defer my student loan until I get out of school, and get the car that will replace my 9 year old Grand Am. Am I thinking straight? I just feel so broke.
Pete the Planner says: Newsflash, you are broke. But don’t get discouraged. There is nothing wrong with being broke…once. That is the major concept that we as Gen Yers need to come to terms with. Being broke, itself, is not a bad thing.
Jeremy, everyone should be broke once in their life. That time should be when you are in your exact position. You can’t be in too much of a hurry to get un-broke. If you do, then you will undoubtedly end up broke again. You can’t be broke and act like you aren’t. And buying a car while deferring your student loans is a perfect example of not acting broke when you are. You see, you have the ability to feel less broke based on the lifestyle decisions that you make, but the reality is that you are still broke. These lifestyle decisions seem small in stature, but in fact they have long-term consequences.
Would you rather be broke between age 22-26 or between 42-60? I’m not a “told you so sort of guy”, but I’m not wrong about this broke thing. Learn to live on your wife’s salary, and START PAYING BACK YOUR STUDENT LOANS RIGHT AWAY. You do not want to have these student loans hanging on your back while you are trying to build your retirement savings and save for your children’s education.
And let me save you a little trouble four years from now when you graduate grad school. You will still be broke. Focus on paying off of your student loans. You will have already proven that you can live on $40,000 per year. Therefore, don’t expand your lifestyle just due to your increase in income.