My Husband Had a Spending Addiction and I'm Drowning in Student Loans

Dear Steve,

I'm what some would consider a "career" student, and I'm learning several lessons about debt the hard way.

I'm 30 years old and about to enter my 3rd year of a doctoral program. In order to achieve my dream, I have racked up $95,000 in student debt. A third of this is due to the fact that my husband never held a full time job during our marriage, and I (stupidly) took out an extra $30k in student loan to make ends meet during that time.

He was also a secret spender, and I was saddled with tens of thousands of credit card debt. We are now separated, and I'm desperate to put myself in the best possible financial situation for my future.

I have worked a full time telecommunications job and a second part-time job while going to school full time in order to pay off the joint credit card debt that was racked up by my ex. It has taken two years, but I have finally reached a point where I have a $90k mortgage, my student loans, and car loan with about 2 more years of payments.

All of my student loans are in deferment, but about $50k is accruing interest. Fortunately, I will not be required to take out any loans for my doctoral program, and I receive a meager monthly stipend that helps with expenses.

I am praying that I will be able to keep my telecommunications job for the next two years so I can pay down this debt. However, like so many people, I live in constant fear that my position will be eliminated.

My monthly doctoral stipend covers my mortgage and car payment, but that's about it. I could sell my house, but my mortgage and monthly house-related expenses are about equal to the average rent in my area, so I was hoping to keep my house until I graduate and am ready to move to a new area. I'm attempting to find a roommate to help reduce that financial burden.

What should my primary objectives be in continuing to get my finances under control? Should I put every penny to my car loan first, and then focus on the student loans that are accruing interest, or put everything towards the loans? Or should I put a percentage towards the car, the student loans, and a savings account?"

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Thanks for writing in.

Without a doubt the saddest mistake I see people make is to put their debt ahead of their financial well being.

This article will show you the severe long term consequences for doing that. I can cost you millions in lost retirement income.

At this point I think we need to let the math tell us the most logical way forward. In order to get the right date so you can make the right decisions, I'm hoping you'll read the 8 Easy Steps to Eliminate Your Debt Checklist.

The fact your student loans are on hold right now is an illusion it's helping with your debt situation. While they are not demanding payment, as the balance continues to grow in deferment it is accelerating the growth of your student loan debt.

The one fact you did not mention was if these loans are federal or private student loans. If you are lucky these are federal student loans and have the benefit of having some income based repayment options. See my guide on handling student loans you can't afford.

I sense you do not have an adequate emergency fund or savings account to fall back on in case of a financial surprise or unexpected job loss. Focusing on building that ahead of anything else at the moment would be my priority. I'd like you to have several thousand dollars in a boring old savings account so any future financial surprises don't wind up on credit.

But the tough question here is not if keeping the house makes sense, but if you can afford to save each month, save for retirement, meet your financial obligations and afford the full student loan payment.

You can try to negotiate with yourself and me about the situation but ultimately the math doesn't lie.

So let's do this, investigate how to deal with the student loans, get a grip on your real income and expenses by building a spending plan, and then let's see where the math takes us.

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