SO MUCH DAMN DEBT!!!!! [Vent}

posted 2 years ago in Money
Post # 2
Member
3044 posts
Sugar bee
  • Wedding: September 2016

I am confused. 1) how did his mom take out loans on his behalf?

also 2) why take out loans at all if she was paying them back right away?

and 3) where did the money all go??

Post # 4
Member
2891 posts
Sugar bee
  • Wedding: May 2015

LaceyTracy: I’ve seen similar, though on a Parent Plus loan. It is in Irresponsible Mom’s name only, but circumstances mean the child is still paying the money owed. Can you talk with a lawyer and see if any of these loans are fraudulent? Or if there’s any recourse for your FI?

I personally paid off $18k in student loans in 6 years while still saving and having a nice life. And you are already doing a lot of the right things! Here’s what I did:

I found a cash back card from my lender that gave me extra points / cash back for making payments with my credit card and then I used my points to make extra payments (ended up being approx. $1k -$2k in rewards that went to debt). I also accumulated points by putting EVERYTHING on the card and paying it off in full each month, so no interest / finance charges and hello, free money towards loans!

I also made 1.5 payments each month, and wrote that the extra money was to go against the principal of the loan, not to be applied to future payments. This helped lower interest because interest is calculated against the principal, so if your minimum payments only go against interest, your principal will keep increasing. Otherwise, they might put it to future payments which isn’t great for attacking the debt. It just means that if you forget to make a payment, nothing bad will happen. 

I refused to live paycheck-to-paycheck. This might seem silly, but I made sure to save 10% of my pay for emergencies. For any unexpected illnesses, car repair, job loss, etc. I needed a cushion so that if my credit card that month exceeded my paycheck, I wouldn’t be screwed. I didn’t want to have to make a choice between making rent, utilities, etc. because the fees to disconnect and reconnect services add up. And being homeless is even more stressful. The savings cushion was critical in 2008, when the economy tanked and jobs were scarce. 

The concern I have is what else is his mom hiding? What kind of boundaries is your FI setting for his mom? How are you ensuring that she can’t further wreck your lives?

 

Post # 5
Member
5192 posts
Bee Keeper
  • Wedding: April 2013

Holy crap, that’s insane.  How much of hte total do you think you’ll have to end up paying off?  It sounds like she is still makign payments, so maybe with the three of you working togehter you can get this put to bed in a few years.  It sounds like you are willing to do what it takes to get this take care of – kudos to you for that.

I would start checking out some of the more extreme financial blogs for ideas – mrmoneymustach.com and earlyretirementextreme.com might be a place worth starting.  Paying off this sort of debt IS possible.  

Also with those sorts of number, check into your interest rates if they seem high see if there is anything that can be done to lower them.  It may also be worth seeing if any of these loans can be legally transfere to the mothers responsiblity.  The bait and switch that she pulled on her son is really terrible.  Yes, he should have been more aware, but I believe you should be able to trust you mother at her word.  So sad to have that trust demolished.

Post # 6
Member
3016 posts
Sugar bee
  • Wedding: July 2014 - Prague

bitsybee:  I wish I could hire you to organize my life for me! 

LaceyTracy:  I would be in pieces. That is so completely awful. 🙁

Post # 7
Member
441 posts
Helper bee
  • Wedding: November 2013

LaceyTracy:  Obviously it’s shitty that she didnt tell him what the situation was, but the fact that she is putting any money towards them and trying to pay them down means alot. Really your just in the situation he would have been in had she not offered, so the best thing you can do is tell her to stop making any payments so she can get a hold of her own debts and your FI can be responsible for his own student loans. 

Post # 10
Member
2891 posts
Sugar bee
  • Wedding: May 2015

prahajess: aww thanks! Just try to optimize, optimize, optimize — just try! I’m a crazy good bargain hunter and always look for deals for things that are good enough, but will last. 

I had to get organized fast because I unexpectedly dropped out of school with literally $600 to my name. All I had was a nonprofit internship, a 0% interest for 6 months credit card and a supportive roommate from undergrad who let me live on her couch while I job searched. 

I was able to pay off my credit card balance by the time the 0% interest rate expired, I had a job and was aggressively paying down loans. I also moved in with my roommate and paid my part of the rent.  

I had a nice life meant that I added an egg and frozen veggies to my ramen and that I shopped from the sale rack at Nordstrom Rack. However, I tried to buy quality basics that never go out of style. I still wear clothes from 10 years ago!

If you need specific tips, just pm me. I’m happy to help!

Post # 11
Member
441 posts
Helper bee
  • Wedding: November 2013

LaceyTracy:  So is it more than he would have actually had to borrow because of interest? Just wondering how it works in US 🙂

Post # 13
Member
441 posts
Helper bee
  • Wedding: November 2013

LaceyTracy:  Ohok! That changes it alot then! That’s just awful, good luck! 

Post # 14
Member
2891 posts
Sugar bee
  • Wedding: May 2015

LaceyTracy: Wait, so his MOM is in debt too, in addition to the student loan debt? This is a confusing mess for sure. (hugs)

Ok, well, if the debt is in her name as a co-signer, then I would still let her pay for them (since her name is on the loan, she is still responsible). However, I would still pay for them as if she weren’t paying down the debt. Have your loan officer apply her payments to the principal of the loan, which will slow the growth of interest. If the life of the loan is 20 years, you’ll be done with the debt in less than 10 years, thanks to double payments + payments against interest. 

The lending companies will take her money if she sends it in as a payment to the debt. Not sure how you can stop them from accepting a check made out to them for a debt that is still outstanding. 

I respectfully disagree with MsChandler:, since I assume if your FI knew that school was costing $200k+, he would have figured out another way to get his education, buckled down and graduated sooner or something. However, by not having this information, he unknowingly made the choice to mortgage his and your future.

The deception is disconcerting, and I personally wouldn’t bail out Mom if she ever decieved me like this. Actions have consequences. By saying that you’ll absolve a cosigner of her responsibility just shows her that she can “underwrite” loans and leave you holding the bag. 

I was very lucky that my parents were honest about their financial situation, or else my modest $18k of debt could have very easily have been $66k. Knowledge, however shitty, is power. The lack of debt meant that I have freedom to pursue interesting, meaningful opportunities first and that pay was secondary. However, everyone should have this freedom. This isn’t the case and that’s unfortunate. 

Sorry to threadjack, OP — just hits really close to home for me — the whole situation. Feel free to PM if you have anything you want to discuss about FMILs and secret debt. :\

Post # 15
Member
423 posts
Helper bee

The situation is confusing. There are a lot of holes, but you already know that. My big questions are (1) how did he not know how the debt was stacking up or did he not care and (2) if his mother was unable to pay for college at the time, how did he think she was going to magically come up with the money to pay it after he graduated.

When you graduate they make you go through loan counseling which (1) updates your contact information and (2) makes you aware of your loans and responsibilities. Were there messages or phone calls made and he just ignored them?

What it sounds like to me is that his mother cosigned his loans for him and said she would help pay them off by taking out an additional loan (not a student loan, under her name only) and would then use the new loan money to pay the student loans off. You’re right. They are his loans and he is responsible for them… even if she said she would help.

I graduated with 113K in student loans. I have been blessed with super low interest rates. The first one I paid off was the PLUS loan under my mom’s name because well, I love my mom. I didn’t want her paying a dime towards it. When I first graduated I got stuck in a two year long hiring process while all my paperwork and clearances were processed. During those two years I made min. payments because that is all I could… even working two jobs at 70 hours a week. In the past three years I’ve paid off 80K+. I’m down to less then 30K and I’ll be done with that within a year and a half. I’ve been able to do that because I landed a stabe, well-paying job in my field. When I pay off a loan, I don’t just pocket the extra money, I roll it into the next one I’m working on… then I double that payment. If I wasn’t making the money I’m making, I wouldn’t be able to do that.

I’m not living paycheck to paycheck either. I am very comfortable. Paying off student loans and doing so early can be done.

After I graduated I saw an article that advised students not to take out more than their expected yearly salary. That’s a good rule of thumb. I know it’s too late for your FI to change that, but it’s something that moves me.

 

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