Dear Debt Adviser,
My boyfriend has a $10,000 student loan and I have been helping him to pay the loan over the past few years (still paying every month at a minimum payment). However, I don't want to pay the loan for another six years or so. Two years ago, we bought a car (2003 Infiniti) together, which is worth about $15,000 to $20,000. It is a very nice and powerful (V-8) car, but it uses lots of gas. It also has high insurance premiums and registration fees, and I am paying all of those as well. He loves the car and says he needs it to move around in the city. In my opinion, he can take the bus.
He says he will apply for his student loan to be forgiven. Does that work? Can he do that? Would it be a smart move to sell the car he loves to lighten my financial burden in this kind of economy? Should we sell the car and pay off the student loan and get a cheaper car? Thank you and hope to hear from you soon.
Sell the boyfriend and keep the car. I'm only kidding, I just couldn't resist! But seriously, my experience has taught me that women approach financial liaisons much differently than men. Often, a woman sees her help in paying a loan or bill as an extension of her caring for another person.
On the other side, men tend more often to separate the two. I've seen this play out when a spender-male and a saver-female date. The saver thinks that the spender must really like her a lot to spend all that money on her, while the spender would think no more about an extravagance than he does about buying a hot dog at a ballgame. My take is that something similar is going on here.
From the limited information you have given me, I believe it is a no-brainer to sell the Infiniti and pay down the student loan if you don't owe anything on the car and own it free and clear. Use his half of the sale proceeds on the loan. Making this move will allow him to take over sole repayment of any remaining balance and remove you from paying the monthly minimum payment on the student loan, the monthly insurance premium on the car and the gas costs. Whether or not your name and your boyfriend's name are on the title of the car, I strongly advise that you both agree on this course of action before moving forward to sell the car. He may be disappointed temporarily, but I believe he will soon get over it.
I also advise that you and your boyfriend sit down and have a discussion about your finances. I typically recommend having the conversation at a mutually agreed upon time with a glass (or two) of wine. Talking about money can sometimes produce an unexpected and volatile result. It is best if you both agree to remain calm. If one of you becomes hurt or agitated, you should stop and listen to the other person's point of view.
I'd like to see the two of you resolve several things in your financial lives. The first is an equitable distribution of your monthly obligations because you seem to resent what you are currently contributing to the household. Next, discuss your short-term and long-term financial goals and develop a spending plan to help you reach them. Lastly, if there's a wedding in your future, start saving for it now. If there isn't, start saving for moving expenses, too!
As far as your boyfriend's idea of student loan forgiveness, it is very difficult to have federally guaranteed loans forgiven for any situation other than if you perform certain volunteer work, enter military service or work in certain communities as a teacher or medical professional. You can learn more at FinAid.org. If these jobs sound like your boyfriend's job, then maybe he has a good idea. If not, I hope he becomes more realistic about your life together.
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