Hello,

I am a graduate student and am engaged to be married in August of this year, 2006. The only debt I currently have are undergraduate student loans. I have a small amount of savings and am able to support myself while going to graduate school without taking out more loans.

My fiancé has made some poor money decisions in the past. He owes money to his parents and a friend, has credit card debt and is taking out student loans for his undergraduate education. However, that said, he does acknowledge his past mistakes and has made many changes to improve the way he handles money: cutting up his credit cards, reducing unnecessary expenditures, starting a budget, etc. We have talked extensively about the way he handles money and what is to be expected once we are married.

He has a bill for Spring tuition for $2500 but cannot pay for it because he was unable to receive student financial aid and does not have enough cash on hand. He can't register for classes in the Fall until this bill is paid. He wants to try to get a personal loan through a bank to pay for Spring tuition. However, I have the means to pay this bill outright with cash. My question is, since we will be married soon anyway, should I just pay the bill for him? I'd rather do this than have him sign up for another loan, which will inevitably end up being my responsibility, too, once we are married. Or, is my paying his tuition a bad idea? I haven't told him yet that I have been thinking about paying it for him because I wanted to get advice from others before I made my decision. I just hate the thought of having another loan if we can squeak by without one. Any thoughts or advice would be greatly appreciated. Thank you.

Amy

Hi Amy -

Ideally, of course, he would take care of this. He knew this bill would be coming. He should have planned.

That being said, soon his bill will be yours, and it sounds like you are going to be the one to get things in line. If you have the $ and have some room, I say do it... that is unless he, or you, can get a loan at a lower rate than some of his other debt... then pay off the higher apr debt. Or get the loan and hold on to your money if you don't have much of a savings buffer.

A few more suggestions.

Run credit checks. The idea isn't to "catch" him doing wrong, but to understand where you are and where you want to go. The credit report is the reality others will be looking at. It is also the picture you should be looking at. Was one of the first things my wife and I did when we really started to control our finances and I'm glad we did. Free annual credit reports through:

https://www.annualcreditreport.com/cra/index.jsp

Second, it is critical you keep a good budget. The best thing my wife and I ever did was have three bank accounts. One is for fixed expenses, one is variable expenses, the last is savings.

The fixed account gets $ earmarked for utilities, insurance, mortgage, loan payments, etc. direct deposited. Even though utilities can vary from month to month, we have the ave payment calculated. We have a $200 buffer in this account to cover those times when a fixed expense is higher than predicted. Most of these bills can be paid electronically and scheduled. This one account has made a huge difference. Sounds simple, but we never have to wonder how much $ is left for a date versus the phone bill.

The variable account is food, household, fun, etc. Yes, you buy food every week, but what and how much IS variable. So this account requires planning. My wife and I sit down every two weeks and make a list of things we need or want to do in the next pay period. Takes a very short time, and keeps us from straying too far off budget. Also, if he screws things up and strays you are not worrying how to pay the mortgage, since that $ is in the other account. Also a $200 buffer here that isn't to be touched unless emergency. It can be hard, even with a budget, to run things smoothly with two people.

The savings acct is unique in our situation. We kept the savings at her old bank. We put a little aside out of every check. It is an account that we don't have access to online, and it's a bit of a pain to get to... or at least harder than our regular acct. Out of sight = out of mind. The money build fast this way, even if its just 20 or 50 a check.

Getting together and spending some time on a budget together is so impt. My wife and I did OK enough early on, but I KNOW we blew hundreds, likely thousands of dollars over a few years by not planning together well and being on the same page.

You've already stated he knows a budget is needed, and you have enough $$ to pay his bill, so you've been able to set $$ aside. Good foundation.

His ed loans will likely have lower rates than the credit cards, so you know you'll focus on the credit debt first.

Good news is even if his credit isn't great he can repair it. Two years good behavior can mean a lot to a mediocre history, as what-have-you-done-lately is often looked at.

The public library also has good books on finance & credit repair. A few books we read together when we really started to make it a team effort:

Truth about money (big but good info)
Zero Debt
Suze Orman books like 9 Steps to financial freedom, or financial guidebook
Wealth building

I know this is a long post. I never give just the short answer! =) Feel free to repost or PM if you have any questions.

best regards.

HI, Amy,
Thank you for asking a question here, and Welcome to this site.
As I understand your question, you plan on marrying him in Aug. this year, he doesn't know how to handle or manage money, but is saying he will learn, by cutting up credit cards, and other things, now needs $2,500, and can get a personal loan. You are asking, should you pay it for him?
Definitely not.
I am 64 yrs old, married for 29 yrs (second marriage). My first marriage ended in divorce after 7 yrs, leaving me with debts incurred, mostly by my wife.
You aren't even married yet, and are thinking about loaning, or simply paying off, his debts.
I would let him borrow the money, and start learning the value of money, accepting the responsibility himself. If you pay it off for him, he hasn't learned anything. Except maybe that you will "bail him out" whenever he gets in trouble.
The Number 1 reason given for Divorce is money. Don't start with a marriage like this. He has to learn how to handle money, if you two have a chance with marriage. There are enough issues to overcome with marriage from just every day living. I do wish you the best.

kp2171 and fredg,

Thank you very much for your quick replies. You both have raised very good points and have given me some helpful things to think about. As I said, he doesn't know I am thinking about this, and I don't want to mention it to him unless I am sure that it is the right thing to do. I have feared my paying for this to seem as "bailing him out" as fredg mentioned. He's a great person, just was really dumb in his late teens/early twenties and needs to work on saving and using his money for needs and essentials before the fun stuff--but he recognizes this and even before I met him had taken steps on his own to rectify the situation. He's just still paying for it. I, however, am as tight as they come with money because I have no one to fall back on in case there are problems. We both have talked so much about money being one of the leading causes of divorce and we don't want that to happen to us; that is why we are getting things talked out and straightened out beforehand. Oh how important it is for parents to teach and model good money managing skills to their children :o)

Thanks again for your replies. You have been a good help. Take care.

Amy

Hi, Amy,
You are quite welcome, and I hope we have helped somewhat.
As you mentioned, it is SO important for children to learn something about money, while they are growing up.
Unfortunately, many children today are given almost anything they want, not having to work for it, have an allowance, then that's it, until the next allowance. I do hope your future children will be taught better, and give some jobs around the house to do.
Also, it has been reported by the National Network TV news companies that the major problem with young people now is Credit Card debt. They charge so much while in college, not even knowing about interest, that they now face hugh debt, without even having a job!
At approx 20 to 21% interest yearly, it's unreal.
Best of luck to you both.

You are not going to like my answer, it is not what you or he wants to hear, He has made a mess and needs to learn about it and from it.

There is no problem with him taking a year off from school and working to pay off some of his debts and saving money to pay for the next years tutition.

What is going to happen with the careless spending is that he will graduate oweing more money than he could pay off ever, this happens to far too many students, so when they start to work, and college education does not guarntee large salaries to start with, a person is not able to pay living expenses because of such high student loans.

She he merely needs to take a year off, join the working world, perhaps take one class or two at a time until he gets

You've already read my earlier post, but I forgot to mention another thing...

When I had failed once to properly save money for an upcoming expense that I was responsible for we ended up pulling money out of a savings acct that was mostly $$ my wife had put aside.

I ended up paying that account back over time. Just another option.

I agree you need to make him responsible, as others have posted. If you loan him the money and tell him you expect to have that savings paid back in a certain amount of time, that would also show you whether his words and promises are real. If he cannot keep his word to pay you back then you know you need to deal with that big problem immediately.

Marriage is about working together. He has some hard lessons to learn, but I disagree with the statements to make him figure it out on his own. His taking time off from school, for example, does impact you financially and personally. So I don't think the broad stroke "make him do it on his own" is necessarily the only answer. You need to decide if that a palitable one.

But the one consensus is he needs to take some responsibility, and you'll need to hold him to it.

Best regards

Hi kp2171,

Thank you for your additional thoughts. I've also talked with my Bishop at Church about this and he has given me advice that contains bits and pieces of everyone's posts. I have a lot of good things to think about. I do like the idea of "paying back" our account, if I were to help him out financially. We will see what happens. Right now, my fiancé is taking care of it, contacting people and trying to figure out the best solution, so I am willing to let him do so... to see what happens. He's a good guy; he'll be able to get it resolved. I have confidence in him, and us. Also, I think going to school is important and see those loans as more an investment in the future... and the real way we will begin to start making a dent in the loans he has/we will have is when he and I both finish school and start working, so the sooner that happens, the better (though we have a plan for working on them even while we are still in school). Thank you again for your time and thoughts.

Amy

Hi, Amy,
Sounds like you have done some good investigating into your different options. I do wish you and your fiance` the best.