Improving rate of return on savings by investing in gf's loans

The problem is, "blood has to leave the brain to get......"

PatrickM213 said:   She must be giving some good oral testimony to have you considering this plan.
LOL!

Solandri said:   br435 said:   My girlfriend (who I am living with) has about 150k worth of loans (Med School) mostly at 6.8% with some amount at 8% or so (I think these being the private loans). [...]

The thought I had would be that I would loan say 20k to my gf which she would then use to pay of the highest interest loans. She would pay me an interest rate between 0% and 8% - lets say 5% which would give me a good return on my money and still save her on interest.
Bear in mind that the interest she's paying is on the full $150k. Figure best case, $130k @ 6.8% plus $20k @ 8%, that works out to $10,440/yr in interest. Or an effective combined interest rate of 6.96%

8% - 5% on $20k works out to $600/yr. Basically your generosity would be reducing her loan payments by $600/yr. Her effective interest rate would be 6.56%. So she would only experience a net 0.4% drop in interest rate, not 3%. It doesn't seem like it would really help her all that much compared to the enormous risk you're putting yourself and your relationship under.

Take the $50/mo you'd be saving her by doing this, and use it to treat her out to a nice restaurant a couple times a month. She gets the same monetary benefit, and there are no financial or legal entanglements, no messy paperwork. If she's smart, she'll take the "going out" money she saved when you treat her, and apply it as prepayments on her loans, resulting in pretty close to the same thing as you're proposing.


bpp said:   motuwallet said:    i knew we weren't breaking up, and i knew if we did that she was ethical enough to pay me back regardless.
You dont think most people when they lend money to loved ones/family members think that they are ethical enough to pay back their loans??? And a good percentage of those end badly.
Generally, family/loved ones end up in debt because of bad financial decisions. So expecting them to pay back a personal loan is usually very risky.

Loans for med school, assuming she's a good student, would be a lot less risky. I don't know what the dropout rate is while in school, but once they get the MD and finish residency, I'm guessing the vast majority of them pay back their loans.

That said, I still agree with everyone else here. Don't start paying off loans until after you're married.

So to save the relationship and keep it low risk for you- Why dont you just pay the extra 600$ a year- thats the interest she would save if you risk 20K. Thats 50$ a month for you- less than what a 1 dinner date a month would cost.

henry33 said:   I think just one or two people actually mentioned that the OP should have a signed note. Then it's just the same as a contract between any two parties. So if one party doesn't make the payments, then the other party takes them to court, gets a judgement against them and then gets to garnish the other person's wages if they don't pay up. So it seems to me that if the note was all official and even notarized then it's really just a question of making a personal loan and up to the OP to determine the credit worthiness of the borrower.

On the other hand, a loan without any paper trail might not be that good an idea.
An unsecured note isn't often worth the paper ITs printed on. She could bk and wipe out the judgment. Get collateral and secure your loan if you want a note with some teeth.

Similar situation to OP, gf owes $250k in student loans and luckily she is now working and has paid the loan down to $125k in almost 3 years. In the 4 years we have been together, 3 of them she has lived with me in my house. Instead of me helping her pay off her loans, she lived with me for free (no rent,utilities, etc). I also helped her purchase a 4Runner with $5k down payment, her pos Saturn was never put together right, parts kept falling off and just didnt feel safe in it.
We just got married in March and we still have the same arrangement, We keep separate money accounts so we won't get mad at each other for buying crap(I spend $ on guns and electronics, she spends her's on massages, mani and pedi).
I would advise you not to use the savings to payoff her loan. I used my savings to buy 2 rental properties instead, do that instead and tell her its for your future together(and for tax purposes). Your gf will probably make over $200k very easily when done, and you cannot write off interest on the student loans if you make over $80k. So we are using the rental biz to write off alot of stuff.

Just wait until you get married. If you're not married in 2-3 years it's probably not meant to be and you'll have your answer. If you do end up getting married, you both will be making a good amount of money and your financial future will be just fine without all the potential complications of this scheme.

bluegreenturtle said:   Has anybody in the history of FWF actually posted pics?

I think there's hunny156 and suezyque w/ pics in avatar

There's this one post below with lady divorcing some guy bedding craigslist men at their house. Haven't seen much else in mindless reading of finance forums (sometimes human condition of marriage/relationships as it relates to finance forums).

http://www.fatwallet.com/forums/off-topic/972019/m14431230/#m144...

Do NOT do it! Your risk meter is broken.

There's a point I'd like to make here as a woman. My BF and I have been together for coming up on 4 years. We rarely ever fight or have major disagreements. Recently we had a pretty good fight at which point he learned I wasn't happy about a certain aspect of our relationship. He told me he had NO CLUE and as far as he was concerned everything was perfect and he's never been happier in his life. I'm telling you this to say that sometimes one half of a couple is unhappy in some manner but keeps things to themselves or perhaps the other party has a blind eye to things in their relationship. One day the unhappy party may decide that they can't take the situation anymore and leaves. I'm not saying this is the case here, but what will you do if someday she's done with you and blindsides you by ending your relationship? OR, what happens someday when she is no longer making YOU happy and you decide to end the relationship?

Starting residency this summer, huh?

From someone with first hand experience in the residency department... The probability of her (or you) keeping the relationship throughout the residency period is very very small.

She will be spending about ~12-16 hour days on a daily basis with other people. You will not really be in the picture. There will be as much drama dealing with residents as there would be in a high school. Lots of the drama could be considered some Montel type stuff.

Residency has destroyed even the most resilient of relationships. Save yourself the trouble. Do not do it.

ElPablo said:   Similar situation to OP, gf owes $250k in student loans and luckily she is now working and has paid the loan down to $125k in almost 3 years. In the 4 years we have been together, 3 of them she has lived with me in my house. Instead of me helping her pay off her loans, she lived with me for free (no rent,utilities, etc). I also helped her purchase a 4Runner with $5k down payment, her pos Saturn was never put together right, parts kept falling off and just didnt feel safe in it.
We just got married in March and we still have the same arrangement, We keep separate money accounts so we won't get mad at each other for buying crap(I spend $ on guns and electronics, she spends her's on massages, mani and pedi).
I would advise you not to use the savings to payoff her loan. I used my savings to buy 2 rental properties instead, do that instead and tell her its for your future together(and for tax purposes). Your gf will probably make over $200k very easily when done, and you cannot write off interest on the student loans if you make over $80k. So we are using the rental biz to write off alot of stuff.It would be troublesome for me to have sex with a business partner. I guess it will make the divorce that much easier. BTW, who's going to buy the diapers and formula? Do you have a parenting contract?

You made the right move. My wife was dating some dude in college who agreed to co-sign her student loans since her parents weren't willing and he was in the workforce and had some credit. Needless to say he's now stuck with these loans on his credit report and even got hit with some lates when she failed to make the first few payments (before I entered the picture).

Of course, now I'm paying the loans so I'm not really sure who the real sucker is here... but at least I got the girl.