Question for the Money Doctors
Question submitted on Jan 6, 2015.
QuestionHi! My husband and I just got married and I relocated to New York City (where he's from.) He has a good job, enough to pay our $2400 rent and basic bills, but since I moved, I'v been looking for a job for two months, and though I have several interviews coming up, I don't yet have a steady income coming in. We both put our student loans into forbearance until the end of March- my payment is about $650 each month and his is around $850. We recently sold my car for $5,000; and we're wondering how to prioritize this money- should we put it in long-term savings? Pay down our student loan debt? Put it towards future months' rent?
Do you have an emergency fund established? If your husband were to unexpectedly lose his job, would you have enough money to pay the $2400 rent and other basic expenses for a month or two? If not, open a savings account with the car proceeds and leave it there for a “rainy day”.
If you already have set aside enough cash to carry you through 2-3 months, the next priority to tackle would be credit card debt. Do you or your husband have any credit cards with balances that can be paid off? With interest rates as high as 20% or more, carrying a balance is very expensive. Apply the $5000 to the card(s) with the highest interest rate should there be any balances to pay.
If you have an emergency fund, and have no credit card debt, then reactivate your student loan liability and start making the payments.
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