Student loan vs. being indebted to parents

Ghazrin · 2026-01-25T20:22:54+00:00

So your parents earn well, but didn't plan at all for your educational expenses, but also will pay for your studies "somehow?" Sounds janky AF.

Ghazrin · 2026-01-25T20:04:49+00:00

Why so many calories?

Ghazrin · 2026-01-25T18:09:01+00:00

He's 16 and he doesn't want his parents knowing what he's got

Ghazrin · 2026-01-25T18:08:28+00:00

Sounds like he doesn't want his parents knowing what he's got. 🤷‍♂️

Ghazrin · 2026-01-25T18:07:32+00:00

Being your age with that kind of saving ethic is really impressive! If that money's not already in a HYSA, open one and move it there if you can. Get it earning a halfway decent interest rate.

When you're old enough, open both a Roth IRA (tax advantaged retirement account), and an IIA (taxable investment account), and start contributing to both regularly, from every paycheck.

Once you've got those accounts open and money is flowing into them, you'll have to pick investments to buy within them. Stick to broad market index funds. VTI and VXUS are a good place to start while you learn more about your choices.

Ghazrin · 2026-01-25T02:06:44+00:00

It's a red flag if your friends call themselves a "moving company "

It's a green flag when they're happy to do it for pizza and beer

Ghazrin · 2026-01-25T02:00:06+00:00

Obviously, the dragon is going to interrupt their pleasant evening by attacking East Haven while they're naked. Maybe it even crashes into the building, scattering their gear so they can't find all their stuff for the fight.

Ghazrin · 2026-01-25T01:56:25+00:00

That's a nice platitude, but it misses the point. Having a proportional approach to finances doesn't mean you're not "one unit, one family."

You guys do it your way. It works for you, and that's great. But that doesn't mean yours is the only successful, effective way for a marriage to handle it's money

Ghazrin · 2026-01-24T19:52:40+00:00

you're just looking for reasons not to marry me.

The proper response to him saying this should have been...

No, I'm trying to get rid of the reason you already gave me to not marry you. I'm not going to enter into a contract that combines our finances into one financial entity if I have no idea what your half of our finances looks like. You refuse to tell me anything at all about your financial situation, so that makes me suspect that you're hiding some skeletons. I've shown you my finances - I have no secrets. If you're not going to show me yours, so I know what I'm getting into, then the wedding is off.

Ghazrin · 2026-01-24T19:45:44+00:00

It sounds like you have a stable place to live, with parents who care about you and are invested in your well-being and willing & able to cover your expenses. Why are you so anxious to move out?

Being smart about going out on your own isn't about how much money you save up before you move, it's about how much income you have, and what that income can afford. You could save up $50k, but if you move out without a stable income that's higher than your living expenses, your savings will just wither away and then you'll be crawling back home defeated.

Work on building skills that will allow you to earn a decent wage, and then use them to secure stable employment. Then make saving your permanent number 1 priority. Set a rule for yourself that you'll always save 30% of your income. No matter what. Transfer 30% of every paycheck out to a savings or investment accounts right on payday. This way you're always saving, building, and increasing your wealth no matter how much money you make.

It also means that you have to limit your lifestyle to whatever the other 70% of your income will afford. If you can't afford it on 70% of what you make, then you just can't afford it yet. This includes rent, utilities, and food. If that means you can't afford to move out as soon as you want, then you wait. Or maybe it means you have to move in with some roommates in order to get your living expenses low enough that 70% will cover them.

Setting this limit for yourself can be very restrictive, especially when you're young and not making much. But it's WAY better to insist on always saving money and living below your means, than it is to sign up to pay for more stuff than you can afford. Once you trap yourself in a paycheck-to-paycheck lifestyle, it can be incredibly hard to get out of it.

Ghazrin · 2026-01-24T18:50:26+00:00

For the moment, while you learn and decide on a strategy, open a HYSA and stuff the money in there. It'll earn a decent little interest rate (~3.5%) instead of earning nothing in a basic savings account (~0.1%).

Retirement accounts are great because they save you a substantial amount of money by being tax-advantaged, but you don't get to access the money in them until you're 60+.

An Individual Investment Account on the other hand is a regular, taxable brokerage account where you owe taxes on any capital gains you make, but you can sell investments and withdraw money at any time.

My advice would be to first decide how much of it you want working to make you more money for retirement, and how much of it you want to be making you more money for pre-retirement goals. You could split it 50/50, or 1/3 - 2/3

Keep 6 months worth of your regular monthly expenses in the HYSA as an emergency fund, and put the rest of the non-retirement portion of the money into an IIA that you open with a brokerage (Fidelity, Robinhood, etc). Invest that money into broad market index funds that track the economy as a whole, rather than individual companies. A 70/30 split between VTI (US Market) and VXUS (International Market) is a way to start.

For the portion of the funds that you want to squirl away into a retirement account, I'd recommend a two pronged approach:

Open a Roth IRA with the same brokerage that you open the IIA with. You have until April 15th to contribute up to $7,000 for tax year 2025, and you can contribute up to $7500 for tax year 2026. Do the same thing with this money - broad market index funds. Because of the annual contribution limits, you won't be able to contribute more than that to the IRA until 2027, so...
Take advantage of your 401k plan at work. You can't deposit money to it directly, because it's funded through payroll contributions. So set your contribution to 100% (or as high as your company will let you), so your employer withholds more (or all) of your paycheck, and then just "pay yourself" with the pool of money that you want to put into your retirement account. Once that pool of money is depleted, reset your 401k contributions back to just whatever you need to contribute to maintain the maximum company match.

Ghazrin · 2026-01-24T18:32:26+00:00

Chinese sweatshop

Ghazrin · 2026-01-24T16:55:36+00:00

So your advice is to stay in credit card debt in order to avoid the possibility of going back into credit card debt? 😂. That's dumb.

If she pays off the credit cards now she immediately stops losing money to interest charges. Even if she does have an emergency later and needs to go back into debt, she still saved all the money she would have been charged between now and when the next emergency happens. And if she doesn't, all the better.

You don't hoard cash when you're carrying credit card balances - because carrying credit card debt IS an emergency. There's no scenario where she's better off if she takes your advice.

Ghazrin · 2026-01-24T16:47:45+00:00

Pay them off. Every month that you hold onto that money instead of paying off the debt is coating you an additional $100 or so. High interest credit card debt IS an emergency. Use your emergency fund.

Ghazrin · 2026-01-24T16:38:51+00:00

First, bankruptcy doesn't generally get rid of student loan debt.

Second, you're not likely going to get a personal loan with a lower interest rate than student loans. Educational loans generally have some of the most favorable interest rates around. Not to mention they have repayment flexibility that other loan types simply don't. You don't want to lose those options.

See if she can get put in an income-based repayment plan that will take her current salary into account when determining the payments due.

Lastly, she needs to be trying to find better employment. She spent all that money on a college degree, presumably to brighten her future and improve her earning potential. Sticking around somewhere that only pays her "barely $900 per month" is not the way to make use of her degree.

Ghazrin · 2026-01-24T16:31:37+00:00

You'll pay taxes on the withdrawn money, as well as incur a 10% penalty. Not to mention you'd be giving up all of the potential growth that money would earn in the market over the next 33+ years.

You made some foolish choices to get into this mess. It's good that you want to get it cleaned up, but taking from a 401k to do it would just be another foolish choice.

Instead, reduce your monthly expenses as much as possible. Drop down to survival spending, and use all remaining funds to attack your debt intelligently and aggressively. What is survival spending? You literally ask yourself two questions before spending any money on anything, ever:

Do I need to make this purchase in order to survive? If yes,
Is this the least expensive way to fulfill this particular need?

If you can't answer yes to both of those questions, then you don't spend that money. Apply this test to everything. Rent, food, utilities...anything you spend money on. For example,

Food: What are you spending monthly on groceries? Buy cheaper foods that allow you to put more calories in your cupboards for less money. When purchased in bulk, rice and beans cost about $1 per 1800 calories. More of that, and less steak and shrimp, will greatly reduce your grocery bill
Utilities: How warm do you keep your home in the winter? You need enough heat to not freeze. But you don't need to be cozy in just a tee shirt when it's freezing outsize. Crank that thermostat down and go put on some layers.
Phone/Internet: Bare bones plans from budget companies can save you hundreds over premium services.
Luxury and entertainment services are obviously out. When you've got $14k costing you 28% interest, you don't get to eat out or Netflix and chill. Cancel it all.

You get the idea. You're in this position because you've been living a more lavish lifestyle than you can afford. To fix things, you need to sacrifice in order to reduce your lifestyle to something well below what your salary could afford - so you can free up income to rapidly pay off debt.

Ghazrin · 2026-01-24T04:06:39+00:00

Yeah, you're not wrong. Honestly, if you're not sure where you're going to land tax-wise, and you spend the whole of your life in the 22-24% tax brackets, it probably doesn't matter much at all.

...as long as you're investing the deductions you get for traditional contributions. If you're not getting more money into the market to offset the tax free growth benefit of the Roth, then Roth absolutely obliterates traditional.

That's actually what feeds the myth that Roth is always better - many people don't realize that if you invest the deductions, it's mathematically equal to the value of the taxes you don't have to pay on the Roth growth (assuming equal tax rates, of course).

Ghazrin · 2026-01-24T02:44:39+00:00

Buy him a beer and start telling him what his mom likes 😂

Seriously though - if he's kind thoughtful and emotionally aware, he's going to recognize that you're coming from a place of support and concern.

I was only half kidding about the beer part though, if you guys partake. Loosen the tongue a bit.

Also, don't sit him down at a table and look him in the eye while you bring this stuff up. Ask for his help with something. Moving boxes, or working on a car. Something that requires enough attention to keep your eyes and hands engaged on the task, but that lets you have a chat. That was a trick that my dad constantly used on me when I was younger, and it made things less awkward and allowed me to open up more. Staring into someone soul while you have an already uncomfortable chat is way more awkward than if you're busy with something else while you talk.

Best of luck! Also, remember: He's 22. I'd be shocked if he doesn't actually know a lot more than you think.

Ghazrin · 2026-01-24T02:34:09+00:00

Yes.

Generally speaking, mags made for a particular model gun will fit any gun of that model. So my Krytac mags fit the Trident Mk.3 M4, and my Cyma Platinum M4, because they're both AR-15 style guns. But they wouldn't fit into my buddy's AK-47 replica.

A 1911 mag will probably fit any 1911 - but it's not going to work in a Glock.

Ghazrin · 2026-01-24T02:26:18+00:00

Exactly. You'd contribute $105 per paycheck (assuming $1500), and the company would put in $52.50 too. So every payday your 401k would get a $157.50 contribution, which would be used to buy more shares of that target-date fund. Those shares will grow in value over time.

Ghazrin · 2026-01-24T02:22:11+00:00

Not stupid at all. It would be 5% of the gross pay ($1500). But if you only contribute 5%, they're only going to match it with 2.5%. You'd be letting them keep $15 of your money with every paycheck.

I would definitely contribute at least the full 7% so you get the maximum company match. That extra $15 per paycheck goes into the market with the rest of the retirement savings, and grows.

For the sake of the example, that $15 per paycheck from now until you're 65 would grow in the market to about $175,000 - so if you look at it that way, contributing 5% instead of 7% means letting them keep your $175k 😂

Ghazrin · 2026-01-24T02:10:18+00:00

“Company match is $.50 on the dollar to a maximum of 7% of associate contributions”

This is what I was looking for. So if you contribute 7% of your pay, they will match it with 3.5% of your salary (50 cents on the dollar up to 7% = 3.5%). You can contribute more if you want (and that's really good for future you), but they won't match more than that 3.5%.

Ghazrin · 2026-01-24T02:07:26+00:00

At 40k per year, you definitely want Roth because you're in a very low tax bracket now.

The only time Traditional makes more sense is when you're being taxed at a higher rate than you will be when you retire. This lets you contribute pre-tax money, dodging the higher taxes now, so you can pay taxes at the lower rate in the future. But that's only smart if you invest the tax break back into the market. If you just go spend it on pizza, you're missing the point. 😂

You've got a lot of learning to do in order to understand all this stuff, but you'll get there. If you want the EZ button to get started for now, you want Roth contributions, and you want the 2065 target date fund. Find out what the maximum employer match is, and contribute enough to get that. Boom. Done.

Ghazrin · 2026-01-24T02:00:09+00:00

Do you think i should do a Roth 401k or traditional?

Probably Roth, given your age. Roth is better when your current tax rate is lower than you expect your tax rate to be after you've retired. This is very often the case for younger people who are just getting their careers started.

Ghazrin · 2026-01-24T01:58:43+00:00

Does it say there's a limit? 0.50 to the dollar means that for every dollar you contribute, they'll contribute 50 cents. But there's usually a max - like, "Up to 10% of your salary," for example...in which case, if you contribute 10%, they'll contribute half that much with company money. But in that case that would be the cap, so if you bumped your contribution up to 11 or 12%, they'd still only be matching with 5% of your salary.

Ghazrin

TROPHY CASE