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A Cautionary Tale and Momentous Labor Day

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  • A Cautionary Tale and Momentous Labor Day

    The year was 2012. Husband graduated from medical school, we moved halfway across the country, and his parents pleaded to let them become the "bank" for his student loans. They said it would be so much more flexible, and they'll cut the interest rate nearly in half! He reasoned, the money will come back to him in the form of an inheritance (doesn't know if that will happen), and PSLF isn't an option since there was "absolutely no way" he'd go into academics (he went into academics). We weren't married at that point so I expressed my concerns then left him to decide. He went for it, and I wouldn't say the arrangement was exactly flexible. I found out he'd fallen behind on payments when his parents gifted us $10k for a honeymoon, insisting we use half of it to catch up on his loan. That's when I took over the finances.

    Throughout residency and fellowship we made "interest only" payments, $39k in total, then refinanced on a much shorter term. They were sad about this, as a 20 year loan would have netted over $100k in interest. With a magnanimous "we won't charge you a penalty for early pay off" they relented.

    I wouldn't say the loan has been a point of contention between us and his parents, but that's because I made sure to treat the situation as if it couldn't be taken advantage of. Not surprisingly there was frustration on our end: their obvious pleasure in making money, the strings-attached gifts, and still feeling beholden at 37.

    Over these years when I've tried updating him on our finances he doesn't even want to look at whatever spreadsheet or websites I have pulled up. So I'll send him a text "lowest CC bill in 2 years!" or "Look at our net worth!". Yesterday however we were talking, I had my computer out and thought he might enjoy seeing how our accounts have grown. He was impressed but then concerned. Recently we crossed the 6 figure threshold on EF and home down payment fund. He asked, why was this money just sitting in brokerage, not invested in the stock market, when our loans are accruing interest? It was a fair argument.

    I suspect many a wife would stamp her foot and say after all these years I deserve a home. Instead, I was giddy. Why deny this satisfaction when he has indeed labored long and hard to get here? So, 26 months after graduation, a final payment of $92,681.95. A single penny shy of the balance in an attempt to needle his mom.

  • #2
    Congratulations on paying off the loan. That must feel great.

    And your story is a good reminder of how complicated family relationships can become when money is involved.

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    • #3
      U would be best served to live without the resentment, justified or not.

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      • #4
        Wow. Cautionary tale indeed. I suspect you could have had better rates refinancing privately, even aside from PSLF. Good work paying off anyhow!

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        • #5
          Nothing like the feeling of killing a big loan.... Click image for larger version

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          • #6
            How does he feel?
            Paying off student loans in 26 months is a good thing.
            From a financial standpoint, it doesn’t sound like you expressed any complaints.
            FLP hit the sad part. A 37 years old paying one penny short is for lack of a better word, childish.
            Your problem is with your husband because this has been bugging you for a long time. Especially the gift. Which was perfectly fine to gift half or would that have been “cheap”?
            I doubt you will ever lose the desire to needle your MIL. That is sad. Unintended consequences I am sure.
            The good part is they didn’t have a bad debt and invested wisely and their son has a frugal spouse. I just wish the DIL and MIL didn’t have to resort to needling and resentment. I hope the relationship heals. By the way, the student loans could have been refinanced. Seems to have been your preference. Wise choice not to pay them in coins!
            Apologies, not a criticism of you.
            Just a thought, work together to reach a comfort level with your husband’s disinterest in family finances. Student loans won’t be the last family decision.

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            • #7
              Gifting $5000 towards a honeymoon + gifting an extra $5000 towards student loan payoff (which is what they actually did) is quite generous IMO. I hope they got a thank you card.

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              • #8
                Congratulations on paying off the student loan. Now as FLP indicated, you will be well served to work on your attitude.

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                • #9
                  Originally posted by Tyche View Post
                  The year was 2012. Husband graduated from medical school, we moved halfway across the country, and his parents pleaded to let them become the "bank" for his student loans. They said it would be so much more flexible, and they'll cut the interest rate nearly in half! He reasoned, the money will come back to him in the form of an inheritance (doesn't know if that will happen), and PSLF isn't an option since there was "absolutely no way" he'd go into academics (he went into academics). We weren't married at that point so I expressed my concerns then left him to decide. He went for it, and I wouldn't say the arrangement was exactly flexible. I found out he'd fallen behind on payments when his parents gifted us $10k for a honeymoon, insisting we use half of it to catch up on his loan. That's when I took over the finances.

                  If we are talking of the time frame 2012-2020 You would have better off with a private loan that could be financed at a lower rate. And his parents could have made far more money investing that money in index fund or Amazon rather than loaning to your spouse. So neither side has really won.

                  Just be happy that this episode is behind both parties and move forward with good terms. No more monetary dealings.

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                  • #10
                    LOL some WCI smackdowns over here. The payment hit their LLC account this morning and a "wow, congratulations on being so financially responsible!!" text so no hard feelings. Guess math-minded mom didn't notice the penny. He'll make a joke out of it to needle her. That too, was not my idea.

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                    • #11
                      OP, congratulations on being the fiscally responsible one of the family and working together to support each others deficiencies. Your spouse clearly wasn't a fiscally minded one by both your actions and your in-laws stricter fiscal terms....yet they gifted and offered favorable interest rates over existing options. Isnt that enough?

                      Theres more than the dollar side of the equation and I believe the smackdowns are more genuine attempts of feedback to you that there's more than just fiscal responsibility -- you're Winning the battle but losing the war.

                      ​​Would suggest taking a look at finding a healthier way forward with the inlaws.

                      ​​​

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                      • #12
                        Spouse over here, probably 20 years down the road from you. Managing the finances for our family has been one of the biggest joys for me. I love showing my highly motivated, loves his job like a drug, husband the fruits of his labor + the added fruit from my good planting and tending. Most days, his money makes more money than he does for that day (he’s highly compensated). That said, I found myself in a position to give my in laws more grace, more generosity and more kindness than I thought that I would be capable of. That too, has given me fruit in the form of peace, harmony, love and kindness in return. You are a rockstar in how you handled this, family and lending money never feels good. That was the feeling you had, and now it’s over. Congratulations in getting through this mine field.

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                        • #13
                          I said ‘his money’, but we all know it’s our money. ✌️

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                          • #14
                            Originally posted by Tyche View Post
                            LOL some WCI smackdowns over here. The payment hit their LLC account this morning and a "wow, congratulations on being so financially responsible!!" text so no hard feelings. Guess math-minded mom didn't notice the penny. He'll make a joke out of it to needle her. That too, was not my idea.
                            I look at this like some here in WCI call having skin in the game. Many here could support fully the undergrad and grad education of their kids but would not do it and make the kid have a skin in the game by taking out loans.

                            I suspect that his parents knew their son was a fiscally irresponsible son and hence insisted on it being a strict loan. If you were not financially savvy, you and he would have squandered the money and without an agreement, he would not have learned the lesson. Even with you keeping an eye he still missed payments and imagine what would have happened if you had not been there.

                            I think the MIL deserves more credit than what you give her and your hubby less. Hope he has learned his financial lesson.

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                            • #15
                              I never understood the animosity against in-laws thing. They raised your spouse, so if you like your spouse, shouldn’t you be happy with the source? I think when people really complain about their in-laws, they are really complaining about their spouse in a socially acceptable, by proxy fashion.

                              Also, this illustrates the real reason why you shouldn’t loan money to family—when people get behind on payments with a bank, they expect their credit score to be trashed and for the bank to come after them for the money. They don’t like it, but they expect it. When they get behind payments with family, they somehow expect family to just shrug and say that’s cool, whatevs, and when family reacts any different way (even by gifting the payments so they can catch up again) they get upset. And then they mentally account how much they are going to get back in the form of inheritance...i.e. they daydream about the lending family members demise (!?!)

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