Jill (2:53)

You know what? It's okay. Sometimes the people I know who started late really come around and just supercharge things. So this is not a problem. We are here to help. So, Logan, how old are you?

Logan (3:05)

I'm 47.

Jill (3:07)

Are you married? Partnered? Single? Where do you stand in that world?

Logan (3:11)

Partnered.

Jill (3:12)

Okay. And do you and your partner combine your finances?

Logan (3:17)

We do. Only in our budgeting. We keep them separate, though. So I can spend my money, she can spend hers.

Jill (3:24)

Okay, I got it. In other words, when we talk about when you have retirement and student loans, it's not like you're all one big happy family. You're contributing to household expenses, but not the bigger picture. You're not like, oh, she's got $800,000 in a bank account. She wants to pay off all my student loans. We're not there yet, right?

Logan (3:43)

Not yet.

Jill (3:43)

Darn it. I wish she had that. Okay, so, okay. Do you live together?

Logan (3:48)

We do.

Jill (3:49)

Okay, got it. All right. Do you own a home together?

Logan (3:52)

Yes, we do have a mortgage.

Jill (3:54)

Okay, what's the house worth?

Logan (3:55)

350.

Jill (3:57)

Okay. And what is the outstanding mortgage amount?

Logan (4:00)

Over half of that has been paid off.

Jill (4:02)

All right. And do you know what the interest rate is?

Logan (4:05)

I don't.

Jill (4:06)

Do you remember when you bought it?

Logan (4:08)

She actually bought it before we got together. We did do a little refinancing. I think she has got that old wonderful 3% interest rate.

Jill (4:18)

I love that. Perfect. Okay, now let's get to you. So, Logan, are you working full time?

Logan (4:23)

I am.

Jill (4:25)

How much do you earn?

Logan (4:26)

$104,000 a year.

Jill (4:28)

Okay. And do you make retirement contributions on that $104,000?

Logan (4:34)

Yes, I am contributing at 15%.

Jill (4:38)

Ooh, that's a lot. Good for you.

Logan (4:39)

Yeah, I'm trying to catch up. And I have converted my 401 over into a Roth plan.

Jill (4:46)

Great. How much is in that Roth 401?

Logan (4:49)

$60,000.

Jill (4:51)

And is there any other money that you have invested for retirement? An old ira, an old retirement plan? Anything else out there?

Logan (5:00)

No.

Jill (5:00)

Okay. No. Don't worry. I hear your voice going down. I get it. It's. All right. Now, the student loan situation, I bet there's a story here. So why don't you give me a little bit about where you stand in the student loans?

Logan (5:14)

Okay, So I have $98,000 in graduate school debt. I do have 15 years of on time payments. But the student loan repayment plan that I was on from the Biden administration has essentially disappeared.

Jill (5:31)

Right.

Logan (5:33)

And there are a lot of changes that are going on with the new administration that I think are going to reduce the student repayment options down to just two or three very, very basic plans.

Jill (5:45)

Right, right. That's what I understand as well. One is just going to be a plain old like here's what you owe and you know, here's your monthly payment and the other is some sort of amount that would be based on your income. What's the payment that you have right now for the student loans?

Logan (6:03)

Well, right now, because of some of the COVID era plans under the Biden administration, my student loan payment is set to zero until August of next year. And I've spoken, I've called in and talked to the administration, the student loan administrators, and they can't tell me what my eventual repayment is going to be yet. So there's not really a way to budget for it. However, I also get an additional 24,000 a year from a VA disability. And if I take the entirety of that monthly payment, I will be able to pay off the entirety of my student loans before I hit that 20 year forgiveness.

Jill (6:52)

Oh my God. But you don't know.

Logan (6:55)

So yeah, that's my big question. Should I just bite the bullet and pay it all or should I continue to make my on time payments and when I hit 20 years of on time payments, file for having the rest of it wiped out? Man.

Jill (7:10)

Okay, so we have five years to go. Could be a whole new administration. You never know. Could be a whole new program. I'm inclined not to pay it all off. That's so unlike me because I like certitude. But I mean, look, you can take that 24 grand a year of disability and sock it away and create kind of a sinking fund so that if you had to you. Because right now, what happens to that 24 grand a year? Where does that go?

Logan (7:40)

Right now I'm trying to save as much of it as possible.

Jill (7:44)

So how much do you have in savings right now?

Logan (7:47)

Right now I've got about 8,000 in savings and that's just in a regular credit union savings account that is only earning 0.01 interest. So I also wondered, should I take all of that savings out and put that in a Roth IRA and something that's high yield.

Jill (8:08)

No, no, not high. No, I don't want it in the Roth. I need availability, don't I? I've got five years, right? Is this the only savings you have?

Logan (8:19)

On top of just my regular checking account that's got about 6,000 in it.

Jill (8:24)

Does the credit union have CDs? Maybe we could just throw some of the money in CDs just right.

Logan (8:30)

Yeah, they do.

Jill (8:32)

Okay, so maybe I would do that. Just you need access to your money. I mean, you do need an emergency reserve fund. Does your partner make a ton of money? And like I don' really have to worry about an emergency. I don't want to be stupid about this.

Logan (8:43)

Oh, we're pretty equal. She does have an emergency fund. We both made a plan of having half a year's spend saved up in case of something happening.

Jill (8:55)

What's your half year spend equate to?

Logan (8:59)

I would want about 30,000.

Jill (9:02)

All right, so, well, I mean, we still have to put this. So we have to get that disability into the savings and check savings specifically. And if you can go to a High Yield Savings, if they offer that, you can go online, you can go to depositaccounts.com and you can open up an online High Yield Savings account. But you need to have access to your money. You really do. So I think that until you get to this $30,000 savings level, I wouldn't put the money in a Roth. I just would like you to have access just in case. Right. That's what Emergency reserve is. Now, in terms of the five more years next year, we don't know what your payment's going to be, right? For all intents and purposes. That's another reason just to keep the savings as bulked up as you can. I think it's fine to put 15% into the Roth. I think you should be using every available dollar and put it into savings. But do make it high yield or throw some money in a CDC ask. Sometimes credit unions will give you a deal if you ask and find out what they have available. And if not, you can always go to an online High Yield Savings or money market account. It's so weird because you have this five year period. We don't know. Ostensibly you would have said, well, if I make five years of payments, so if next year I'm off, you know, off the hook for another year, I can beef up my savings, then I start paying. Let's just pretend it's, I don't even know, $1,000 a month, okay, you pay that for another four years and at the end of that four years you either would have two different things happen. One is like, hey, you owe us all this money or maybe you don't. And I would like to preserve the optionality for don't. It's just that we need to have the money available so that you can make these payments and you can pay for the loan if you need to, and that's what you're going to do with your disability. If all of a sudden in a year from now, you're like, hey, Jill, I got my $30,000. Now what? Then you can open up a brokerage account and just start to put some money in there. But I think the most important thing today is to beef up that savings till it's 30 grand. I don't know, Mark. Do you feel different? I know you probably would feel, like, much more comfortable if he just paid this off. But we're close, though, right? We're close to the possible time here. He's done 75% of the work. There's no way I'm paying it off right now. I'm going to wait another five years. Yeah, there's no reason not to. And if you, you know, if you have the wherewithal to just be able to carry this emotionally, I think you're going to be fine. And even if not, we will be able to figure out, like, a plan before then. So here's what I want you to do. Logan from Missouri, I want you to be very focused on building up your savings while you're contributing to your Roth 401K. But in a year from now, when the clock starts ticking again, I want you to get back in touch with us. I want to know what that payment looks like in a year.

Logan (12:00)

Okay.

Jill (12:01)

That's going to be your next decision point. Okay. And we'll go and, like, if it's $2,000 a month, because all of a sudden they're like, well, we got to figure out how this dude's going to pay us back in the next four years. Then you will use your disability payment to just pay the. Make those payments. But let's see what it comes back with. You know, we don't know. It's so crazy. This is insane to switch policies like this midstream on people. It really is. So I'm sorry you have to go through that. Can I ask you a nosy extra question?

Logan (12:32)

Absolutely.

Jill (12:33)

You're partnered. Do we have some estate documents? Are you at that point? Like, what happens if your partner who owned the home, if she were to pass away, would you be the inheritor of that house?

Logan (12:47)

Yes, she has set that up in her will that I would be okay.

Jill (12:50)

And do you have a will that sets her up as well? You know, she. Actually, you need a will, but you don't. Your most. Your largest asset is the $60,000 Roth 401K. So she's the beneficiary of that.

Logan (13:02)

Yes, she is.

Jill (13:04)

All right, do you have your documents otherwise? Like, who gets to pull the plug?

Logan (13:07)

Oh, no. And I haven't set up a will. It's definitely something I should do.

Jill (13:12)

You should do that. You know what? You're a grown up now. Now you have to do it, I'm sorry to say. Logan, go get yourself. If you have that as a corporate benefit, that's a nice thing to use. Estate planning. So have done a will, a power of attorney, and a health care proxy. That's it? That's all you need? And very. It's. It's. I. I encourage you to do that.

Nancy Cartwright (13:34)

Also.

Jill (13:34)

It's very strange. I don't know what the law is in Missouri, but, you know, when you're not married, the funny thing is, is that the law is kind of thorny with estate issues, so it is better to get something down on paper. Okay.

Logan (13:48)

Okay.

Jill (13:48)

All right. I'm just gonna go Zen with you, man. Five more years.

Logan (13:52)

I know. It's so close.

Jill (13:54)

It's so close. And so much can change, as we've just seen over the past five years, when it comes to student loans. So stay in touch, keep us posted, and let us know if there's any further information we can help you with, all right?

Logan (14:07)

Oh, I will happily do so. Thank you.

Jill (14:09)

All right. Thanks for getting in touch with us, Logan. Hey, are you in this purgatory of student loan madness? Get in touch with us. Let's get a game plan to together for you. Just go to jillonmoney.com, click the contact us button, write us a note, and if you'd like to join us live, check the box. Mark does everything else. All of our content lives on that website, jillonmoney.com so might as well bookmark it. And you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Try to put your hands metaphorically on someone's back. Or maybe just give someone a hug. Get permission first. I'm a hugger. Still got to ask permission. Change your work, Change your wealth. Change your life. Thanks for listening. We'll talk to you tomorrow.

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Nancy Cartwright (16:01)

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