Hi Money Minder,
I have a burning question – is $1850 the right amount for my partner and I to fork out for rent each month? I need a fresh perspective on this.
Let me break it down for you – I bring in roughly $8000 per month and have $10k in student loans at a 3.61% interest rate. Oh, and I’ve got around $95k stashed in some HYSA/CDs that I’m keeping for now because we might move in a few years.
On the other hand, my partner makes about $4000 monthly and carries around $50k in debt (mostly student loans with a bit on a car) at an average interest rate of 4.90%. Together, after taxes and retirement savings, we pocket around $8500-9000 monthly.
Honestly, I’m most worried about our debt – I really want it to disappear. Rent costs don’t bother me too much, and I’ve been holding off on paying my loans due to the low interest rate, but I’m leaning towards clearing it off by the end of the year.
So, given all this info, do you think $1850 a month for rent is reasonable for us?
Warm regards,
Sara Debt-Free-Wannabe
Response from THE MONEY MINDER:
Hello There,
Congratulations on being proactive about your finances and seeking an outside opinion on this matter. Based on the financial details you provided, it seems that $1850 per month for rent could be a reasonable amount for you and your partner to pay. With a combined take-home income of $8500-9000 per month, you both seem to be in a good position to afford this rent amount. However, the key concern here is the existing debt, especially the relatively high interest rates.
Given your student loans and your partner’s debt, it might be beneficial to focus on paying off the higher-interest debt first to save on interest payments in the long run. While you mentioned having a substantial amount saved in HYSA/CDs, it might be worth considering using some of those funds to pay off the debt with higher interest rates. This could help improve your overall financial health and reduce the burden of debt payments.
It’s great to hear that you are already thinking of paying off your student loans with the low interest rate. Prioritizing debt repayment can bring you closer to financial freedom and make it easier to achieve your long-term goals, such as saving for future moves or investments.
In summary, while $1850 for rent might be manageable based on your income, addressing the debt concerns could bring greater financial stability and peace of mind. Consider creating a detailed plan to pay off the debt systematically while continuing to save for your future goals. All the best from THE MONEY MINDER as you navigate through this financial journey.
