Mixing The Money
Elizabeth will be wed soon and wants to know how to work the Baby Steps and the debt snowball into her marriage.
QUESTION: Elizabeth is getting married in the summer and is on Baby Step 4. She’s starting to invest for the first time. Her fiancé is paying down his student loan. When they get married, should she empty her emergency fund to $1,000 and put the money onto his student loan?
ANSWER: I give you guys high marks for your behavior. You are really on top of it. When you get married, the “I” and “he” changes to “we.” Don’t pay anything of his until you’re married, but when you come back from the honeymoon, realign your money to reflect your total money makeover as a couple. Make sure that “we” have $1,000 in the bank as a baby emergency fund, then work on paying off the debt. Put his money with your emergency fund, and then you’d basically take your entire emergency fund and throw it at the debt.
You can also pile up money between now and the summer so that when we get back from the honeymoon, we will be debt free. If you can start your marriage debt free, that would be awesome.