Your Table Is Full

Kelly has $150,000 in student loans. She's eligible for an $85,000 repayment program and having the remaining amount forgiven. Should she switch to this plan in order to cash flow her adoption?

QUESTION: Kelly has $150,000 in student loans. She’s eligible for an $85,000 repayment program and having the remaining amount forgiven. Should she switch to this plan in order to cash flow her adoption?

ANSWER: I’m going to try to be nice, but you may not like me. You have too many balls in the air. You’re going to drop one. You have gone and gotten a very expensive Ph.D. in order to earn $70,000 a year. Your husband is in school full time. You’re not in a position to adopt. You’re broke and deeply in debt and your husband doesn’t have a job.

If you paid $150,000 to be a stay-at-home mom, I’m going to kick your butt. If you continue to work after the adoption and your husband is working, then we’re going to make $150,000 or $200,000 a year and you can clean this mess up rather quickly. I don’t want anyone’s plan to be 25 years to pay off a student loan. If you want to put it on that plan to temporarily help you with cash flow, fine. But that’s not a long-term plan. I don’t want you to be a slave. I want you to live your life and have lots of adopted kids, make lots of money, and become very wealthy and all of those kinds of things.

You guys are going to have to slow down in your acquisition of things, including adoptions and degrees and other things, until you learn to pay for some of them. I don’t know exactly what that looks like. If he’s out of school and you’re chunking $50,000 a year at this thing, you’re done with your student loans in no time; and if you wiggle an adoption in the middle of that, that makes sense.

If you want to adjust the student loan for now to try to accomplish some of these goals at once, that’s fine, but don’t stick with the 25-year plan. Let’s have a five-year plan to be debt-free. I just don’t want you to go to the “I’m never going to pay my student loan off” mode. You guys really need to be very careful about any more decisions you put on your table. Your table is full. You’re high-energy people, and you’re intelligent people, and you think you can keep all the stuff on the table, and that’s what gets folks in trouble. When you have no financial stress, you’ve got lots of options. That’s where I want to get you to as fast as I can. I’m not trying to break your heart or say you didn’t hear from God or any of that. I just want to stand back from your forest and say, “Crap! There are a lot of trees.”

In a sense, what we’re doing is pushing pause on the student loan in order to get him out of school so we can put a fire hose on it. Then you guys look at the rest of this as to how you’re going to get it, and don’t put anything else on your table.