Give me some "got out of debt" success stories!

amother

Orange

Sat, Dec 07 2019, 8:05 pm

SacN wrote:

This may not be a popular opinion here, but I'll give it my shot.
My husband and I are both professionals in Israel with high paying jobs. We have over 300k dollars in student loans, and pay the minimum every month. At 30 years, we'll get our loan forgiveness and be hit with a whopper of a tax bill for over 110k from the irs.

We are otherwise above board and in the black, with the occasional dip for emergencies. We have some savings. We will probably be able to help our kids when they get to college /marriage.

I'd rather save my money for investing, buying a home, etc, than paying off my (mostly my husband's) debt. It's not worth it. It won't pass to my children, I don't have any estate, I will probably retire very late (if at all) and am not likely to ever own my own home. If I (or my husband) die with tax debt to the IRS, that will just be... Fine.

Why should I also scrimp and save and live in a way that's not healthy for my family? My kids need private therapies. My socially struggling kid needs a trendy backpack. I work 45+ hours a week +commute and need someone to mop my floors. I like the Kelloggs cornflakes, I don't like the cheaper telma ones.

I used to live like someone with no money until mental health challenges brought it all into focus. I can't give my whole life to paying back debt. I need to feel the success of working so hard. I have money in my bank account, and Dave Ramsey thinks it should all go to my loans. I think he's wrong.

Do you owe this money to the Israeli government?

amother

Violet

Sat, Dec 07 2019, 8:12 pm

SacN wrote:

If you have a realistic plan how not to pay your loans legitimately, then why would you pay them?

amother

Violet

Sat, Dec 07 2019, 8:16 pm

amother [ Bisque ] wrote:

sacN- I'm trying to understand. after 30 year when you get that 110 k tax bill you plan to just not pay it. don't they start garnishing your wages?

would you feel the same way if it was money owed to an individual? right now my dh's old business partner ( frum guy) owes us thousands of dollars. It's been a nightmare...

The forgiven balance will be counted as income the year it is forgiven. She will have to pay tax on that. The 110k tax is less than 300k, so she is paying the minimum until the balances fall off. It's a financially realistic plan. (In all likelihood, the majority of the loan balance is owed to Uncle Sam anyways, so it's just going from one pocket to another.) It's like utilizing Medicaid. If you feel it's unethical to take money from the government you don't have to, but if you do utilize government programs that you're eligible for, then student loan forgiveness is no different.

amother

Lilac

Sat, Dec 07 2019, 8:27 pm

Unfortunately education in America is insanely expensive. People who's parents do not save for their college (most yeshivah ppl) take out government student loans with interest rates of 6.5 percent. The colleges can raise the price to however much the gov loan will cover. Each year credits cost more and more. Often the jobs attained with the degrees do not pay enough to cover those loans.

The government makes money off the loans.

Those who live in countries where education is gov subsidized ( Israel, Canada, uk) or whose parents payed for their degree do not understand this situation.

amother

Oak

Sat, Dec 07 2019, 8:29 pm

SacN wrote:

Wow, great post. That was so honest. Have you considered putting your savings in assets besides an American bank accout? Inflation is larger than the interest rate today, so you're losing money by keeping it in a US savings account. Why not buy real estate overseas, have a bank account overseas (legal so long as you declare it) or invest in alternative currencies like crypto? That way you protect your assets against garnishment or dollar decline.

amother

Smokey

Sat, Dec 07 2019, 10:05 pm

maybe my story will give you some chizuk. I grew up without a penny and married someone in the same boat. I was a major thrifty wife but we still never could make ends meet. Kids clothing was all other ppls hand me downs etc. Around four yrs ago we purchased a house (Im still not sure how we pulled that off) by borrowing for the down payment etc... It was super stressful every month. Me and my husband started our own business and we bh never looked back. One yr after we moved in we were debt free ... bh now our business is doing amazing... we are able to give huge amounts to charity ( that was always my dream) Its Still really weird to be on the other side of the table...
Just keep Davening.

amother

Green

Sun, Dec 08 2019, 12:58 am

amother [ Smokey ] wrote:

BH so happy for you! What kind of business did you start?

SacN

Sun, Dec 08 2019, 5:17 am

Quote:

I would never borrow money from an individual without an airtight contract. If I was investing in a business, it would be money I'm 100% comfortable writing off. We do currently have a car loan (from our Israeli bank) , which we pay fully every month.

The IRS can't garnish my Israeli wages. In fact, since I pay full taxes here in Israel, I don't understand why the US government thinks it has any right to my money (taxes). I don't live or work there, I don't benefit in any way from paying it, and still, I have to file taxes every year.

I will hit the IRS tax when we get there. I hope/pray that the tax code changes, and debt forgiveness is no longer considered taxable income. Living abroad, it's very much in the IRS' interest to negotiate a reasonable settlement with us (which they do do), since there's very little to ensure that we actually pay. Maybe I'll win the lottery, or go down in tax brackets. Who knows.

Meantime, I will continue living responsibly, putting money into savings for emergencies, my kids futures and my own investments. I will not risk those important aspects of my financial life to pay off debt. If it was anything aside from student debt, we could declare bankruptcy and have our future back, but student debt can't be forgiven by bankruptcy.

I refuse to throw my whole life into retroactively paying for my husband's graduate school education. I want money for retirement, for college for my kids (in Israel, where it's affordable), weddings, periods of unemployment. New appliances when my fridge or oven breaks. New sheitel when my 7 year old one isn't wearable.
I can't, and won't, throw all that money at that debt. I need it for other things.

I could probably pay it off eventually - refinance to a private loan with lower interest. But 30 years later, it will be paid off and I will have absolutely nothing else. It's not worth it.
Debt is not a moral wrong (as multimillionaire Dave Ramsey would have you believe). It's just a financial circumstance.

33055

Sun, Dec 08 2019, 8:05 am

SacN wrote:

Quote:

Your plan is interesting. Is it based on discretionary income?

Taxes on loan forgiveness are not inevitable. You should do a bit of research to see if you are in the position where you don't have to pay taxes.

Consult with an attorney.

amother

Denim

Sun, Dec 08 2019, 8:17 am

Another thing to consider about deliberately defaulting on student loans is that the loans are a scam. Normally when people can't afford something (like housing) the prices go down. This is not so with college tuition for one simple reason. The government continues to guarantee the loans. So any 20 year old kid who wants to borrow 100k for a degree that might get her a starting salary of 20k, instead of lowering the tuition to a fair price, the government simply guarantees the exhorborant price. Well, screw you Mr government. You guaranteed this ridiculous loan, now people who are in position to default, are doing so.

33055

Sun, Dec 08 2019, 10:54 am

amother [ Denim ] wrote:

That's an interesting perspective. Doesn't the availability of money drive the price up of everything? Should you not pay back anything because without the money you wouldn't have bought it?

This is true for houses and other items. You may have been forced to buy a shack if you didn't get mortgage money, so I guess you don't have to pay mortgage money back because the prices of houses would be lower because very few can afford cash for their homes.

Without credit cards home goods would not be so expensive, etc.