Debt... Evolved

I really wasn't sure what to call this post. Debt transformed? I thought about "Debt, no more!" but that's not accurate (I wish!).

It's really a wonderful thing, but makes me feel a bit queasy at the same time. I'll try to explain...

While we were walking to the grocery store this afternoon, M casually mentioned that he should just pay off my credit card debt and car loan, and then I could just make payments to him. No more interest charges, and a boost in credit score. My immediate reaction was "no, no, no" and we stopped talking about it.

A few hours later, as I was looking at my debt repayment plan, I started thinking how much better I'd feel if the debt was wiped away from the creditors, and the payments were going to M. I did a bit of number crunching, figured out how much I'd save on the interest, and then typed up an e-mail to him with what I'd come up with (while he was in the other room playing games online with his friends).

We talked about the e-mail this evening, discussed the pros and cons, and we ended with him writing me a check - for the entire amount of my consumer debt.

I looked into the legal implications of him giving me the money. He was very "whatever" about the whole thing, but I wanted to give him something in writing. I stated that it was a "demand loan" (he can demand the whole thing at anytime), that I was solvent at the time he made the loan, and that my net investment income is less than $1000 (all true). Hopefully, this will protect him from having to pay any kind of tax. (Please correct me if I'm wrong!)

So, like I said, it's wonderful. He's generous and wonderful. And I feel queasy and a bit like I want to cry. I already owe him (a lot) of money. Yes, we've been together a long time, we live together, we have a joint account. Yes, there is no doubt in my mind that this loan will be paid back within a year. No, he's not going to make me his indentured servant. Yes, this will be somewhat helpful to us both (my credit score will no longer be a hindrance in getting a new apartment). No, this doesn't hurt him financially.

Having said all that, I still feel like... I don't know... a bad person. Wretched. Unequal. I want to be the one writing out the checks, helping him get out of debt. But he has zero debt (and likely never will... other than a mortgage, somewhere down the line), and I'm like a poor, sad sack with debt up to my ears.

I should be happy, and I am happy, in a way, and I'll be happier tomorrow... but right now, I just feel kind of sorry for myself.

Anyway... I'll be depositing the check on Monday. I'm not sure when it'll go through, but whenever it does, I'll be making my payments the same day, and then updating all my sidebars.

Feel free to chime in with your thoughts... if you think the whole thing is a bad idea (legally, for him), I would really appreciate the input.


Emmett said...

cool blog

FB @ said...

Well I think it's AWESOME that M paid off the debt and now you just pay him the cash instead of paying some other losers the interest instead.

That is wonderful. Truly. And I'm glad you insisted on a piece of paper as well... even if he was totally "whatever" about it.

Canadian Saver said...

Yes, I agree too, it's a great thing that M did!!

You could always print out a schedule of payments and put that on the fridge or behind the bedroom door, so you can both see it and scratch off each payment as it is made :-)

asgreen said...

What great news! And how wonderful for M to help you out this way. I don't know about the legal implications, but savings on interest is huge! I agree with Canadian Saver, put a schedule of payments somewhere were you will both see it.

Mentally Sane said...

I think you made the smart move financially. If it wasn't going to hurt M financially, and it helped you, then it was a good deal. I understand your feelings though. It feels odd to accept what some of us independent people would perceive as "charity," though that's not what this is. But, it does toe the line a bit.

I also admire that you wrote out a legal document for him! That was very considerate of you and probably reassured him that he was making a smart investment. Not that it sounded like he needed that assurance, but it's always nice to know something we put money into will pay off. So, I think you guys have done a great thing! Congrats on getting your debt paid off - at least M won't charge your interest!

Kristy @ MYC

Sunflowers said...

Thanks for the comments, everyone. :) I still feel a bit sick about it, but I think I'll feel a lot better when I see the big $0 on my credit card and car loan statements!!

Miss M said...

It's not a bad idea, often one partner helps out the other financially. Mr M owed me money but we never made any formal agreement about it. Are you paying him interest? Even if your finances aren't truly joined when you live together they are combined in a way, your debts are a limitation to you both. I think it's going to work out great.

Simplelivin' said...

Wow that is awesome of him! I'm sure it's a huge relief off your shoulders to only have to worry about one payment now, and and interest free payment at that! Huge props to M for offering!!!

Anonymous said...

I started to write a Comment that really turned into a post...which you will now find here:

Consider amending your agreement with to include 3% interest, which is just about the highest CD rate on the market. That way he loses absolutely nothing. And even though we're not talking a huge sum of money, it should help with your feelings of imbalance in your relationship. You will both benefit from your improved financial position because you'll be able to pay off your debt MUCH faster, and it won't cost him a dime!

Sarah said...

Wow, that's awesome of him!

I agree with MMK, if you feel guilty, offer him a small amount of interest. Don't feel guilty, though. Often I feel like the best use of my money would be to give it (or loan it!) to the people I care about most.

Anonymous said...

That is awesome!! I a very glad for you! I think you will feel so much better knowing that you can pay it down faster now! What a sweet boy!

Christina | said...

I agree with everyone here. It's wonderful of his to do that. I like the schedule of payments idea and agree that if you feel guilty, paying interest of 2.5-3% would help. I lower the rate from 3% because according to the contract you wrote up, he can "withdraw" at any time, and those high rate CDs don't offer that, but 3% interest is still a bargain compared to credit card rates, so if you want to do 3% go for it.

Congrats on getting out of high-interest debt!

undercover vixen said...

just fyi, technically you would owe taxes on that....but i don't think the IRS will be checking u out...this is because the lack of interest is considered "income" by the IRS. It's a technicality I wouldn't worry about though.

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