Hi, I’m a huge fan!
My boyfriend is currently working overseas, and we plan to ‘go Barefoot’ when he gets back so we can tackle our debts. My accountant suggested we first pay off the personal loan my boyfriend got, which he consolidated his credit card debt into — a loan that was only possible with my name on it. The accountant suggested using my inheritance, which I currently have in our joint offset account. Trouble is, my boyfriend now has another credit card and I worry I would be bailing him out again! What should I do?
Your accountant is just looking at the digits:
The interest on the personal loan is costing you more than the offset, so you could save money by extinguishing that debt. And given you’ve already contracted an STD (Sexually Transmitted Debt) — that is, you’re now both jointly and severally liable for repaying the loan — it makes total sense financially.
However, if I were in your situation, I wouldn’t repay the loan.
(Actually, I wouldn’t have co-signed the personal loan in the first place, but I’m a little Judge Judy like that.)
First, because you don’t want to set up the expectation that you’ll reward his dumb behaviour.
And second, because you’re already giving him a helping hand. By keeping your inheritance parked in your joint offset account, you’re already effectively lowering your mortgage repayments, giving him a fantastic opportunity to ditch the credit card and domino his debts.
I’d sell it this way: this is an excellent way to show his commitment to both the Barefoot plan, and you!