• Continue tackling debt. As for their debt, more than 80% of it is student loans. Wright likes their strategy for getting rid of them in 10 years with loan forgiveness. “Given his balance of $172,000 right now, if he paid $900 to $1,000 a month for 10 years and the rest was forgiven, he could save more than $50,000, plus interest,” says Wright. Otherwise, their credit card debt is such that it can be paid off easily, and she thinks putting contest winnings toward the cards makes sense.
Although their credit scores are in the high 600s, the 700s would be better still, says Wright. “The scores are where they are mostly because they lack a credit history. While they should pay off their credit cards, they shouldn’t cancel them, so they have a track record of holding them for a longer period of time,” says Wright. The length of your credit history accounts for 15% of your FICO score. Having that available credit will also help increase their scores, Wright adds.
Further, if interest rates remain low in 2013, Patrick should consider refinancing his car loan, which is currently 6.5%.
• Create wedding contingency plans. Wright says the $5,000 to $7,000 that the couple will spend on their wedding is extremely reasonable. However, she cautions that weddings can take on a life of their own; not only can the guest list grow and grow, but stuff happens.
“They need a contingency plan. What if the family can’t contribute in the way they plan to now? What if one of the parents loses a job? Is the money already set aside? They also need to have a cushion on costs; they may go over budget,” says Wright.
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