Debt Management

1. Refinance the Student Loans to a lower rate
2. Stay in your apartment assuming it's $1000/mo or less and y'all are making $50k/yr combined and have no other debt besides the student loan.

Golfer is right. You do need the flexibility that lower monthly housing costs will give you.

ETA: I missed the fact that you're being given the land, which will help. I'd run the numbers in a spreadsheet. Also consider what you can get for selling the land and putting that toward the loans while you stay in the apt.

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Curious why you say stay in the apartment?

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I'm not a fan of borrowing money for a depreciating asset at that rate for a long period of time.

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Another question to consider... The hole idea of the trailer is to save money to put towards student loans. So, we were gonna try to go with the longest mortgage possible on the trailer. However, does it make financial sense to do this? Should we instead go the 10-15 year mortgage route and pay it off in 2-3 years? This would leave us with paying minimum on student loans for a couple years, but would give us a greater profit when selling the trailer.

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I wouldn't count on profit from selling the trailer, you are introducing a lot of variables here, and like you said, you might want to keep it in the end.

If you are dead set on this scenario, it just doesn't make sense to pay down those student loans as aggressively as you are planning, because your plan involves borrowing money at a higher interest rate to do so. I would pay that off first, simply because it would complete your asset (trailer + land), that will make converting that asset to cash an easier decision. This sounds like your scenario in para 3. Once paid off, you will have the decision to stay in the free and clear asset and attack student loans, or sell the asset to put toward the loans or a DP on your new home. This depends on how comfortable you are in your new setting. Also, if you are under the AGI limit, you can always deduct student loan interest (above the line deduction), while you have to itemize with a mortgage, so that should also play into the equation (you may be in a situation where the lower interest is also tax deductible, effectively lowering the interest rate compared to interest that is not tax deductible, which would be the case for mortgage interest if you cant itemize). Side note - also depending on your income, you may be able to get a Mortgage Interest Credit (rather than a deduction), so look into that as well, as it would reverse the above advice.

Are you putting anything down? That payment will be 500-600 if all is borrowed (with T&I included) at 15 years. That frees up a bit of cash flow, but isn't going to be putting a huge dent in those student loans. I don't know you personally, but it seems like you could "steal" that $400-500 a month from yourself tightening your expenses, or at least a portion of it. Take up tutoring or something like that on the weekends and you might be at that point.

That was just some rambling back to you, but maybe a few extra things to chew on, if you are set on this route. I do agree with what is posted above about exploring refinance of your student loan debt. This can be done, it is sometimes a pain but is possible. It's hard for me to recommend taking on more debt, at a higher interest rate, in order to accelerate the payment of other debt. Those are both pretty high rates in this environment. If you could get traditional mortgage rates on the trailer I'd say its a great plan, but I am just having trouble seeing the savings being that profound.

Alternatively, if you are honestly building a "dream home", one that you realistically predict you will never move from, another option is to save aggressively toward the downpayment for the home and build it sooner than later. Depending on how long that may be, you could refi/pull out HELOC on the home and effectively refi your student loans through a lower rate (have less equity in your house than you put down, because you use that equity to pay off loans). This could be complicated and may not make since by the time you could execute it, without knowing more about your personal financial position.

Good Luck!

You're plan sounds horrible IMO. You shouldn't borrow more money at an even higher rate for a depreciating asset. Your better off staying in the apt. If you insist on moving out of the apt. why not borrow money at half the interest rate and buy a home? At least that has the potential to appreciate. The trailer does not.

For example, you could borrow $150k (may not need this much) @ 4% for approx. $715/month.

The trailer, as you've laid out, you would borrow $50k (will probably spend more) @ 8% for approx. $365/month. That's if you can even get a 30 year on a trailer.

Or just stay in the apartment. I guess the trailer is throwing less money away, but just doesn't seem worth it.

OceanMan I appreciate the detailed response. Heading into work so when I get some time I'll put together some more details. Thanks that's some good info to chew on.

As far as the terrible plan... I've got family land, a nice chunk surrounded by even more land. It's nice... Tired of living in apartments and ready to get some space and be closer to family. Hell now I'll be able to get me the duck dog I been wanting forever. By no means am I considered a financially smart fella, but I'll look to make the most of the situations I put myself in.

Btw renting vs the trailer. 3 years in the apt would be around 34k spent on living. If I was to pay the trailer down in the same time I'd have to believe I wouldn't lose 34k. Septic, electric, and water will all be used on the house I build, so those costs aren't a waste.

I know this is the money board, not the OT, but good god, don't live in a trailer.

I once had a front row seat to a family renovating a trailer.

Who does that?

I believe Katrina flooded it within the year.

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Another thought... If I can pay the trailer off in 2-3 years.. wouldn't the high interest rate not be that big of an issue?

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If you can pay $45k off in 2-3 years you should just stay in the apartment and pay off your student loan in 3-4 years.