Student loan payments: get advice and actual numbers here

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orangecup
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Re: Student loan payments: get advice and actual numbers here

Postby orangecup » Wed Sep 13, 2017 3:10 pm

Anonymous User wrote:a year into the job (big law):

- put $70k into loans
- put $18k into 401(k)
- have $10k in bank account
- no CC debt or other debt payments

is this admirable or foolish? i haven't refinanced yet but plan to by early 2018.


It took me two years to shift my loans from ~193k to ~123k, and I was paying down at a fairly aggressive rate. Kudos, that's a great first year.

Agree with others - increase your emergency fund (make sure it's in a high yield savings account like Ally, GS, etc.), max your Roth (backdoor), and continue to pay down loans aggressively.

Anonymous User
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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Wed Sep 13, 2017 8:37 pm

Anonymous User wrote:
Anonymous User wrote:a year into the job (big law):

- put $70k into loans
- put $18k into 401(k)
- have $10k in bank account
- no CC debt or other debt payments

is this admirable or foolish? i haven't refinanced yet but plan to by early 2018.


Just curious: are you in NYC? What do your monthly expenses, including rent, look like?


not in NYC but in CA. COL isn't super cheap here either but i would probably have spent more living and working in NYC. my monthly expenses have averaged to around $2100 per month, and i pay for rent, auto insurance, gas, gym membership, netflix, etc. definitely living way below my means, but i live in a clean place in a safe neighborhood ten minutes from work and eat well, so no complaints. also, i'm currently childless, so that helps.

thanks everyone for the advice! it was helpful to get an objective viewpoint. i will definitely aim to increase my savings and look into the backdoor roth IRA. paying down loans hasn't been easy but it's also been good to learn how to scale back my consumption habits while still trying to live a decent quality life (as much as possible as that is while working big law).

Anonymous User
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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Fri Sep 15, 2017 2:21 pm

Here are my numbers at about 14 months in. I make just under $100K working in a non legal job. Just wanted to present a slightly different perspective in case anyone is curious about life outside of biglaw/the law in general. Come to the dark side - we work 9-6 and wear jeans every day :wink:

Put 10K in my 401(k) and 11K in IRA
Paid off 40K of loans. Fiance contributed an additional 27K to kill my PLUS loans.
Nothing in the bank (well, nothing from me. We have an emergency fund thanks to fiance.)
No debt other than my student loans.

We spend 4K/month not including loans or retirement savings, so not pinching pennies by any means. The goal is to be debt free exactly 3 years from graduation, so far so good.

Anonymous User
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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Sat Sep 16, 2017 2:36 pm

A bit of advice needed on refinancing.

I am a new associate in Big Law in NYC and am looking to refi about $180k in loans. I'm very interested in First Republic due to their very low fixed rates but currently do not have their requisite liquidity requirement (15% of overall loan balance). I would like to refinance with CommonBond on their 10-year hybrid which offers fixed for the first 5 years and variable for the second 5 years. The plan would be to build liquidity on the side to meet First Republic's requirement and have them refi my CommonBond refi in Year 3 or 4 and thus never get to the variable period.

Does this sound like it would work? I've spoken with CommonBond and they said people refinance their CommonBond loans all the time but I would like a disinterested party's opinion.

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JenDarby
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Re: Student loan payments: get advice and actual numbers here

Postby JenDarby » Sat Sep 16, 2017 4:23 pm

Anonymous User wrote:A bit of advice needed on refinancing.

I am a new associate in Big Law in NYC and am looking to refi about $180k in loans. I'm very interested in First Republic due to their very low fixed rates but currently do not have their requisite liquidity requirement (15% of overall loan balance). I would like to refinance with CommonBond on their 10-year hybrid which offers fixed for the first 5 years and variable for the second 5 years. The plan would be to build liquidity on the side to meet First Republic's requirement and have them refi my CommonBond refi in Year 3 or 4 and thus never get to the variable period.

Does this sound like it would work? I've spoken with CommonBond and they said people refinance their CommonBond loans all the time but I would like a disinterested party's opinion.

FRB wasn't big when I did my refi with commonbond, but that's basically what I did. I was with commonbond for 1.5 years before moving to FRB

Have you talked to an FRB banker? Sometimes they are flexible with liquidity requirements etc, so it never hurts to give it a try (I came close with low liquidity after discussing early on, then ended up waiting a while to build a little more before finalizing)

If someone hasn't already given you the plug, PM me and I will connectyou with my banker (you would get $200 and I would get $300 if you did refi)

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Mon Sep 18, 2017 1:09 am

I'm in the process of doing that, but from a Sofi loan. Refinanced immediately when I entered repayment. From the FRB bankers I talked to it sounded like they handle refis from other refinancers a ton. Not surprising since their rates are so much better but they are a little less widely known + that 15% liquidity is a pretty steep barrier for the first year.

It's worked out well. Cut both my payments and interest rate pretty substantially for the first year. It's been easier to get my efund built up and I've made more progress on the principal than I would've if I'd just stayed on fedloan this year. If I'd been able to do FRB from the beginning I would have, but a) didn't know about them, and b) lol at getting 15% liquidity around right off the bat unless you're coming off a clerkship.

Question for those wise to FRB, and why I'm posting anon - so, something the FRB guy let slip when we had a call to talk through stuff was that their loans are technically not student loans. Does that mean they become dischargeable? I have little to no understanding of where that particular attribute of student loans comes from, but I had it in my head that it's statutory rather than contractual. No plans to declare bankruptcy, ofc.

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JenDarby
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Re: Student loan payments: get advice and actual numbers here

Postby JenDarby » Mon Sep 18, 2017 7:27 am

^ I've wondered this same thing but don't have an answer. He's right that they aren't student or educational loans. It is classified as a personal loan.

I didn't give it much more thought than that though since I don't expect to be bankrupt in the next 9 years.

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Re: Student loan payments: get advice and actual numbers here

Postby Anonymous User » Mon Sep 18, 2017 7:42 am

JenDarby wrote:
Anonymous User wrote:A bit of advice needed on refinancing.

I am a new associate in Big Law in NYC and am looking to refi about $180k in loans. I'm very interested in First Republic due to their very low fixed rates but currently do not have their requisite liquidity requirement (15% of overall loan balance). I would like to refinance with CommonBond on their 10-year hybrid which offers fixed for the first 5 years and variable for the second 5 years. The plan would be to build liquidity on the side to meet First Republic's requirement and have them refi my CommonBond refi in Year 3 or 4 and thus never get to the variable period.

Does this sound like it would work? I've spoken with CommonBond and they said people refinance their CommonBond loans all the time but I would like a disinterested party's opinion.

FRB wasn't big when I did my refi with commonbond, but that's basically what I did. I was with commonbond for 1.5 years before moving to FRB

Have you talked to an FRB banker? Sometimes they are flexible with liquidity requirements etc, so it never hurts to give it a try (I came close with low liquidity after discussing early on, then ended up waiting a while to build a little more before finalizing)

If someone hasn't already given you the plug, PM me and I will connectyou with my banker (you would get $200 and I would get $300 if you did refi)


Thanks, this is really helpful. When I spoke with FRB they sounded like the 15% was a hard requirement but I'm not even in the ballpark right now so I think the CB hybrid is the route I'm going to take for now. Happy to use your FRB banker when the time comes to refi with them though.

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Mr. Peanutbutter
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Re: Student loan payments: get advice and actual numbers here

Postby Mr. Peanutbutter » Mon Sep 18, 2017 9:07 am

JenDarby wrote:^ I've wondered this same thing but don't have an answer. He's right that they aren't student or educational loans. It is classified as a personal loan.

I didn't give it much more thought than that though since I don't expect to be bankrupt in the next 9 years.

I think the bankruptcy code incorporates the IRS's definition of student loan iirc, so no, it probably isn't a student loan for purposes of discharge, but yeah not sure I'd wanna test that

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bk1
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Re: Student loan payments: get advice and actual numbers here

Postby bk1 » Mon Sep 18, 2017 12:22 pm

Some student loan blogs I've seen assume it is dischargeable in bankruptcy (e.g., https://www.whitecoatinvestor.com/first ... financing/), though I'm not sure they're right. Pre-2005, private student loans were dischargeable. 26 USC 221 (which 11 USC 523 uses for definitions) now says that the term "qualified education loan ... includes indebtedness used to refinance indebtedness which qualifies as a qualified education loan." The only exception in 221 are for loans from relatives or through employers.

My glance at that made me think they are not dischargeable, but I haven't looked at it any closer.

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Mr. Peanutbutter
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Re: Student loan payments: get advice and actual numbers here

Postby Mr. Peanutbutter » Mon Sep 18, 2017 12:33 pm

Again, haven't done a deep dive, but I remember a while ago upthread there was some convo about this and FR didn't qualify because refinancings under that definition have to come with certain protections that FR doesn't offer

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JenDarby
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Re: Student loan payments: get advice and actual numbers here

Postby JenDarby » Mon Sep 18, 2017 12:57 pm

hopefully whatever poster that refinanced with FRB and declares BK first will come back and let the rest of us know the outcome

clerk1251
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Re: Student loan payments: get advice and actual numbers here

Postby clerk1251 » Wed Sep 20, 2017 9:41 am

Anonymous User wrote:I'm in the process of doing that, but from a Sofi loan. Refinanced immediately when I entered repayment. From the FRB bankers I talked to it sounded like they handle refis from other refinancers a ton. Not surprising since their rates are so much better but they are a little less widely known + that 15% liquidity is a pretty steep barrier for the first year.

It's worked out well. Cut both my payments and interest rate pretty substantially for the first year. It's been easier to get my efund built up and I've made more progress on the principal than I would've if I'd just stayed on fedloan this year. If I'd been able to do FRB from the beginning I would have, but a) didn't know about them, and b) lol at getting 15% liquidity around right off the bat unless you're coming off a clerkship.

Question for those wise to FRB, and why I'm posting anon - so, something the FRB guy let slip when we had a call to talk through stuff was that their loans are technically not student loans. Does that mean they become dischargeable? I have little to no understanding of where that particular attribute of student loans comes from, but I had it in my head that it's statutory rather than contractual. No plans to declare bankruptcy, ofc.


When I refinanced with FRB, I looked into this as well, as I found it a bit surprising, and from everything I could tell - the answer is yes, it becomes dischargable. It's likely that this is why they have such specific requirements for the people they approve (high credit score, some liquidity, two years of work experience in their field, etc).

clerk1251
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Re: Student loan payments: get advice and actual numbers here

Postby clerk1251 » Wed Sep 20, 2017 9:43 am

clerk1251 wrote:
Anonymous User wrote:I'm in the process of doing that, but from a Sofi loan. Refinanced immediately when I entered repayment. From the FRB bankers I talked to it sounded like they handle refis from other refinancers a ton. Not surprising since their rates are so much better but they are a little less widely known + that 15% liquidity is a pretty steep barrier for the first year.

It's worked out well. Cut both my payments and interest rate pretty substantially for the first year. It's been easier to get my efund built up and I've made more progress on the principal than I would've if I'd just stayed on fedloan this year. If I'd been able to do FRB from the beginning I would have, but a) didn't know about them, and b) lol at getting 15% liquidity around right off the bat unless you're coming off a clerkship.

Question for those wise to FRB, and why I'm posting anon - so, something the FRB guy let slip when we had a call to talk through stuff was that their loans are technically not student loans. Does that mean they become dischargeable? I have little to no understanding of where that particular attribute of student loans comes from, but I had it in my head that it's statutory rather than contractual. No plans to declare bankruptcy, ofc.


When I refinanced with FRB, I looked into this as well, as I found it a bit surprising, and from everything I could tell - the answer is yes, it becomes dischargable. It's likely that this is why they have such specific requirements for the people they approve (high credit score, some liquidity, two years of work experience in their field, etc).


One more thing to note though - since it is not a student loan anymore, the interest cannot be written off on taxes. This is really only applicable if you make less than 80k a year, but still something to note.

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Hikikomorist
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Re: Student loan payments: get advice and actual numbers here

Postby Hikikomorist » Wed Sep 20, 2017 9:48 am

clerk1251 wrote:
clerk1251 wrote:
Anonymous User wrote:I'm in the process of doing that, but from a Sofi loan. Refinanced immediately when I entered repayment. From the FRB bankers I talked to it sounded like they handle refis from other refinancers a ton. Not surprising since their rates are so much better but they are a little less widely known + that 15% liquidity is a pretty steep barrier for the first year.

It's worked out well. Cut both my payments and interest rate pretty substantially for the first year. It's been easier to get my efund built up and I've made more progress on the principal than I would've if I'd just stayed on fedloan this year. If I'd been able to do FRB from the beginning I would have, but a) didn't know about them, and b) lol at getting 15% liquidity around right off the bat unless you're coming off a clerkship.

Question for those wise to FRB, and why I'm posting anon - so, something the FRB guy let slip when we had a call to talk through stuff was that their loans are technically not student loans. Does that mean they become dischargeable? I have little to no understanding of where that particular attribute of student loans comes from, but I had it in my head that it's statutory rather than contractual. No plans to declare bankruptcy, ofc.


When I refinanced with FRB, I looked into this as well, as I found it a bit surprising, and from everything I could tell - the answer is yes, it becomes dischargable. It's likely that this is why they have such specific requirements for the people they approve (high credit score, some liquidity, two years of work experience in their field, etc).


One more thing to note though - since it is not a student loan anymore, the interest cannot be written off on taxes. This is really only applicable if you make less than 80k a year, but still something to note.

Does anyone know the tipping point for at what amount of debt it's better to wait to refinance until after your stub year? Assume a 5.5% unrefinanced rate and a 5-year plan with FRB.

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Mr. Peanutbutter
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Re: Student loan payments: get advice and actual numbers here

Postby Mr. Peanutbutter » Wed Sep 20, 2017 10:00 am

Refinancing gigantic student loans before you even know if you’ll make it 5 years in an industry notorious for attrition is a decision driven by more than a simple formula. I don’t have the risk tolerance to give up the fed protections rn (and the psychological aspect of not worrying about it for now helps too)

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Hikikomorist
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Re: Student loan payments: get advice and actual numbers here

Postby Hikikomorist » Wed Sep 20, 2017 10:08 am

Mlk&Ckies wrote:Refinancing gigantic student loans before you even know if you’ll make it 5 years in an industry notorious for attrition is a decision driven by more than a simple formula. I don’t have the risk tolerance to give up the fed protections rn (and the psychological aspect of not worrying about it for now helps too)

I agree with this, but I think I'm at a debt level where I'll have to pay it back no matter what. Haven't looked at it that closely yet, though.

clerk1251
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Re: Student loan payments: get advice and actual numbers here

Postby clerk1251 » Wed Sep 20, 2017 10:13 am

Anonymous User wrote:A bit of advice needed on refinancing.

I am a new associate in Big Law in NYC and am looking to refi about $180k in loans. I'm very interested in First Republic due to their very low fixed rates but currently do not have their requisite liquidity requirement (15% of overall loan balance). I would like to refinance with CommonBond on their 10-year hybrid which offers fixed for the first 5 years and variable for the second 5 years. The plan would be to build liquidity on the side to meet First Republic's requirement and have them refi my CommonBond refi in Year 3 or 4 and thus never get to the variable period.

Does this sound like it would work? I've spoken with CommonBond and they said people refinance their CommonBond loans all the time but I would like a disinterested party's opinion.


The banker I worked with was super helpful with the liquidity issue, and he told me that if I have about 10% liquidity one one bank statement, he'd make it work. I refinanced $150k. I borrowed $10k from my parents for about one week, made sure it got into my bank account a few days before the monthly statement cut off, and then gave it back right after. My statement that month showed that I had about $15k in the bank (even though it wasn't there for long), and that was enough to get me approved. Especially seeing as you are in biglaw, you should be able to bank $18k in just a few paychecks. I'd strongly recommend you simply wait a few weeks and then refinance with FRB. You'll probably end up saving money in the long run and it will just be so much easier than having to refi elsewhere and switch.

clerk1251
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Re: Student loan payments: get advice and actual numbers here

Postby clerk1251 » Wed Sep 20, 2017 10:18 am

Hikikomorist wrote:
Mlk&Ckies wrote:Refinancing gigantic student loans before you even know if you’ll make it 5 years in an industry notorious for attrition is a decision driven by more than a simple formula. I don’t have the risk tolerance to give up the fed protections rn (and the psychological aspect of not worrying about it for now helps too)

I agree with this, but I think I'm at a debt level where I'll have to pay it back no matter what. Haven't looked at it that closely yet, though.


It's really more of a personal risk tolerance calculation you'll need to make. Figure out how much your payments will be, and for what term. Then figure out the bare minimum you'll need to make as a base salary to afford that. I refinanced when I was still in biglaw and then took a clerkship. I have personally managed to make $1200 monthly payments on a law clerk salary of about 60k and still get by day to day without touching any savings (lower COL city). Figure out what that number would be for you so you can feel comfortable knowing that if you got fired, at least all you'd need to make is 60k or whatever it is. If you have tons of loans and that number is much higher, then consider waiting.

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SmokeytheBear
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Re: Student loan payments: get advice and actual numbers here

Postby SmokeytheBear » Wed Sep 20, 2017 11:31 am

clerk1251 wrote:
Anonymous User wrote:A bit of advice needed on refinancing.

I am a new associate in Big Law in NYC and am looking to refi about $180k in loans. I'm very interested in First Republic due to their very low fixed rates but currently do not have their requisite liquidity requirement (15% of overall loan balance). I would like to refinance with CommonBond on their 10-year hybrid which offers fixed for the first 5 years and variable for the second 5 years. The plan would be to build liquidity on the side to meet First Republic's requirement and have them refi my CommonBond refi in Year 3 or 4 and thus never get to the variable period.

Does this sound like it would work? I've spoken with CommonBond and they said people refinance their CommonBond loans all the time but I would like a disinterested party's opinion.


The banker I worked with was super helpful with the liquidity issue, and he told me that if I have about 10% liquidity one one bank statement, he'd make it work. I refinanced $150k. I borrowed $10k from my parents for about one week, made sure it got into my bank account a few days before the monthly statement cut off, and then gave it back right after. My statement that month showed that I had about $15k in the bank (even though it wasn't there for long), and that was enough to get me approved. Especially seeing as you are in biglaw, you should be able to bank $18k in just a few paychecks. I'd strongly recommend you simply wait a few weeks and then refinance with FRB. You'll probably end up saving money in the long run and it will just be so much easier than having to refi elsewhere and switch.


Not to be the boy scout in the room, but that sounds kinda like fraud.

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Danger Zone
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Re: Student loan payments: get advice and actual numbers here

Postby Danger Zone » Wed Sep 20, 2017 11:48 am

Not really because it still shows access to liquidity

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SmokeytheBear
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Re: Student loan payments: get advice and actual numbers here

Postby SmokeytheBear » Wed Sep 20, 2017 11:51 am

Danger Zone wrote:Not really because it still shows access to liquidity


That's a stretch.

I don't wholly care, but I would suggest to OP to delete that post and suggest to others not to employ that strategy. If you default on the loans, that could become a material issue.

CknNgtz
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Re: Student loan payments: get advice and actual numbers here

Postby CknNgtz » Wed Sep 20, 2017 12:05 pm

Another FR refinancing question for a new biglaw associate - is the 2 years work experience a hard requirement? It seems FR allows a little flexibility with the liquidity requirement and I was wondering if they'd be similarly flexible with the 2 years WE.

Alternatively, I've seen people say that externships, clinics, summer associateships, etc. can count towards the 2 years in the industry. Is this true?

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SmokeytheBear
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Re: Student loan payments: get advice and actual numbers here

Postby SmokeytheBear » Wed Sep 20, 2017 12:08 pm

CknNgtz wrote:Another FR refinancing question for a new biglaw associate - is the 2 years work experience a hard requirement? It seems FR allows a little flexibility with the liquidity requirement and I was wondering if they'd be similarly flexible with the 2 years WE.

Alternatively, I've seen people say that externships, clinics, summer associateships, etc. can count towards the 2 years in the industry. Is this true?


Not hard. A guy in my group refied with them at the end of his stub year.

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bk1
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Re: Student loan payments: get advice and actual numbers here

Postby bk1 » Wed Sep 20, 2017 12:42 pm

SmokeytheBear wrote:
Danger Zone wrote:Not really because it still shows access to liquidity


That's a stretch.

I don't wholly care, but I would suggest to OP to delete that post and suggest to others not to employ that strategy. If you default on the loans, that could become a material issue.

Considering FR's formula nets out credit card debt against bank balances, I don't really agree with DZ on this one.

That said, people do this shit all the time (e.g., borrowing money from parents for down payment on a house and not reporting it on a loan). I'm sure some people get caught for it (only one I can think of is that bro on The Wire) but I suspect that's pretty rare.

Some of the underwriting guidelines are dumb though: e.g., joint bank account balances are counted at 50%, but credit cards are counted at 100% if you are the sole account holder and your SO is just an AU... which is how most credit cards work these days (and I personally wouldn't see it as all that bad to transfer to a bank account where you are sole account holder for a month just to avoid having your cash counted at 1/2).




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