Help me think through this clearly.
Background: In 2.5 year we're pulling the kids from school, taking a sabatical, hitting Spain, Thailand, and Costa Rica. We're paying for plane tickets out of airline miles. All 3 countries are fairly inexpensive, compared to the US. And we will try to get a renter for our house while we're gone. I don't know what a budget for all that should look like, but I'd guess it should be cheaper/as expensive as our normal monthly budget. DH will be on half pay during that time. Currently we save 45% of our income. No credit card debt, house will be paid off in 5 years.
Getting to it: Because we're now within 2.5 years of using the money, I transfered 12k out of VTSAX. I could do a CD, or high yield saving account.
OR why couldn't I just kill the student loan? It's $9750 at 3.5%. The $124 monthly payment just a small part of our budget. When my dollars were in the market, holding on to that loan was the mathematically smart thing to do. But now that I'm looking at rates that only match inflation, why shouldn't I just finish off the loan instead of earning 1.85% in a savings account.
The money is fungible. We're maxing a 403b, an HSA, and some additional in the Roths. As far as retirement savings we're way ahead of the game, and could just not contribute that sabatical year. I feel like our circumstances are really flexible. (We could just come home early, or cut out a country, if we're running low on money) So do I need that money sitting around? For over 2 years? Losing value?
What am I missing? Am I thinking about this the right way? Kill that loan?
