Pay Debt or Invest - I am a new to it all!

[mac91red]

Good Morning - I have been trying to read the forums and the posts to come up with a good strategy for my family.  I've always considered myself more conservative with my spending but by comparison I can tell I am far from where I want to be.  I am 34, married, with 2 children 8 and 5. 

Income me:  4000/Month after taxes and 401K contributions
Income wife: 1000/Month after taxes

Debt:
House - 125k 30 year at 3.75% (we've lived here for 4 years)
Rental house - 55k at 6% - bought a year before the housing market crashed - currently being rented for a wash.  Would love to sell the place as we still spend about 2k a year on various repairs.  I don't see this home with a future for rental income.
Auto - 12,000 at 2.45%
Student loan - 20,000 3.4%

Savings:
401k - 50K - currently contribute 4% of my income to get a 100% match from work.
Roth - 5500 - I just started a roth this year.
I usually keep a few grand in my checking acct during the year. 
My wife is self employed so we do not get any employer funded benefits.

I was hoping for some advise on if my focus should be paying debt as quickly as we can before trying to maximize savings?  I've read views from both sides of this argument.  My family lives at or below our means.  We don't try and buy the newest of everything but we also aren't completely living for the future either.  This is something we'd have to sit down and discuss as a family if that is the course we wish to take.  But also, any excess funds monthly go towards paying down the student loan.  Am i better off getting debt to 0 and then pushing all in on savings?  Should i do a mix of both?  Or would it be better to max out saving contributions each year and ride out our monthly payments on our debt?

I appreciate the time and the feedback

[GrowingTheGreen]

A few questions:

Can you sell your car, payoff the note, and purchase a used car for $3-5k?

Are you underwater on the rental?  If not, sell it.  Not only is it actually costing you money every year, but you're losing out on the opportunity to invest the money tied up in equity.

Do those two things and you're down to your house and student loans, both of which have an extremely low APR.  Max your Roth, get your 401k full match, then it's up to you whether to invest or pay off debt.  I say invest.

[mac91red]

The rental is under water - the house is worth 15K less than it was when i bought it.  We could sell the car however i am hesitant to do so.  During my life I have had very bad luck with used cars and even with the wealth of info out there today I am not good when it comes to auto repair.  it isn't a strength of mine.   

[boarder42]

Get rid of the rental.

Put the rest of your funds towards savings. All rates are low enough it doesn't matter

[GrowingTheGreen]

The rental is under water - the house is worth 15K less than it was when i bought it.  We could sell the car however i am hesitant to do so.  During my life I have had very bad luck with used cars and even with the wealth of info out there today I am not good when it comes to auto repair.  it isn't a strength of mine.

Don't sweat the used car.  Seriously. I've got an 05 Corolla with 140k miles. No issues other than normal oil/brakes/belt stuff.  Many people on this forum consider my car on the newer side. You can get a pretty reliable car for $5k.

[FrugalBuff]

I just sold a car with a loan to purchase a fuel efficient used car. I would recommend it. It's been 3 months and my family is already enjoying the extra cash to save.

You should check out the spreadsheet in the "How to write a case study," sticky. It has some advice on how to invest vs. pay off debt. It's also really useful for trying different financial what-ifs and seeing what kind of impact they'll have on your savings.