Thanks to all who replied so far. I like the idea of not prepaying my mortgage at this point and instead slowly adding to my emergency fund and also increasing my 401k contribution every few months or so. We should be able to ramp-up our retirement savings, emergency fund savings, and college fund contributions once my wife re-enters the workforce. BTW, she's been earning some cash by babysitting neighborhood kids, which helps pay for some things. I probably have monthly expenses, including mortgage, of about $4k. So I should be able to save $2k/month. As far as retirement savings, should I continue to contribute up to my employer's 401k matching percentage, then contribute to a Roth 401k, or a Roth IRA? Or should I just increase my pre-tax 401k contribution to take advantage of the pre-tax accumulation of earnings? My current effective tax rate is low, about 6%. Last year my adjusted gross income was $99K and my taxable income was about $59k. Total federal taxes were $6k and state taxes were $5,200. Of course I don't know what taxes will be in retirement, but when my wife goes to work our taxable income may push us into a higher tax bracket. Should I contribute to a Roth 401K or IRA now to take advantage of my lower tax rate, then switch to the 401K when our income increases substantially?