Mustachians! This is my first post here. I've been looking into the FIRE lifestyle and exploring ideas, and came across MMM and have been spending all of my free time over the past month trying to absorb this game-changing information. In doing so, I found I need to make some serious changes if I want to retire early.
I'm 33 years old. I'm married and have two kids. I make a decent living; $120k/year and I live in an area with a low cost of living.
HOWEVER, I have been terrible with money. No, I haven't racked up a lot of credit card debt--I've kept that low. But I've financed a new truck a year and a half ago (Tacoma, 2WD). I've got a mortgage. And, I've not been shy of spending every dollar outside of a few thousand in an emergency fund.
I'm changing that. I've been sacking away every dollar possible for the past month. But now I have the question of what to do with it. I can pay off my debts and work towards owing nothing. I owe the following:
28 years left on $202k mortgage @ 4.5% interest. I have about $40k in equity. $1450ish/mo with escrow. No PMI.
4 years left on the newish truck, and I owe about $29k @ a 2% interest rate, and it's worth about $24k. $575ish/mo payment.
$3000ish on a 0% interest expensive-ass mattress
Yep, bad spending, I know. BUT, they are sunk costs. And now I'm looking at options for moving forward.
So, my mission: Acquire no new debt. Spend only on important things for now. The question is what to do with the leftover money.
Option 1: Throw all my extra money at debt. Pay off the truck. Drive the truck for another 15 years. When done paying off the truck, work on the mortgage. Pay off the freaking expensive mattress. Once all of this is done, years later, finally invest and begin the 10-year journey to RE!
Option 2: Throw all my extra money at debt. Save $ for a couple months, enough to get out from under the truck. Assuming I buy a $6k replacement and it costs me $4k to sell it, I'm out $10k. Shell out money to pay off the depreciation loss. Acquire inexpensive car with cash. Recoup the costs of change over two years of no payment (offset by increased cost of repairs/maintenance). Set aside some money to replace the $6k car since I drive a lot for work, and work on paying off the mortgage. Once all of this is done, years later, finally invest and begin the 10-year journey to RE!
Option 3: Accept the truck is a sunk cost. Accept that while I have debts, they are low interest rates. Make only minimum payments on everything and send every extra dollar to my TD Ameritrade no-commission-on-index-funds account, and earn greater interest on my money than I'm paying out in debt. Throw less money into investments, but at an earlier date. Begin the ?-year journey to RE!
So, to those who have been at it a while, or maybe have experienced a similar situation... What would you do if you were me?