Interest or Cash Flow?
Hello all. I recently became introduced to your fine community, and need some face-punching.
Life Situation: Married, one dependent with another coming in July. Me: 28, Wife: 29, Kid 1: 5 months. Marginal tax rate: 15% Fed, 9% State
Gross Salary:
Me: $3,520 Base, plus overtime from Feb-April and Aug-Oct (roughly 10k annual)
Wife: $4,223 (cushy state job)
Pre-tax Deductions:
Me: HSA of 281.25 a month
Wife:
Union Dues: 61.32
Dependent Care FSA: 416.00
Parking FSA: 70
Dental Ins.: 5.33
Health Ins.: 60
Misc: 4
Other Ordinary Income:
(Very) Side Hustle: Part out Miatas. Rougly $2k net a year for tax purposes.
Budgeted Net Income: $5,450
Budgeted Expenses:
Mortgage 1,250.00 (859.59, 382.52 Escrow, includes PMI, budgeted high for inevitable tax increases)
Electronics 30.00
Utilities 225.00
Home Repairs/Maintenance 160.00
Gasoline 180.00
Cell Phone 70.00
Internet/Cable 67.00
Insurance 100.00
Supplies 200.00
Grocery 300.00
Entertainment 100.00
Student Debt 784.19
Education 100.00 (working towards licensure in my field)
Clothing 50.00
Medical 10.00
Miscellaneous 105.00
Automotive Repair 80.00
Tithe/Giving 583.00
Extra to Debt 508.63
Auto Payment 527.18
Assets:
My 401k: roughly $1,800, all from employer non-elective 3% safe harbor contribution
Personal Residence: Appraised in Oct. at $206,000
Emergency Fund: $2k
Savings for Future Expenses: $4,900
Liabilities:
Mortgage:
Current Balance: 182,261
Rate: 3.875
Term: 30 years (just refinanced one year into original mortgage to get a lower rate)
Payment: 1,242.11 including escrow (See above)
My Fed Student Loans:
Current Balance: 7,990
Rate: 5.5-6.5 depending on loan
Payment: 158.xx
Wife Fed Student Loans:
Current Balance: 16,162
Rate: 5.5-6.5 depending on loan
Payment: 207.33
Wife Private Student Loan:
Current Balance: 22,517
Rate: 4.25 (VARIABLE)
Payment: 169.25
Wife Private Student Loan:
Current Balance: 26,213
Rate: 4 (VARIABLE)
Payment: 201.61
Wife CC:
Current Balance: 844
Rate: 0 (forever on current balance)
Payment: 15
Auto Loan 1 (FACE PUNCH):
Current Balance: 11,830
Rate: 2.99
Payment: 283.43
Term Left: 3.5 years
Auto Loan 2 (FACE PUNCH):
Current Balance: 13,768
Rate: 2.49
Payment: 244.67
Term Left: 5 years (Recently purchased)
Specific Questions:
1. We are currently focusing our extra cash flow towards paying down my Federal student loans due to the higher interest rate. Should we instead focus on the auto loans to free up cash flow and give us vehicular flexibility? While our most recent purchase will serve our needs for a decade or more, the earlier purchase is a little small for our growing family (hence the most recent purchase).
2. Should we look into refinancing my wife’s student loans? This would get us a lower rate on the fed side, but probably increase the rate on the variable rate loans. However, we would go for a fixed rate loan which would make me feel a lot better.
3. Included in the $4,900 savings for future expenses is a little over $2,200 for future home repairs. This balance usually grows by the $160 a month in our budget. Our home was built in 2001, do you think this is a good idea, or would you think it is overly conservative given our current debt situation?
Thanks for your advice!