Hi MMM forum,
My wife and I are expecting our first child in the next couple of weeks. We recently made some big changes and I'd like some input on what to focus on in the next year or two. My wife will stay at home with baby so we don't have to worry about daycare. We recently purchased a condo FSBO in a nice area 2.5miles from my office (I now bike or walk every day). We also leased a car (honda accord) which was probably not the best idea but it was 0 down and 208 per month so I don't consider it insane and it will give us 3 years to reassess what we'll need ongoing based on whether we have more kids. My employer is also offering an HSA option for health ins this year so I'd like peoples' thoughts on that with having a newborn.
Assets:
140,000 in retirement accounts 90% stock index 10% cash (Keep some cash in Roth for job loss scenario)
4,500 in cash savings
2,000 in cash checking
116,000 condo (conservative estimate based on purchase price less a 6% commission if we were to sell)
2,000 paid off car
TOTAL ASSETS: 264,000
Debts:
18,500 @4.875% fixed (student loan)
23,000 @4.5% fixed (401k loan): I know I probably deserve a facepunch here but I did it to avoid PMI and my 401k does NOT require immediate payback in the event of leaving the company.
98,500 @3.75% fixed (Condo Mortgage)
TOTAL DEBT: 140,000
Income:
Take home pay (after 401k loan payment of 543 per month): 3,840/month
Monthly Expenses:
Mortgage: 457
HOA:240
Prop Taxes:200
Utilities: 100
Cellphone:38
Car Lease: 208
Car insurance: 93 (65 for new car, 28 for paid off beater)
Life Insurance: 40
Internet: 15
Student Loan Payment: 200
Gasoline: 40
Food:550 (on average)
Restaurants/Entertainment/Misc:250
TOTAL EXPENSES: 2431
Questions:
Wide open to suggestions on any of the above but specifically:
Should I sell our beater car and just drive the leased car/ride my bike? I think this is a yes since we rarely drive now that we live so close to everything but is there any value in hanging on to a paid off car particularly when you can't get much in resale value?
I have about 1400/month cash flow to work with and I am wondering what everyone thinks we should do:
I'm debating between one of the following options realizing that they are all good in their own way.
1. Get our emergency fund up to 15,000 so I can fully invest all the cash in our Roth accounts
2. pay off the 401k loan earlier
3. pay off student loans earlier
4. max out HSA and IRA and make minimum payments on 401k loan and student loan
I know mathematically I'm probably better off making minimum payments on debt and trying to max out all tax advantaged retirement accounts but is there something I'm missing? I don't hate debt but I certainly don't enjoy it either, particularly consumer debt.
I'd love to hear input from the community on idea to improve and/or things to consider as we have a baby and are still trying to pursue FI
Thanks!