I have taxes withheld as single with no dependents but I file as HoH with one dependent. I claim my brother and get the EITC as well as the exemption. I know I should probably adjust my withholding. Before I didn't quite trust myself not to blow that extra money, plus I was afraid of not having enough taken out. But I might adjust it for 2016.
That makes a huge difference! Why wait to adjust the W-4? If the case study spreadsheet calculations are correct (you should verify), your total federal income tax for 2015 will be ~$330. Get your money
now and use it to pay off those high interest debts.
I'd really like to keep my IRA at 100/month. I'm 26 so I have lots of compound interest time to take advantage of. Same thing for the taxable investment account.
See guidelines below. Current 10 year Treasury rate is ~2.3%, so a literal interpretation would indeed put the IRA ahead of the extra debt payment on the 6.8% loans. Not the 8.5%. I'd pay the debt, but admit it's a close call. The taxable investment, however, should not be considered until the debts are gone.
In the lists below, thinking "first your 457 (if you have one), then your 401k and/or 403b" wherever "401k" appears is likely correct.
Differences of a few tenths of a percent are not important when applicable for only a few years (in other words, these are guidelines not rules).
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)
6. Fund mega backdoor Roth if applicable
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.
WHY
0. Give yourself at least enough buffer to avoid worries about bouncing checks
1. Company match rates are likely the highest percent return you can get on your money
2. When the guaranteed return is this high, take it.
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs.
4. Rule of thumb: traditional if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between (or see
http://forum.mrmoneymustache.com/investor-alley/deciding-between-roth-and-traditional-ira-based-on-marginal-tax-rate/ if you want even more details on that topic.)
5. See #4 for choice of traditional or Roth for 401k
6. Applicability depends on the rules for the specific 401k
7. Again, take the risk-free return if high enough
8. Because earnings, even if taxed, are beneficial
The emergency fund is your "no risk" money. You might consider one of these online banks:
http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001 If your 401k options are poor (i.e., high fund fees) you can check
http://forum.mrmoneymustache.com/investor-alley/to-401k-or-not-to-401k-that-is-the-question-43459/ for some thoughts on "how high is too high?"
I do have $890 in a savings account. Do you think I should take any out of it to put towards my debt or leave it be? That's my emergency fund.
See point #0 above - I'd leave this alone.