I've come quite a ways in the 14 months since this case study. Wife and I cut expenses largely by getting rid of many categories (television, phone, beer, restaurants, etc. etc.) and rolling that into our $200/month we each get to allocate as desired, which eliminated much non-essential spending. A sizable amount of "play" money but it serves our needs given that most any luxury we can't agree on has to come out of it. Anyway, I've knocked out the $17.5K family loan, kept some of the low interest debt, and invested the difference in what seems to be mostly doctors bills regarding my first son's birth!
Anyway, our net worth went from $32K to $77K in our first 14 months in the cult on an $81K gross income. Now that all of the doctors bills are paid and the emergency fund replenished, I need to decide where to put our remaining ~$1350 monthly after-tax surplus.
Options - 401K. Plan kinda sucks and I'm already maxing the match. Meh.
IRA - We have ~11K in a Roth that I plan to leave there since the contribution can be accessed without penalty if the worst happens. I'd like to fund a traditional IRA instead, with both the wife and myself that's $1050/month.
Mortgage - We're paying PMI. Owe $139675. Monthly payment is $1508 ($402 in escrow, insurance around here is horrible) 3.75% interest. PMI is $65.87. Need the balance to get to $128000 or so and then we don't pay the PMI anymore. My wife would like to pay this down until we no longer pay PMI.
Auto - Owe $9500 on the car @ 2.2%. We average about 38.5 MPG, so it isn't horrible except for the full coverage and ridiculous rate of depreciation. One option is to pay this off and drop the full coverage. We could get rid of the car which I think I could get $13.5k or so for, but the only car my wife would be interested in that is on the "Frugal" list would be a 5-speed Vibe, and I can't really find one around here. I did find one at a dealer, but they wanted $14k for a 70K mile 6 year old car, so fuck them.
Student loans - currently at 0.8% interest. I don't particularly feel like paying that off, and it's only a balance of about $5200.
It looks to me like I can save $1600 on taxes by maxing the IRAs, but would save on PMI now and for many months to come by paying that off. I think the math favors IRA, but I'd like some thoughts on this.