I recently discovered this website and so far I love it! It has given me a source of hope that I can be FIRE. I am continuing to explore the website and the forums for ways/methods that suite my situation The information I
found still has be questioning whether or not I am doing the right things.I am in a unique situation.
I am a 31 yo male, married, 1 child (3month old). The wife and I both work full time with a combined base salary of $220,000 ($11,420/mo take home). We both graduated 4 years ago with substantial student loan debt. Substantial!
Her student loans
13 different loans ranging from 1.86 - 8.00%
Total :$168,500
Weighted average interest rate: 6.42%
Min monthly payment: $990
My student loans
8 different loans ranging from 5.05-6.55%
Total $120,000
Weighted average interest rate: 5.93%
Min monthly payment: $735
Total student loan debt: $288,500
Total monthly payment: $1,635
I switched the repayment plan from 10year to a 20y payment. We got interest rate reduction for autodraft. So instead of autodrafting the close to $5,000 per month (10yr repayment), we autodraft $1,635 (20y repayment) and I go in every month to pay $3,365 to the highest % loan. This will keep us on 10y repayment plan but I have more control over my money. I can direct it at the high % loans. I will get $12,000 student loan reimbursement for the next 3 years from my employer.
2 years ago we moved from a rental house to a house we purchased in a great school system for our children (so we don't have to send our children to private school). We owe $234,000 @ 4.375% on the house and our monthly payment is $1675 (mortgage & property taxes).
We owe $26,000 on 1 of our cars and own the other car. Monthly payment $420 @ 1.49%. I believe Dave Ramsey says that if you owe more than 20-25% of your income to an auto loan, you should sell the car. Ours is about 12% of our income and we really don't want to sell the car because we need a reliable car that will last us a long time.
My employer matches 1:1 up to 5% for my retirement TSP. That is free money so I am doing 5% roth contribution to my TSP (current balance $33,000). This has me putting away 10% of my salary to my retirement My wife's employer gives her 7% of her salary regardless of what she contributes, and we are currently not contributing to hers.
We are in the process of rolling over our 401k with previous employers into a rollover IRA with vanguard, which will total $42,000. I haven't researched which funds to put the money into yet. Any suggestions?
We started using YNAB this month. We have a 1 month emergency fund and are living off the previous month's income. So effectively we have a two month emergency fund if something were to happen.
Total Debt summary
Student loans: $288,500 @ 6.22% ($1,635/mo)
Mortgage: $234,000 @ 4.375% ($1,675/mo)
Car: $26,000 @ 1.49% ($420/mo)
"Fixed" expenses (utilities, water, tv/internet service, phone,car ins)
Total: $900
Monthly fixed expenses + debt: $4,670 (this does not include the extra $3,365 to student loans, spending money, auto fuel, groceries, eating out, etc)
Savings summary
Rollover IRA: $75,000
Wife's saving: 7% of salary
My retirement: 10% (5% from me, 5% from employer)
2 month emergency fund
About $65,000 in home equity
So my questions are:
1. Our main focus is I want to pay off student loans by 2020 if not before. Because of this, we are only contributing 17% of our salary to retirement. Is this okay?
2. I think we can be debt free by 2023 if we continue to pay $5,000/mo to student loans and then pay extra $5,000 to the mortgage after the loans are paid off. But should we? Should we increase our retirement savings instead?
3. Very broad question: What are your thoughts about our situation? How would you handle it?
4. Help?!?