Sorry this might be a tad long....
Since finding MMM about 18 months ago, I have made a lot of progress. I am not sure I am optimized though, and was hoping for some MMM expertise on my situation.
Details:
Job: 36 yo Attorney for a non-profit in low COL area. Single. No kids.
Salary (starting Jan. 2015): $72000/year – Job is very stable and for the most part quite tolerable :)
Efund: 10K
403b: 38K (good options, Vanguard, etc)
Roth: 10K
Student Loans:
- Federal: 90K @ 4.75% (on IBR, min. payment around $400, 6 years remaining until PSLF)
- Private: 49K @ 3.13% (variable, minimum payment $258)
Mortgage: 50K remaining @3.25%
Living expenses before loan expenses: ~$1800/month, $21,600/year
Total Net Worth: -$41K, saving rate around 50%
For purposes of this discussion, let’s assume the living expenses will stay the same in 2015. My goal for 2014 was to reduce my AGI as much as possible for both tax purposes and IBR calculations. This may or may not be the optimal move going forward, but I don’t know. That is why I need you all!
In 2014 I divided my income ($63000/year) as follows:
Living Expenses: $1800/mo
Loan Payments/emergency fund savings: $1400/mo ($800 to private, $400 to fed, rest to Efund)
403b contribution: $1000/mo + emp. cont.
Here are some options for 2015. I am not entirely sure what my new paycheck will look like at this point.
1. Maintain 1K contribution to 403B (employer matches 5%) – should I increase?
2. Increase private student loan payment from $800 to $1K/month or more – kill loan?
3. Reduce private student loan payment to $500/month or less and invest leftover funds in taxable accounts, since interest rates are so low on SLs?
4. Take half of emergency fund and remaining $500 if I do #3 and invest in Vanguard Lifestrategy Fund as joint emergency/taxable account (moving away from large emergency fund)
5. Other options?
I would like to get rid of the private loans, but I also want to put my money to work. I would like to increase my taxable/efund accounts a bit, but I am not married to the idea. I have a 20K credit card I could use in case of true emergency, but I also will need access to cash for a variety of things in the next 5 years or so (new used car, electrical/plumbing work for house, etc). I also have family support in case of true emergency. So my emergency fund is really a sinking fund for future expenses.
What would you do? How do I optimize my income, loan payments, and savings?