My wife and I are just starting to grow our mustaches after years of me shaving both of our faces (i.e. she wanted to save, but I didn't...). Now MMM and my wife finally have me seeing the light and realizing just how much money I have wasted which has really shocked me into action. We've improved our cashflow by about $2,000/ month by various means, and now I am very focused on paying off some debts. My problem right now is I'm not sure in which order I should pay off this debt. Our positive cashflow each month will now be around $2,000-$2,500, and we are hoping to add to that through paying off the below debts (basically the snowball method, but not necessarily paying off the smallest ones first.
We have about $15,000 in savings and that should grow by at least $4,000 over the next month due to refinancing our mortgage (which means we'll be missing a mortgage payment plus getting back $2,000 in escrow)
With our new mortgage, we will owe about $278,000 for a monthly payment of just under $1,600 at 4.125% interest - we're doing a 30 year but planning on accelerating the payments on this once the other debts are paid off in the hopes of paying it off in about 10 years from today
We just refinanced my wife's car ($17,100 total for a 2012 Honda Civic worth much less) at 3.45% for 48 months for a $381 monthly payment
My wife has a 7 year 401k loan of $11,820 at 4.25% interest that has a bi-weekly payment of $111 (we have been planning on paying this off first since it is the smallest and now have the money saved up to do so) - also, it seems like paying off the 401k loan will have an 11% payback (4% interest savings plus 7% that money can now earn on average in the stock market)
I have a 30 year (I know...) 401k loan of $49,000 at 4% interest that has a monthly payment of $250 - this feels like slavery at this point because I am chained to my current job until this is paid off and so emotionally I want this paid off ASAP but the monthly savings is pretty small
I have a car loan payment of $505 month for a 2013 Nissan Altima (35+ mpg, so not terrible on that front) at 3.69% interest and still owe about $23,800 on it
We owe my parents about $4,700 at 4% interest over 7 years for a monthly payment of $68
Lastly, neither of us are fully funding our 401k's. I believe we could do up to $18,000/year by law, but I did about $13,500 last year and she did $8,400. My thought is we will keep roughly the same %'s for the next few years while we pay off the non-mortgage debts and then go up to the maximum in 3 years when the other debts are paid off.
Sorry, but one more consideration - we are thinking about solar panels which would cost about $18,000 out of pocket (after tax credit) and even if we financed it would help us come out ahead by at least $50/month over our current electric bill averages. After reading MMM, I am thinking maybe we need to save up that money before buying it, but it would probably mean waiting for 2-3 years to get solar by which time the tax credits will be gone (12/31/16 expiration) so it won't be nearly as good of a deal. Would it be so wrong to finance this since it is generating positive cashflow?
Thanks in advance for your time to read this and give us some guidance!
Jeremy