My husband and I are both master degree holding engineers pulling in great salaries around the age of 26. Along the way we have racked up debt but have never worried about monthly payments because our take home completely covers it and we dont spend a lot otherwise. (For example we have never had cable and still do not have smartphones). Now, unfortunately my Grandpa passed away but he left me an inheritance. I now have $240K sitting in a low interest savings account (yes horrible I know). I am going to be sitting down with a financial adviser in the next coming weeks (to interview/see if we are on the same page) but I also would like this amazing communities ideas. We are not fully growing our mustaches but we do have a lot in common, lots of 401K contributions and an HSA are just a part of our paycheck with no thought and we really don't spend a lot of money. We would rather play board games and drink some wine with friends than go out to a bar (score for us).
Here is the mountain of debt we have with interest rates: DH took out a lot of student loans and I have already paid the highest interest ones off, 8-9% ones :(
Principal Balance Interest Rate Monthly Payments
$1,470.20 2.35% $50.50 (M)
$2,843.38 6.80% $38.67 (M)
$4,607.02 5.75% $61.25 (M)
$7,174.26 6.55% $98.16 (M)
$2,499.29 5% $31.92 (M)
$152.13 5% $40 (M)
$3,567.56 5.55% $52.31 (H)
$3,633.35 5.55% $53.27 (H)
$2,482.62 1.10% $30.72 (H)
$4,525.27 5.75% $87.85 (H)
$1,923.28 6.55%
$14,218.86 6.55% $197.13 (H)
$8,766.01 6.55% $121.53 (H)
$7,185.54 4.75% $61.91 (H)
$10,724.42 6.25% $82.65 (H)
$17,311.35 4.75% $121.08 (H)
$9,259 $74 (parents paying with old bonds of his)
(M) are mine, (H) are his. Some of them have ridiculously low interest rates so I would think investing rather than paying those off would be the smarter decision. Student loans are also tax deductible (which I know doesn't mean much but may help prioritize the payoff). Which ones should we pay off/which should be leave?
We also both bought brand new spanking cars... totally against the mustache way, I know. We looked for used cars and failed especially when it came to the truck (all beaters/not taken care of) and we were able to get it under invoice because of a relative working at ford so we did the math where we didnt have to pay for the depreciate right away. We will run these vehicles into the ground so consider it worth the money... but of course we put them on a loan.... Yes the truck is used as a truck a lot but we drive the smaller one to save money and carpool.
Principal Balance Interest Rate Monthly Payments
2011 Hyundai Elantra: $8,997.00 5.25% $232
2013 Ford F-150 $18,764.00 3.09% $400
The last twist to this story of 'affordable' debt is that we have a mortgage. I saved up money since high school for a house. I love it, best purchase ever made. BUT we put 5% down and have PMI. APR of 4.75%. To get rid of the PMI ($148/month) we would have to throw around $33,000 at the mortgage (would also reduce payoff time and interest as you all know). BUT Bank of America holds our loan and they SUCK so we are not sure if they will actually remove the PMI since I have seen stories of them not doing so. (Would try to get something in writing from them before spending the money?).
So after all that information. Do you all have suggestions? What to pay off, what to invest? We have $240,000 to play with. If we get monthly payments of debt down we will not be spending it, it would allow me to get to my level of saving once again. If invest, give something to start with. I have read a LOT over the last week on this site, seems like I should get a Vanguard account with some index funds?
THANK YOU if you made it this far. You all rock!