Making progress paying off debt - continue this path or change focus?

[nonostash]

My husband and I have paid off about $40,000 of debt over the past year and a half (some back taxes, about $20k credit card debt and about $15k for 2 car loans).  It feels great to have all that gone, but we have about $19k of student loans left at 2.35% (min pmt $137/mo). 

We are 33, no kids, renters, have almost $10k emergency fund and less than $15k in retirement funds (several old funds and a current one - probably an entirely separate post for the questions I have with these!).

We had started out on the Dave Ramsey plan, but now we are not so sure where to focus our efforts.  I know we still have debt but it doesn't feel as urgent as the other debt did and we feel like we need to start investing, like yesterday, so that we don't have to work til 60!

What advice would you offer us?   Thanks in advance!

[Mayan]

Great job on the debt so far!  Assuming that your loans are fixed at their current rate, you're likely to do better by paying minimums, letting inflation decrease the value of the loan balance, and investing extra money elsewhere.  Whether or not that plan is right for you will vary.  Some things to consider are how debt averse you are, your job stability, and whether you have enough extra income to increase your retirement contributions AND pay extra on the student loans.  In your position, upping the retirement savings would be a pretty big priority for me before tackling the super low interest student loans

[apennysaved]

I would put at least the minimum in your 401k to get the maximum employer match (if you have one & have not done so already).  Then, probably set up a monthly automatic contribution to a Vanguard account if you really want some investments outside your 401k.  If you get any extra money through side hustles or bonuses maybe consider throwing that at the student loan.  This is what we did until the student loan got down to @$5K and then one of us got a bonus and we were able to knock out the remainder just because it felt good to not have it lingering.  Great progress!

[aj_yooper]

Wow, that is debt pay down!  You two are awesome savers.

Your student loan debt seems very manageable on a monthly basis.  I agree that now is the time to fill your retirement accounts.  If you have a company match for a 401k, I would put in the match to get that extra money.  Then, if you are eligible for a health savings account at work, I would explore that.  If done by the firm, you don't pay Social Security or any taxes on that money so that is a sweet deal.  After that, I would think about Roth IRAs. 

[nonostash]

Thanks for the feedback and the 'congrats'!

I have a 403b through one of my jobs, but I don't think a match is offered at all (adjunct college instructor) and my husband is self-employed (in a sense - he gets paid through a 1099 so we are setting aside taxes for him, although we get a lot of write offs so may have a chunk of that money left over when we do our taxes).

So, it sounds like we should just pay minimums on the student loans (or would you recommend maybe $250/mo?) and then contribute to my 403b up to a match if available (right now I put in a mandatory 7.5%), then a Roth IRA up to the $5500 max for each of us (if hubby is eligible, which I think he is) then to a Vangaurd account or back to the 403b? (I have some questions about index funds as well, maybe I should post them in the investing forum?) 

And what about building up our emergency fund first?  Do that with any extra money we bring in until we're at maybe 4 months?

As you can probably tell, I feel torn in many directions.  It was easy when we were just focusing on getting rid of all non-SL debt!

[Will]

So, it sounds like we should just pay minimums on the student loans (or would you recommend maybe $250/mo?) and then contribute to my 403b up to a match if available (right now I put in a mandatory 7.5%), then a Roth IRA up to the $5500 max for each of us (if hubby is eligible, which I think he is) then to a Vangaurd account or back to the 403b? (I have some questions about index funds as well, maybe I should post them in the investing forum?) 

And what about building up our emergency fund first?  Do that with any extra money we bring in until we're at maybe 4 months?

As you can probably tell, I feel torn in many directions.  It was easy when we were just focusing on getting rid of all non-SL debt!

In certain cases, one could use a Roth as an emergency fund.  Google it for details.

[nonostash]

And what about building up our emergency fund first?  Do that with any extra money we bring in until we're at maybe 4 months?

As you can probably tell, I feel torn in many directions.  It was easy when we were just focusing on getting rid of all non-SL debt!

In certain cases, one could use a Roth as an emergency fund.  Google it for details.

Ah, I think I've heard that before.  Will research that option.  Since we don't own a home, have fairly stable jobs, no kids, and have some other sinking funds that could be raided and expenses that could be dropped, we are probably fine with the amount we have in emergency fund on hand and could 'store' another chunk of it in a Roth.  Thanks for that suggestion. 

Also, we have private health insurance, not through an employer, so would the tax savings still apply with the HSA?

[aj_yooper]

Here is a link for a self-employed HSA:  http://theselfemployed.com/insurance/health-savings-accounts-for-the-self-employed/

You might want to look into the Affordable Care Act to see if any of the plans would work for you.  If you had a high deductible plan there, you could, I believe, set up a HSA, say through Vanguard.  Good luck.

[nonostash]

Thanks, I'll look into that as well.

One other possibly stupid question:  when I'm looking into "index funds" at Vanguard, am I looking for mutual funds or ETFs?  I was on their website trying to figure out the difference...

Looks like I've got lots of homework to do! :)

[aj_yooper]

Mutual funds, preferably Vanguard index funds or the ETF.  The ETF is a way to buy the fund in smaller amounts than say $3000 to start a fund.  So you could be at a lower cost; they are efficient ways to buy index funds.

A Total Market Stock Index ETF would mean you are buying the entire stock market; it is a good way to start.  Read up on the Vanguard site and soon you will be a pro. 

[TrulyStashin]

I'm the contrary voice here.   You have a 10k emergency fund which is earning less than 1% interest but student loan debt costing more than twice that.  I'd pull about $8k from that emergency fund and pay off/ down the student loan debt.  Use "springy debt" as your emergency fund until all debts are paid off  http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/  That would leave you with $11k in SL debt.

With no employer match for your retirement contributions I'd skip it for one more year or maybe 6 months (whatever time it takes to get debt free).  Shovel every spare dime toward that student loan and get it paid off.  Given your track record, you can do that pretty quickly.   It will be easy to catch up on retirement contributions once you're debt free.

A cardinal principle of Mustachianism is that DEBT IS EVIL.  Perhaps you've lost sight of this because the interest rate is low.  But debt is evil not just because of the interest you're paying but because of the lack of freedom it imposes on your life.   Get free first, then build your stash.