My big internal debate at the moment is whether my fiance and I (both 28 years old) should temporarily pause retirement contributions in order to wipe out a couple debts within 6 to 12 months. These debts include:
-Her car loan, which is 0% interest, $375/month, and has about four years left; and
-Her student loans, which have varying interest rates and total about $14,000.
Without any retirement contributions, we would have a monthly surplus of about $3,000 per month. I'm thinking we could use that to rapidly pay off her student loans (4 months) and then her car loan (6 months).
This idea appeals to me because it would greatly reduce my fiance's monthly expenditures. When we first met, she spent about $2,500 per month ($850 on student loans, $375 on a car payment). She is now down to about $1,900 per month after paying off all of her private loans. Getting rid of her car payment and her student loans would bring her down to $1,385/month.
That low monthly cost of living would leave us with about $2,500 in monthly expenditures while we earned about $9,200 per month. That would mean that we could quite easily max out 401k, traditional IRA, etc.
Basically, I'm torn between the current hybrid approach we have (some to retirement, some to debt) versus being able to concentrate all our efforts towards a singular goal.
Part of me thinks I'm taking a Dave Ramsey-esque approach with my idea--paying down the debt likely isn't the best mathematical approach, but it certainly seems more emotionally appealing.
Any thoughts?