I'm trying to determine if it makes sense for us to pay down either of our debts early using savings.
Current debt:
$7,800 @ 3.25% (2011 Outback) - paying $405/month, 21 months remaining
$4,000 @ 5.16% (student loan) - paying $150/month ($100 over the minimum), roughly 30 months at this pace
Savings:
$8,000+ liquid savings/emergency fund
$70k+ retirement
I am currently in school while my wife works (remnants of student loan from her master's degree), so our current net income is on the low end. I am taking out loans (not yet included above) to cover a portion of my current masters degree which I will complete in 1.5 years and expect a significant pay increase (plus we will finally be at 2 full time incomes).
From an interest perspective, paying off her student loan before the car makes more sense. But the saved interest on either of these debts will be fairly minimal in the long run, and not worth worrying too much about. Are there any other advantages to being loan free on the vehicle (ie. lower insurance) that I might be missing?
Thanks for your thoughts