Author Topic: Priorities  (Read 13953 times)

sassy1234

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Priorities
« on: October 24, 2013, 08:13:19 AM »
Hi Everyone,
I am struggling to set priorities for my saving and debt repayment.  This topic has been covered, but not with my details, specifically my low student loan rates.  I appreciate any advice. 

*My husband and I have $30,000 student loans, with 2.1 and 3.3 rates.  Over the last year we have brought this down from $60,000. 
*We are having our first child in April and will be paying a lot for day care
*We have $10,000 in retirement, not much
*We rent out our home in another state, and will sell it in 3 years or so.  Might make $5-10,000
*We rent in an expensive city, however our rent is less than what we would pay for a mortgage, as we want to buy a really nice house next.  We are comfortable in the rental that we are in and are fine staying here for the next 3-4 years max.  Our downpayment goal is $120,000.
*We plan on buying a nice used SUV in 10 months.  We have a sedan that will last another 5 years and by that time we will have a second kid, so we want the space a SUV gives.  Also, have a large dog. 
*We save/put towards debt about $5,000 per month
*Have about $10,000 savings.  Goal of 25,000 emergency fund. 
 

I have too many priorities and can't decide what is most important.  Emergency fund, pay off really low interest student loans, or save for a house/car, or invest?  I read so much on this topic and can't decide. 

What do you all think? 

mlipps

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Re: Priorities
« Reply #1 on: October 24, 2013, 08:29:45 AM »
I'm going to assume that if you are able to save/invest $5k/month, your AGI is over the $125k mark for deducting student loans. Even so, to me, making the minimum payments on the 2.1 rate is a pretty easy decision to me. The 3.3 is a little less so, but I personally would still feel comfortable putting it further down on my priorities list. If the entire $30k were at 3% interest, you're only paying $900/year in interest. With inflation hovering around 2%, I don't see any rush to tackle that. The only exception is if the payments will put your debt to income ratio high when you go to apply for a mortgage, but again, that seems unlikely.

As far as the house/car/emergency fund, why not combine all those goals into one? It's all cash that you need within a couple of years, so I don't see any reason you need to separate them out.

Between retirement & cash savings, I would definitely at least be maxing out your 401k's & IRA's every year. I'm sure you're at least in the 25% tax bracket, so the hit to your paycheck really won't be all that substantial. I really like this paycheck calculator: http://www.adp.com/tools-and-resources/calculators-and-tools/payroll-calculators/salary-paycheck-calculator.aspx to estimate what your new paycheck looks like after changing things like 401k contributions & withholdings.

Speaking of withholdings, make sure in 2014 that you adjust yours to account for your new bundle of joy (and congrats! :D). The extra exemption should decrease your taxes at least a little bit. You should also look into an FSA to pay for the daycare costs while you're at it. This withholding calculator for the IRS website is a big help to get those just right: http://apps.irs.gov/app/withholdingcalculator/.

Hope that helps!

sassy1234

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Re: Priorities
« Reply #2 on: October 24, 2013, 08:35:32 AM »
Thanks.  Yes, our total income is around $150,000.  We have both had big promotions in the last year, so all this extra money is new to us. 

Maxing out Roth and 401k is probably a good start. 

What do others think? 

madage

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Re: Priorities
« Reply #3 on: October 24, 2013, 08:41:50 AM »

*We plan on buying a nice used SUV in 10 months.  We have a sedan that will last another 5 years and by that time we will have a second kid, so we want the space a SUV gives.  Also, have a large dog. 


I hope you enjoy that bedpan and catheter.

I have two kids and a dog weighing over 80 lbs. We traded in our Highlander over a year ago in favor of a Ford Fiesta. We're getting along just fine. More than just fine when I think about the fact we're averaging 60% better fuel economy with the Fiesta.

lackofstache

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Re: Priorities
« Reply #4 on: October 24, 2013, 08:45:22 AM »
Get the match on the 401(k). I'd probably max out Roth's until you get to a comfortable spot & then start a Traditional so you can get the before tax money working for you. Pay the minimums on your student loans. Save the rest for EF/car/down payment. Once you have $25K, if you need a car, you can buy it. Then consider anything above that part of your down payment when you find the right place.

mlipps

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Re: Priorities
« Reply #5 on: October 24, 2013, 08:47:19 AM »
Get the match on the 401(k). I'd probably max out Roth's until you get to a comfortable spot & then start a Traditional so you can get the before tax money working for you. Pay the minimums on your student loans. Save the rest for EF/car/down payment. Once you have $25K, if you need a car, you can buy it. Then consider anything above that part of your down payment when you find the right place.

The phase out for a traditional IRA is $95k MAGI, and that's EXCLUDING your contributions. So they wouldn't qualify.

mlipps

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Re: Priorities
« Reply #6 on: October 24, 2013, 08:48:01 AM »
Thanks.  Yes, our total income is around $150,000.  We have both had big promotions in the last year, so all this extra money is new to us. 

Maxing out Roth and 401k is probably a good start. 

What do others think?

If you max out 2 401k's for $35,000 total, that would bring your AGI down to $115k, which would let you deduct the student loans. Get it on it! :)

sassy1234

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Re: Priorities
« Reply #7 on: October 24, 2013, 08:59:35 AM »
Thanks for the useful comments so far. 

Madge, "I hope you enjoy that bedpan and catheter.

I have two kids and a dog weighing over 80 lbs. We traded in our Highlander over a year ago in favor of a Ford Fiesta. We're getting along just fine. More than just fine when I think about the fact we're averaging 60% better fuel economy with the Fiesta." 

Personal choice.  What works for you is great.  It might not be what we want. 

madage

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Re: Priorities
« Reply #8 on: October 24, 2013, 09:10:42 AM »
Thanks for the useful comments so far. 
...

Personal choice.  What works for you is great.  It might not be what we want.


It's just a facepunch, it's what we do around here.

My point is that we also thought we wanted the SUV. Eighteen months in, we considered the more expensive insurance, the 2x cost of tire replacements, gas, etc and we found out it really wasn't worth the expense. Just trying to help others avoid making the same expensive mistake.

jpo

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Re: Priorities
« Reply #9 on: October 24, 2013, 09:24:05 AM »
Personal choice.  What works for you is great.  It might not be what we want.
How about a nice used minivan instead if you need that much space?

MsSindy

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Re: Priorities
« Reply #10 on: October 24, 2013, 09:57:24 AM »
Madge is really trying to get you to challenge your thinking about what you 'think' you 'need'.  This forum/blog isn't just about saving a portion of your income, it's really to get you to think about things differently.  When you say "we want to buy a really nice house next", this sends up a red flag that you're still in the "I want" stuff phase.  Right now, you're in good financial shape and you have options.  We'd hate to see you throw away those options by boxing yourself into fancy houses and vehicles.  You really 'need' a lot less than you think to be happy.  Just something to think about.

As for your question, since all your goals are in the future and they all consist of cash, it doesn't really matter what 'bucket' they go into - just keep expenses low and save like mad!

Forcus

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Re: Priorities
« Reply #11 on: October 24, 2013, 10:01:43 AM »
Agree with the above. The nice SUV and nice house (with 120k down payment I'm assuming either you are talking about a 500k house and I really hope you are writing from Canada at that price..) were key points. Also you didn't include anything on expenses. Lots of little leaks in the budget can amount to one big leak. You noted that you were putting $5k / mo towards debt which leads me to believe you have more than the school loan debt. If not, I'd taper down the payoff of the school loan debt to achieve the emergency fund goals, and prepping for the baby.

Stache In Training

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Re: Priorities
« Reply #12 on: October 24, 2013, 10:08:57 AM »
Saving 5k a month is great!  Look over the mmm blog to just see what other little savings you can squeak out. (but even if you can't just, that's fine once we run the math)  With the low interest rate on your student loans, I'd focus on getting your emergency fund up.  So pay the minimum payment on your loans, and then put the rest of that 5k towards your emergency fund.  I am sure your student loan payment amount is much less than this, but for the sake of simple math, lets assume your student loan payments are 1k per month.  So you can put 4k a month towards your emergency fund.  To go from 10 to 25k will only take 3.75 months. (15k divided 4k/month = 3.75 months)  It'll be even quicker if your student loan payment is less, which I would assume it is, since it's only 30k, and 2-3%.  So 4 months from now, you'll no longer have to save into your emergency fund. 

In other words, in 4 months from now, you'll have 4k+ a month to put wherever you want.  That's huge!  If you just want to be rid of your debt, it'll only take about 8 months to pay off, if all of that 4k goes towards it.  However as already stated, those are going up only at about the same rate of inflation.  So it may make more sense to start investing at that point.  (just depends on how debt adverse you are.)  I'd max out your retirement accounts, and since you are planning on buying a house soon, start saving for that.  4k a month will take 30 months to get to your down payment amount.  Make sure you're putting this into the highest interest-earnings savings account you can, if you're not investing it.  You might not want to invest if you're needing the money in just 30 months, but that's personal choice.

So in summary, put extra savings towards emergency fund.  Then extra can pay off student loans in only 8 months, if you want rid of that debt.  (that may be the way to go, if you are wanting to buy a house, this way you only are paying the mortgage instead of loans and mortgage) Then (or at the same time as paying off student loans) max out your retirement accounts.  After that, either invest or just save for your house, as long as you continue maxing your retirement accounts.

sassy1234

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Re: Priorities
« Reply #13 on: October 24, 2013, 10:14:14 AM »
Thanks for the thoughts on needs vs. wants.  But, some things in life are about personal choice.  We want a nice small used SUV, and a $500,000 house (as we live in one of the most expensive cities in the country).  It will get us a 3 bd, 2 bath in an amazing school district, so we avoid expensive private schools.   

"You noted that you were putting $5k / mo towards debt which leads me to believe you have more than the school loan debt."

We do not have any other debt.  The $5,000 is extra money each month.  We were putting that towards student loans, but are not just saving cash. 

willn

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Re: Priorities
« Reply #14 on: October 24, 2013, 10:20:05 AM »
Sometimes when there are lots of priorities, progress is slow on all, which gets discouraging.  To address that, I'd suggest intense focus on one goal at a time: First, eliminate the debt.  You've done great with that, 30K in a year, so you have less than a year left to be debt free. 

Cut the retirement back to the match, slam the debt, don't contribute to the emergency fund, in fact, maybe deplete it some to get out of debt.  If you are saving/paying 5K a month now, think what you'll do once you are debt free. You'll be able to save for a car and increase the emergency fund very rapidly.  Your thinking around what type of car doesn't matter now. You and your family can survive with your current car for a year, and once your emotions around saving and debt and finance are reset you may make a different decision.

Focusing on one goal at a time, in the beginning of a sea change of financial thinking, helps psychologically and gets you one fast victory after another.   Math usually isn't the factor holding people back--it is emotion and behavior around money that needs adjusting...

jrhampt

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Re: Priorities
« Reply #15 on: October 24, 2013, 10:52:08 AM »
I would prioritize maxing both of your 401ks first.  If you can still continue to pay down the student loans at a rate of $5k per month, then I would do that so that you can be debt-free by April when your child arrives.  This will give you more cash flow to help compensate for daycare expenses. 

As others have stated, I would think long and hard about whether you actually need an SUV or a house that fancy. 

sassy1234

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Re: Priorities
« Reply #16 on: October 24, 2013, 10:57:04 AM »
" I would think long and hard about whether you actually need an SUV or a house that fancy. "

Again, thank you all for comments about needs vs. wants.  This is clearly a personal choice.  Don't MMMers understand that?  Even Mr. Money Mustache owned a $400,000 house for a time being.  Also, in the city I am in, a $500,000 is not fancy.  It is actually a complete fixer-upper. 

I am really looking for advice on what to do first.  Student loans with low interest, or save cash for other things.  Thanks. 

jrhampt

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Re: Priorities
« Reply #17 on: October 24, 2013, 10:59:37 AM »
If you noticed, I did give you advice on what to do first.  But the SUV and house are also on your list, and I am indicating that they should be lower priority.

Forcus

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Re: Priorities
« Reply #18 on: October 24, 2013, 11:01:09 AM »
Well I won't pound on the SUV / house any further as you've made it clear what you believe and I'm sure others will fill the void :)

I agree with the above on having a lot of priorities makes it appear that things aren't happening. What I did to mitigate this is to look at it in terms of net worth. So for example, paying double on my mortgage each month, putting more in 401k, etc., means my balance in my checking / savings at the end of the month doesn't change that much, so it doesn't look like anything is getting better. But by concentrating on net worth, I see the reduction in principle on my home, along with the reduction in future interest cost, I see the match to my 401k by my employer. I have roughly the same savings I had a year ago but my net worth has gone from around zero to +$105k which is a much more accurate indicator of progress and more motivating to keep pushing forward.

MrsPete

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Re: Priorities
« Reply #19 on: October 24, 2013, 01:59:29 PM »
Well, you titled it correctly: Priorities.  Of course, that could also be called Opinions because we're not all in agreement on what items are most important in our lives. 

Clearly the expenses that come with the child are #1. You are going to have medical bills and day care bills; they're unavoidable.  Well, you might have options with the day care costs, but that doesn't seem to be a topic here. 

After the child's expenses, I see that you want a number of expensive items:

SUV
Really nice house
Second child
Retirement money
To be out of debt
Emergency fund

You're right when you say you have too many priorities, and some of these are wants rather than needs. 

Here's  how I'd address the question:  5, 10, 20 years down the road, which ones will still matter? 

The SUV will have cost you money in upkeep, and it'll be full of Cheerio crumbs and milk stains.  It's a depreciating asset.  5, 10, 20 years down the road, the SUV will not matter at all.  I'd rank it last-last-last on the list. 

The nice house.  I struggle to say put this one low on the list because I personally am in the starting process of building a custom house, and although it'll be small, it'll have high-end features.  The difference between you and me, of course, is that my children are all but out the door, and I have an ample retirement fund already saved, plus I'll have a pension in a few more years -- I'm farther along in life than you are, and I can afford the house.  I'd rank the house low on the list.  A really nice house is something towards which you work, not something you splurge upon while you're still new to parenthood and before you have a substantial amount for retirement.  Also, if you're going to have to borrow, you should consider moderate houses; to buy a really, really nice house -- and borrow to do it -- doesn't make sense on a frugal level . . . unless the house is a bigger priority than retiring.  Finally, if $500,000 is a fixer-upper where you live, I'd ask whether this is the best place for you to remain.  You could probably save a great deal more elsewhere.  5, 10, 20 years down the road, having a house will matter, but a moderate house will serve you just as well as a fancy, expensive house -- in fact, it'll serve you better because a moderate house payment will leave you money for other items in your life. 

Second child.  This is a personal thing.  I know that when I had my first, I definitely felt that I was not yet done.  If I had not had my second, I would feel incomplete on a level that nothing else could fulfill.  I'd rank the children as the #1 priority.  However, I feel compelled to mention that, although having children is not cheap, you can find many, many ways to cut their expenses without impacting the things that really matter in life.  5, 10, 20 years down the road, the children will matter more than anything else upon which you spend. 

Retirement money.  I'd rank this #2, second only to the family itself.  You're in the magical years when money saved will be subject to the magic of compound interest.  You've seen the charts about how saving a little bit early = big bucks down the road.  You can never get this time back.  Put off the fancy house and the SUV in favor of real security for your future.  People want to think that they'll have plenty of time later to save -- you know, after the kids are out of day care, etc., etc., etc., but you'll never, ever find a convenient time to put away more money.  So choose now.  5, 10, 20 years down the road, your life will be significantly different based upon whether you save now or put it off a while. 

To be out of debt.  I'd rank this #3.  Sounds like you've done a great job paying down your student loans in the last year -- keep this up.  The sooner you stop throwing money away to interest, the better off you'll be.  How to balance this against retirement?  I'd say split your "this is what I can save" money between the two for now, and when the debt is gone, shift the whole amount towards retirement.  Again, 5, 10, 20 years down the road, your life will be very different based upon whether you're still carrying debt.

Emergency fund.  Again, this is a very important item in your family's budget.  You need to know that in case of an emergency, you'll have money you can have this very instant.  However, I'd rank getting out of debt and retirement saving as more important.  You have some emergency funding now, right?  And you both work.  It's unlikely you'd spend all your emergency fund AND both lose your jobs at the same time.  I don't  mean to say that an emergency fund isn't important; rather, I'm saying that these other items are more important.

« Last Edit: October 24, 2013, 02:25:06 PM by MrsPete »

mlipps

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Re: Priorities
« Reply #20 on: October 24, 2013, 02:13:04 PM »
Applause, Mrs. Pete. Well said, and kindly so.

sassy1234

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Re: Priorities
« Reply #21 on: October 24, 2013, 02:42:12 PM »
Thank you Mrs. Pete. 

As you have noted, I have listed out our goals and things that we want.  By no means is the car our #1 priority.  I hope you were not implying that.  I commented on the car as a goal, because that is what everyone else started to highlight. 

We have done a good job so far of reducing our student loans by $30,000, and are now saving our emergency fund and for the baby. 

In 4 years or so when our oldest is close to kindergarden, we want to buy a house, because paying for private education is out of the question.  We are not running out and impulsively buying it now, like you are implying.  We are planning carefully.  We believe in high quality education and will move to one of the best public schools systems.  This is a priority for us.  And yes, that means a modest sized, fixer-upper house (3 bed, 2 bath) that costs around $500,000.  Because we are going to have 3 kids, this will save us in the end on education. 

Moving is not an option, as our careers are only possible in a big city, and we have family, friends, community, and a support system here.  Money and early retirement are not that important to move away from loved ones that need our help. 

I go back and forth on paying such low interest loans early, when we would do better investing it.  However, being out of debt is priceless. 

Retirement: another important priority that we are starting to focus on now that we are 30. 

"A really nice house is something towards which you work, not something you splurge upon while you're still new to parenthood and before you have a substantial amount for retirement."  I am sure you meant that condescending comment in the spirit of helping another person out with your opinion.  A house is something that you work towards, I think I know that.  That is why we both work full time jobs, have a side gig, and run an extremely efficient house. 

Early retirement is not something we want.  We enjoy going to work and adding to the workforce of this country.  So this affords us some wants, like a small used SUV or a low to medium end house in one of the best neighborhoods.  Since you are building a custom home, I am sure you are able to understand personal choice. 


StarryC

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Re: Priorities
« Reply #22 on: October 24, 2013, 03:54:35 PM »
You can spend your money on whatever you want.  You can raise your kids however you want.   If you believe what will make you most happy is spending your money on SUVs, and houses in specific neighborhoods, that is what you should do. 

However, you might not be on the right message boards if your goal is a conventional life.  Around here, the general goal is financial independence to avoid "having" to work a job, and reducing consumption for the sake of ourselves and the world.

To see more of this ideology, you might look here:
http://www.mrmoneymustache.com/2013/04/25/why-should-i-be-frugal-when-im-so-rich/
http://www.mrmoneymustache.com/2012/09/18/is-it-convenient-would-i-enjoy-it-wrong-question/
http://www.mrmoneymustache.com/2011/10/02/what-is-stoicism-and-how-can-it-turn-your-life-to-solid-gold/

And, if you are open to it, you might want to reevaluate how "bad" the schools in other neighborhoods would actually be, and what exactly is "better" about this other neighborhood.  Most relatively wealthy kids with educated parents and the ability to do educational activities after school/ in the summer, do just fine in any school that is not a threat to their life.

sassy1234

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Re: Priorities
« Reply #23 on: October 24, 2013, 04:08:03 PM »
I don't post too often here, and now I see why.  I was looking for and open to hearing opinions, however I did not expect such a judgmental group. 

sassy1234

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Re: Priorities
« Reply #24 on: October 24, 2013, 04:11:11 PM »
Also, I hate to break it to you, but MMM is going mainstream and there are a lot more people here that are working towards financial independence, but not so extreme where they are not comfortable making their own tampons and reusable toilet paper.  Just because I am not extreme, drones not mean that I can't gain something's from this blog. 

Forcus

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Re: Priorities
« Reply #25 on: October 24, 2013, 04:13:58 PM »
I don't post too often here, and now I see why.  I was looking for and open to hearing opinions, however I did not expect such a judgmental group.

Honestly, I think you just came to the wrong forum with the wrong expectations. I think it would be like going to a Chevy forum and talking about how great Fords are. Just my two cents, I hope it works out for you whatever you do.

Eric

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Re: Priorities
« Reply #26 on: October 24, 2013, 04:25:06 PM »
This thread is funny.

Please give me advice.  No, only advice that I like please.  No really.  Stop challenging me.  Your advice isn't what I wanted to hear.  You all suck!

Bruised_Pepper

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Re: Priorities
« Reply #27 on: October 24, 2013, 04:28:36 PM »
I don't post too often here, and now I see why.  I was looking for and open to hearing opinions, however I did not expect such a judgmental group.

No, you weren't.  You gave these people your situation and were unreceptive to their opinions.  Isn't there a saying something like "advice is something we seek out only when we've already made up our minds?"

sassy1234

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Re: Priorities
« Reply #28 on: October 24, 2013, 04:34:36 PM »
Ok Eric is the only one I like on this thread. 

I wanted opinions on the order of my priorities, ie low interest student loans vs. other items. I should have better communicated that I don't want your opinion on my how I live my life. 

Bruised_Pepper

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Re: Priorities
« Reply #29 on: October 24, 2013, 04:46:54 PM »
Ok Eric is the only one I like on this thread. 

I wanted opinions on the order of my priorities, ie low interest student loans vs. other items. I should have better communicated that I don't want your opinion on my how I live my life. 

Well, I like Eric, too.  And not just because I'm a Cubs fan.

Eric

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Re: Priorities
« Reply #30 on: October 24, 2013, 05:38:49 PM »
Ok Eric is the only one I like on this thread. 

I wanted opinions on the order of my priorities, ie low interest student loans vs. other items. I should have better communicated that I don't want your opinion on my how I live my life.

That's sweet!  Okay, I'll stop poking fun long enough to give actual advice.  Here's what I would do.

1.  Maximize 401ks.  Not only does this give you extra time for maximum compounding, it reduces your current tax bill.  It's a win win and a clear #1 for me.

After that it's less clear.  Normally I'm not a fan of debt, but yours is at such a low interest rate, that it's a little more challenging.  Still, I'd do my best to get rid of it.

2.  Get rid of the highest interest debt until baby comes.

At this point, I think it will be time for renewed calculations.  You'll have just had a child.  Will that cause you to save more, because you're not going out at all, or less, because of all the stuff needed?  You'll have more expenditures because of daycare?  Other changes?

Figure out what your new amount that you'll have available is.  If it's still a strict goal of having a house in 5 years, add the down payment amount to the remaining debt and see if your new monthly amount will cover both in that time frame.  If so, attack the debt first.  If not, save for the house on a 1/60th of down payment per month and put the rest towards your debt.
(insert obligatory comment about how a house shouldn't be your priority over debt just because of a kindergarten class and that you could rent in the great neighborhood for a few years before buying to save money)

The beauty of this site and the challenge it presents to the status quo is that you can probably tackle all of your priorities even faster than you thought with just a few minor changes to your daily life (coughcoughSUVcoughcough) and some further optimization of your spending.

Good luck.


mlipps

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Re: Priorities
« Reply #31 on: October 24, 2013, 05:45:38 PM »
Ok Eric is the only one I like on this thread. 

I wanted opinions on the order of my priorities, ie low interest student loans vs. other items. I should have better communicated that I don't want your opinion on my how I live my life.

Lots of people did that and you're not even aknowledging that. It's rude and frankly makes me not want to even bother responding to posts from newer posters.

mlipps

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Re: Priorities
« Reply #32 on: October 24, 2013, 06:14:23 PM »
Also, unless you moved to Boulder since this post: http://www.mrmoneymustache.com/forum/ask-a-mustachian/jobhomelifestyle-changes-chicago-to-denver/msg146820/#msg146820, I totally reject your notion that Chicago is one of the most expensive cities in the US where you must spend $500k to buy a fixer upper.

willn

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Re: Priorities
« Reply #33 on: October 24, 2013, 06:30:00 PM »
I don't post too often here, and now I see why.  I was looking for and open to hearing opinions, however I did not expect such a judgmental group.

Huh.  I just read through the thread again and see a lot of good opinions. And only the smallest bit of snark and very little in the way of lifestyle judgment.

Many here have reached new levels of satisfaction and accomplishment after altering material expectations, so they encourage other to change what may be self limiting beliefs. I think you may be a bit defensive, its worth asking yourself if that is possible, and if so, why?

jrhampt

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Re: Priorities
« Reply #34 on: October 25, 2013, 06:45:08 AM »
Also, unless you moved to Boulder since this post: http://www.mrmoneymustache.com/forum/ask-a-mustachian/jobhomelifestyle-changes-chicago-to-denver/msg146820/#msg146820, I totally reject your notion that Chicago is one of the most expensive cities in the US where you must spend $500k to buy a fixer upper.

Yeah, no kidding.  Median home sales price in Chicago over the past 6 months was $233k, according to Trulia.

arebelspy

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Re: Priorities
« Reply #35 on: October 27, 2013, 11:04:39 PM »
Also, I hate to break it to you, but MMM is going mainstream and there are a lot more people here that are working towards financial independence, but not so extreme where they are not comfortable making their own tampons and reusable toilet paper.  Just because I am not extreme, drones not mean that I can't gain something's from this blog.

Then the "mainstream" will need to change to match MMM's philosophies when they come here, not the other way around.

Why would MMM become less badass because his message is becoming more popular?  That doesn't make sense.

Kudos to those in the thread encouraging the OP to reconsider her complainypants ways.
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Freckles

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Re: Priorities
« Reply #36 on: October 27, 2013, 11:38:37 PM »
You know what's awesome about minivans?  Sliding doors.  SUVs don't have those.  Little kids and sliding doors are an awesome combination.  You might not realize the joy of the sliding door because you haven't had those two kids yet, but someday a few years from now you'll think to yourself, "Damnit, that annoying no-advice-giving Freckles was right.  I wish I had sliding doors on this dumb SUV."  The Mazda5 even made MMMs cars for smart people list, and it's got sliding doors and extra room in the back.

randymarsh

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Re: Priorities
« Reply #37 on: October 28, 2013, 06:51:53 AM »
Then the "mainstream" will need to change to match MMM's philosophies when they come here, not the other way around.

Why would MMM become less badass because his message is becoming more popular?  That doesn't make sense.

Kudos to those in the thread encouraging the OP to reconsider her complainypants ways.

This.

I started here a year ago thinking I should finance a brand new car. Fortunately, the wise posters here talked me out of it. I didn't throw my hands up and say "BUT THESE ARE MY PERSONAL CHOICES!!!" and run out after I asked for advice.

Instead, I continued reading the blog and asked myself what I wanted my lifestyle to look like. The more I thought about it, the more FIRE appealed to me. This message board is mainly about achieving freedom - not how to afford SUVs and $500,000 homes and 3 kids and a dog and etc. You can have anything you want, you can't have everything you want.

I didn't even end up taking 100% of the advice. I financed a used car, but I did it with my eyes wide open as  ShortInSeattle mentioned. It's also something I continually re-evaluate and I'm leaning towards shortening my commute in the spring and trading down. This is a process of continuous improvement.
« Last Edit: October 28, 2013, 06:59:36 AM by thefinancialstudent »

Wexler

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Re: Priorities
« Reply #38 on: October 28, 2013, 10:33:27 AM »
Also relevant:
http://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/

I think the posters have been pulling their face-punches on this one.  The OP accused us of reusing toilet paper!  But, if you read the forums carefully, you'll see that the community has more pressing problems than toilet paper distribution, like "with my $2million nest egg, should I live in my awesome beach house or live in my other awesome house, but work 20 hours a week at a job I like?"

http://www.mrmoneymustache.com/forum/ask-a-mustachian/hand-wringing-opinions-welcomed/

You don't get there by making your own tampons, you get there by not thinking that buying an SUV is a nonnegotiable when you have debt and minimal savings.

cynthia1848

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Re: Priorities
« Reply #39 on: October 28, 2013, 11:43:32 AM »
I would max out your 401ks first.

Then with your extra every month, pay 1/2 toward the highest interest student loans and 1/2 toward padding out your emergency fund.  When baby arrives, the emergency fund $$ will then go to baby expenses.

I hear you on the house.  We also bought in a high COLA area and a good school system, and we have 3 kids.  It is worth it to be in this area with good schools and not to have to spend $80K/year on private school.

cynthia1848

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Re: Priorities
« Reply #40 on: October 28, 2013, 11:45:37 AM »
Sorry, just as an addendum on the car.  You do not need the SUV yet.  We fit 2 kids in the back of a Civic when they were 2 and 0.  I would wait until the sedan dies and then replace with the SUV or minivan at that point. 

iamlindoro

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Re: Priorities
« Reply #41 on: October 28, 2013, 11:46:34 AM »

Richard3

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Re: Priorities
« Reply #42 on: October 28, 2013, 01:54:07 PM »
I am not an American so my tax advice is probably woeful.

*My husband and I have $30,000 student loans, with 2.1 and 3.3 rates.  Over the last year we have brought this down from $60,000.

I wouldn't bother paying back your student loans any faster than the minimum. You can get better than 3.3% with very little risk in the sharemarket and can beat 2.1% in one of the total market bond funds.

*We are having our first child in April and will be paying a lot for day care

I don't have kids, I assume you've done the math and or really want to keep working rather than have a stay at home parent (which saves you on more than daycare too - meal prep, cleaning, errands etc, all are much more possible when not working.

*We have $10,000 in retirement, not much

I have no idea about American tax, but yeah 401k, roth, IRA all those words I see - you should probably do that with the excess debt payments.

*We rent out our home in another state, and will sell it in 3 years or so.  Might make $5-10,000

Why sell in three years? If it makes sense to rent (ie you're making a good return on the capital) and it's not too much work then keep it as an investment. If it doesn't make financial sense to rent just sell it. Holding on to a house because you think prices are going to go up and or you want to get what you paid for it is not very sensible.

*We rent in an expensive city, however our rent is less than what we would pay for a mortgage, as we want to buy a really nice house next.  We are comfortable in the rental that we are in and are fine staying here for the next 3-4 years max.  Our downpayment goal is $120,000.

If rent is less than a mortgage, continue to rent. I assume you mean you are renting a less nice house for less than you'd pay on a mortgage for a nicer / bigger house?

*We plan on buying a nice used SUV in 10 months.  We have a sedan that will last another 5 years and by that time we will have a second kid, so we want the space a SUV gives.  Also, have a large dog.


I think you've had enough of car discussion, but 1) how often does your dog go in your car? 2) how often do you need the space a SUV give? After a lot of roadtrips and house moves and distant sports games in a variety of vehicles I firmly believe that wagons give the same or more useful space (and the back seat is more likely to be within parental reach from the front).

*We save/put towards debt about $5,000 per month

Congratulations, that's a lot better than most but what % is that of your earnings? There are people here who make less than $5k a month and have 50% savings rates. So while you're doing well, you might not be doing as well as you could be.

*Have about $10,000 savings.  Goal of 25,000 emergency fund.

Not worth it. The emergency fund is stupid for most people. Keep more cash on hand than you think you'll need (mostly in case the bank's computers go down) and then have a big  credit card limit  for emergencies (if you're sensible enough to view a credit card limit as a theoretical thing and not a spending target) . As long as your net worth is not tied up entirely in tax protected or long term investments, you will be able to liquidate enough investments before the card is due.

okashira

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Re: Priorities
« Reply #43 on: October 28, 2013, 03:22:45 PM »
I still don't understand why a dog should dictate what kind of car you drive. Talk about priorities!

Richard3

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Re: Priorities
« Reply #44 on: October 28, 2013, 04:23:00 PM »
I guess it's a bit like the old joke about the 500lb gorilla.

Q Where does a 500lb gorilla sit?
A Wherever he wants!

MrsPete

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Re: Priorities
« Reply #45 on: October 29, 2013, 10:41:26 AM »
This thread is funny.

Please give me advice.  No, only advice that I like please.  No really.  Stop challenging me.  Your advice isn't what I wanted to hear.  You all suck!
Yeah, that's what I'm hearing now. 
You know what's awesome about minivans?  Sliding doors.  SUVs don't have those.  Little kids and sliding doors are an awesome combination.  You might not realize the joy of the sliding door because you haven't had those two kids yet, but someday a few years from now you'll think to yourself, "Damnit, that annoying no-advice-giving Freckles was right.  I wish I had sliding doors on this dumb SUV."  The Mazda5 even made MMMs cars for smart people list, and it's got sliding doors and extra room in the back.
Imagine:  Those of us who have kids actually know something about what works! 
Now THAT was condescending! 
I still don't understand why a dog should dictate what kind of car you drive. Talk about priorities!
I have a friend who drives an SUV so that she can take her two large dogs to doggie day care every day.  If you're laughing a little, I am too.  She's a great person, but totally out of touch with realistic spending. 

sleepyguy

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Re: Priorities
« Reply #46 on: October 29, 2013, 11:54:59 AM »
Your title says it all... and is it 'smart' keeping a big dog in the household with a newborn?  I for one would not.

I'm not gonna rehash the great advice above... just look at your thread title and think a bit deeper.
« Last Edit: October 29, 2013, 11:58:36 AM by sleepyguy »

madage

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Re: Priorities
« Reply #47 on: October 29, 2013, 11:59:00 AM »
I find it somewhat funny the OP went away and we're still here.

Your title says it all... and is it 'smart' keeping a big dog in the household with a newborn?  I for one would not.


Really? I suppose if the dog's owner shirked their responsibility to properly train the dog. Any responsible dog owner, though, should have no qualms at all about bringing home a baby.

TrulyStashin

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Re: Priorities
« Reply #48 on: October 29, 2013, 12:03:02 PM »
I find it somewhat funny the OP went away and we're still here.

Your title says it all... and is it 'smart' keeping a big dog in the household with a newborn?  I for one would not.


Really? I suppose if the dog's owner shirked their responsibility to properly train the dog. Any responsible dog owner, though, should have no qualms at all about bringing home a baby.

Without a big dog in the house, how does the floor get clean?

Eric

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Re: Priorities
« Reply #49 on: October 29, 2013, 02:44:28 PM »
I find it somewhat funny the OP went away and we're still here.

Your title says it all... and is it 'smart' keeping a big dog in the household with a newborn?  I for one would not.


Really? I suppose if the dog's owner shirked their responsibility to properly train the dog. Any responsible dog owner, though, should have no qualms at all about bringing home a baby.

Without a big dog in the house, how does the floor get clean?