First post! Hello!
I'm 41, my wife is 39. Two kids, 7 & 11.
We just had a serious oh-my-god-we're-blowing-it moment about our finances and I'd love some advice about how to move on in a better direction.
We gross about $170k combined. Currently putting away 14% of my pay in a 401(a) (I put in 3%, employer puts in 11%, which is the max match). Balance in the 401(a) is $74,000.
We are in the midst of a couple of months of putting every extra penny towards emergency fund, paying off a credit card, and a large tax bill. We've also finally started setting aside money for future expenses (home repairs, summer camps, new-used car in a couple years, etc.).
But starting in March/April we'll have about $3k per month to put towards either paying down debts or retirement.
Outstanding debts are as follows:
$47,000 3.5%
$16,700 3.8%
$5,750 3.75%
$8,600 1.99%
$282,000 2.75% (mortgage)
Since my wife is self-employed we could open an individual 401(k) and put in up to $54,000 per year, pre-tax.
My question is, should every extra cent go to that 401(k) with all the tax benefits that go with it? To paying off the loans, despite the low rates? Some combination of both?
Thanks for any thoughts!
gavinshmavin