I need help refocusing my financial efforts. We recently bought a house and have paid off 20K in student loans over the past year, but now I think its time to step back and identify new priorities.
The first challenge is that I have $41K remaining in student loans at 6.8% interest, divided over 4 loans: 3 just under $12K, and one just over $5K. I make a $800/mo payment (overpaying by about $200). I've been putting additional lump sums to the $5K loan whenever possible, because that $800/mo will go much further if it is only divided over 3 loans rather than 4. Under normal circumstances I could have the 5K loan done in about 3-4 months, except for the next challenge:
My husband is required to get a masters degree for his job, and we have to pay for it (he's a teacher). He will be starting in the fall and we are doing our best to pay out of pocket to refrain from raising our debt burden. So far I've socked away 3K for him -- he will need about 16K total for this, spread over 6 semesters (2 years). So, unfortunately, this is where most of our 'extra' money is going right now.
We also have a $287K mortgage at 3.75%, on a house appraised at $305K, as we recently bought. Overpaying the mortgage is currently one of our last priorities.
I am almost tempted to scale back our retirement contributions to help get that $5K loan off our back, because it'll start the snowballing in my other loans sooner (and, psychologically I will feel that I can stop focusing on my loans when none are at an 'attackable' amount). However, I think we're a bit behind in retirement savings. I contribute 5% towards my TSP (4% of which is matched), but only have $25K put away at the moment due to taking a break for school, and not putting away much when I was younger. My husband only recently started contributing a nonmatched $50/biweekly toward a 403(b), so he has $4K in that account. He is a teacher and I am a federal employee so we both SHOULD get pensions (his is pretty substantial, which is why he doesn't get matching funds in his 403b(b)). We are only in our late 20s but obviously I understand the importance of retirement savings. But then again, debt is an emergency!
The last point to note is that we only have 5K in emergency savings. This makes me a bit nervous now that we have a house and a lot can go wrong, although I also understand that MMMers scoff at large emergency funds?
I haven't laid out our budget because I know the areas in which we can cut back (Home Depot for one!), but it'll only get us a couple extra hundred a month. We stand to get about $1500 in a lump sum this summer which I think I will split between my husband's grad schoool and my loans. But, I really want to get that 5K loan DONE. Is it stupid to be so focused on it?
I should also mention that I expect us to get a large tax refund next year, since we just bought a house and my husband will be a teacher going to grad school (I believe they get further tax aid than most grad students), plus we have my student loan interest. I wonder if it would be worth meeting with someone to figure out how to adjust our withholdings - athough I am one of those who likes getting those yearly lump sums, especially at today's dismal interest rates.