Hello everybody!
I'm a 29 year old guy living in NYC and I have been on here lurking for a while. I feel like this site has really helped me understand how I should be thinking. I was raised in a spend/live above your means family, and all of the "advice" I got growing up was buy new, finance everything, follow your heart and pay for it later. My parents love mild luxury - new leased cars, new TVs/electronics, and most of all, eating out and drinking out.
Somehow, I always was the opposite. Even in high school, I never bought anything new, liked eating/cooking at home, liked paying for things in cash, and tried not to spend more than I had.
The big mistake came with college, like it did for many others. I got accepted to a good school in New York, wanted to go, and my parents, guidance, counselors, etc., all pushed me to follow my dream. I should have taken the free in-state tuition, but I didn't understand the reality that would hit me later in life. When I graduated, I was in denial, then got angry at everyone else (why me? why did you all let me take out these loans? I did everything right, got good grades, did all my work, graduated cum laude, yadda yadda yadda), then had some pretty serious depression for a while when it hit me that it wouldn't magically disappear, and then, finally, acceptance that it was my decision and it is my burden. I have $100,000 in private loans and $25,000 in federal loans.
I decided that the only way to get out if it was to generate extra income, so I saved like crazy, did a lot of research and got some free money through city programs, and bought a multi-family house in a neighborhood with inexpensive mortgage and high rents about 3 years ago. I live in the basement to maximize income, and after all mortgage, tax, utilities, etc, the house generates $1750 profit per month and I live for free. I do almost all of my own repairs.
Even though I was able to pull that off, I never took control of my loans, paying only interest for the last decade, and I racked up about $15K in credit card debt. I realized the error of my ways reading this site and decided it was time to treat my debt like an emergency and kill it. I got a second job that generates $2000 extra per month (after taxes). So before my regular salary, I am earning $3750 per month with the house and extra job. I am a public school teacher, and my after tax income monthly is $3450. I killed my credit card debt in three months (with the help of a tax return). Now it's time to get those loans. I am going in with $7200 income per month after taxes. Every summer I work summer school, which generates another 8K after taxes. Money out each month are car (bought used, no payment - gas+tolls+insurance - need the car to get between jobs on time) and trains for the wife (necessary to get to school - right now not working but getting degree full time and taking extra courses so we can max income ASAP when she's out), groceries, chicken and cat food, eating out/ drinking out once a week with friends).
I just got approved for a refinance loan through earnest. I can get between 5% and 5.25% APR depending on how much I throw at the loans each month. I need to choose my monthly payment before finalizing. So for my question:
Do I go crazy killing my student loans and putting every dime I make towards them, or do I save for a down payment to replicate what I did with my first house?
I know that I need to kill some of the debt in order to get approved for another investment loan. But should I just pay off the amount necessary and go for the next house, or should I get rid of the student debt entirely and go from there? I feel like my desire to erase my student debt is emotional and not logical.
Also, I have the option to max out my pension, which I am contributing to but not maxing out.
Please let me know what you guys think, and if I'm leaving out any important information.
