I am a recent convert to Mustachianism. I am female, married, 39 years old, with one 7 year old son. My DH and I have been making financial changes over the past two months to try to take control of our financial lives, and are at a point where we are saving 35-40% of our income. We have quite a lot of debt, too, however.
Right now, we are maxing out the Simple IRA we get through work, which totals $25,000/year between us. I believe that we can save an additional $2,500/month or so (we do fee-for-service work, so are not salaried, and thus our income does vary somewhat month by month).
For now, I want to put that additional savings into an emergency fund. As DH and I work at the same agency, it concerns me that if anything were to ever happen to our place of work, we’d be in trouble. So I’d like at least a 4 month emergency fund saved (we have 1 month already saved).
My question is, once that is funded, do we put those monthly savings into paying down our debts, or invest them?
Here’s some relevant information:
Combined gross salary: $200,000 (this does vary but is what we made 2016)
Assets: $53,000 in various retirement funds (old 403b, IRAs)
Home valued at $470,000
$18,000 cash
Liabilities: Loan on home $340,000 (4% interest)
Combined student loans $200,000 (yes, I know this is really bad) most at 3.75%, $21K is at 4.75%
Loan on Toyota Prius $8,500 at 0% interest
CC debt- none, thank goodness!
I’d really love to be rid of the student loans, because they are a terrible weight on my shoulders, but DH points out that it makes more financial sense to invest given the low interest rates. I’d really like some advice from MMMers, as I am really new to all of this. TIA!
P.S. We are not willing to move, as we love our home, our community, and the schools for our son with special needs. I’d be happy to sell the Prius and buy something cheap, especially as we live close to work, but DH isn’t on board with that (yet, I’m working on it!).