I've learned a lot about budget optimization reading MMM and the case studies here in the forum but I have a debt question. Here are our liabilities:
Mortgage: $106,800 left @ 6.5%
Student Loan (me, undergrad): $4,500 @0.1%
Student Loan (me, grad): $13,668 @6.5%
Student Loan (wife, undergrad): $3,180 @0.1%
Student Loan (wife, grad): $27,400 @6.5%
Same-as-cash loan for house repair: $10,900 (16.5% accrues, but not if paid before March 2015
Obviously our first goal is knocking out the same-as-cash loan, but with the other loans, should I attack the high-interest student loans first (snowball) or the mortgage?
I get that the smaller principals, when killed, will add to cashflow, but the mortgage amortization is a lot more weighted to interest. The smaller grad loan (mine) has 6ish years left, my wife's has 8 years left, but the mortgage has 23 years to go. My thinking is that paying principal on the mortgage nets a greater effect, even though the rates are the same.
Thoughts? Appreciate any feedback!
PS: A second factor is that we're underwater on the house by roughly $30K at this point, so if interest rates are still low by the time we recover positive equity (who knows?) we could refi. We're unfortunately not eligible for HARP, as our loans aren't backed by Fannie/Freddie.
If it's at all relevant, our credit is excellent (high 700s last I checked).