I posted a "case study" in a different thread and received a number of great suggestions on reigning in my family's expenses. But one question popped out of that discussion that I would like further guidance on. We currently max out our tax advantaged accounts (401k, IRA, HSA), pay extra toward student loans and have approximately $1,500 remaining in our budget (hoping to grow this number based on the suggestions from the other thread). We've been investing the remainder in a taxable account, but the consensus seems to be that we would be better off paying down the loans. Now I need some help prioritizing our debt payments.
Mortgage - $375,000 @ 5.25% ($2,800 /month; home value is $400,000)
Student Loans - $105,000 @ 4.5% ($1,450 /month)
We currently make extra payments averaging $950 /month on the student loans. Our initial plan was to prioritize taxable savings (for ER) and knock out the student loans in 4-5 years. Someone suggested that we instead aggressively attack the mortgage to reach 20% equity and refinance to a lower rate. I like this idea. Would it make sense to put the $1,500 taxable investment savings and the extra $950 student loan payment toward the mortgage instead? And then after refinancing the mortgage, finish off the student loans with the same extra payments ($1,500 + $950)? My concern would be that stopping the taxable investments for a few years would push back our timing for ER.
Thanks in advance for any suggestions.