Hello, long time lurker, first time poster. So first ,thank you to everyone for all that I have already learned on this site.

I am at a sort of crossroads right now, and I am just wondering what people on this board would do if they found themselves in my situation.

Here is the deal. My wife and I our in our late 30s, and own a house in Chicago which is somewhere around 30k underwater. (228K left on mortgage, approx house value is 200K.) Mortgage rate is 5.5%. 27 years left on the mortgage. We are not eligible for a HAMP refinance because the mortgage was taken out in Nov 2009.

We also have about 50K in student loan debt. (Monthly payment $325, 3.3% interest rate).

We have no other debts, and have about 6 months of emergency savings, and some small non-retirement investments. We are currently saving 5% for retirement.

At this point, the mortgage payment is about 40% of our monthly take home income. At the end of each month we have about $300 dollars unspoken for, and i am wondering, if you were in my shoes, would you use that money to:

1) Increase pre-tax retirement savings. We are no where near maxing out our retirement.

2) Pay additional principle on the mortgage in the hopes of being able to refinance within the next 2-3 years.

3) accelerate the payment of the Student loan.

My gut instinct is to pay the mortgage with the idea that I would get an immediate 5.5% return on the additional principle payments, and lowering the monthly payment would free up more $ for retirement savings later. Additionally, were I to refinance at a lower interest rate, I would essentially be saving the difference in the remaining loan balance. (e.g. a $200,000 mortgage at 4.5% vs 5.5% would save about $1500 a year, or would it?)

Please feel free to tell me where my thinking is/is not askew, and why?

Thank you.