Dulocracy wrote:I am led to believe that babies cost money, so there is that. Thoughts?
Twins Fan wrote:I'm a bit confused at how you're in the 35-38% tax bracket, married/two incomes, no kids yet, I'm guessing a pretty reasonable mortgage payment, a car payment, now other debt, and don't have a whole bunch of extra cash around. Should mean you have a pretty hefty income, no?
Regardless, as to what you posted about... I'm a debt averse type myself and one of the Dave Ramsey things that I like is his "snowball effect". That's where you tackle the smallest balance debt first without worry of the interest rate or "numbers". I did that when I got rid of my debt (cc's, car payments, and such... still have a mortgage) and it was a satisfying way of doing that. A mental boost kind of thing. So, I say knock out the car payment as soon as you can. Then you can decide what to do from there. Maybe split between paying down the mortgage and saving for the baby? Maybe wait one more year before starting to try to have a baby?
JupiterJones wrote:How much is the car worth? You might be able to sell it and then pay cash for an el-cheapo-mobile.
mlipps wrote:Assuming you're itemizing, your effective rate on the mortgage is close to 4.1275, so the rates are pretty close to the same. With the car already being paid off relatively soon, I'd probably focus on the mortgage & see if you can pay it down enough to refinance, but that does seem pretty far off.
Can you refinance the car? Penfed has consistent offers around 1.99%.
My tax rate (state and fed) winds up being around 35-38%
Also, 20% of our gross income goes into ROTH 401k accounts (something that has been debated at length on other threads - both percentage and ROTH).
Calm Man wrote:I think the most important thing is after the baby comes to be. If your wife and you both keep working I think you will be fine. If one of you stops it may not be so good. I would build up a big reserve and pay off debt as you can. The rates are pretty high on the debt so I might save a little less in deferred accounts to pay them off a little faster. Good luck.
Putting money in the Roth 401K in that tax bracket does not seem to make sense.
Could you put the money into a regular deductible 401K and use the tax savings to pay down the loans?
Dulocracy wrote:JupiterJones wrote:How much is the car worth? You might be able to sell it and then pay cash for an el-cheapo-mobile.
Unfortunately, I drive a lot. How much is a lot? 35k miles a year. I got a car that was $20,125 (VW Jetta) that was much more enjoyable to drive. My quality of life went way up, but it was a fairly inexpensive new car (in line with a Honda/Toyota). Should I have purchased new? Moot point, since I did it pre-boglehead days. The car is now 3 years old, which is where I would buy used. I plan on driving it for 10-12 years. Since I have three offices around the Metro-Atlanta area, there is no real way to move closer to one (although the upside down mortgage would prevent that anyway).
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