### Paying off debt vs. max savings

Posted:

**Mon Jul 17, 2017 6:42 am**Hi everyone:

I'm a long-time reader and find many of the posts very inspirational, but I have hardly ever posted anything. So here goes, our situation that I'd like feedback on from the greater community...

Both me and my DW now have fairly stable jobs with a pretty high rate of income (combined +/- $150k/yr, with pay raises of abt 5%/yr), after many years of low-paying jobs, graduate school, time-off for kids, etc. At this point we can max out our 401(k)/457(b) plans with no problem. We also have some debt, which is rather manageable: $110k mortgage on a rental property (4.25% interest), $15k student loan (2.25% interest), $23k car loan (0% interest). Somehow, through all of this, we have been able to scrap together $150k in savings.

Now, it feels like we are ready for the next big step. Do we: pay down the debt? Or, max out RothIRA? We also have two small kids (5 and 2) that we would like to put money towards their 529 account (we get a state income tax break in our state), which we currently contribute nominally.

P.S. we do receive rental income, but the property is a housing bubble purchase (unbeknownst to me), which I could never shake lose of and is way underwater, and the rental only covers about three-quarters of the mortgage.

Thanks in advance for any advice.

I'm a long-time reader and find many of the posts very inspirational, but I have hardly ever posted anything. So here goes, our situation that I'd like feedback on from the greater community...

Both me and my DW now have fairly stable jobs with a pretty high rate of income (combined +/- $150k/yr, with pay raises of abt 5%/yr), after many years of low-paying jobs, graduate school, time-off for kids, etc. At this point we can max out our 401(k)/457(b) plans with no problem. We also have some debt, which is rather manageable: $110k mortgage on a rental property (4.25% interest), $15k student loan (2.25% interest), $23k car loan (0% interest). Somehow, through all of this, we have been able to scrap together $150k in savings.

Now, it feels like we are ready for the next big step. Do we: pay down the debt? Or, max out RothIRA? We also have two small kids (5 and 2) that we would like to put money towards their 529 account (we get a state income tax break in our state), which we currently contribute nominally.

P.S. we do receive rental income, but the property is a housing bubble purchase (unbeknownst to me), which I could never shake lose of and is way underwater, and the rental only covers about three-quarters of the mortgage.

Thanks in advance for any advice.