I want to ask for your input on this dilemma that my wife and I are going through. We have 2 babies currently at daycare. We maxed out our 401k at work and do backdoor Roth every year.
Income: $12,000/month (take-home pay)
Expense: $10,000/month (include mortgage, student loans, daycare, etc..)
Primary Residence: value $650,000 with $365,000 mortgage at 3.75% (30 year fixed). Monthly mortgage is $1800/month in CA
Student Loans: $129,410 (total) - $3,000/month
His: $54,000 at 2.75% ($1500/month) - will pay off 9/2022
Her: $75,410 ($1,500/month) - breakdown below:
- $5,500 at 4.250%
$232 at 3.15%
$1,662 at 3.15%
$7,080 at 4.410%
$12,230 at 4.040%
$3,320 at 3.510%
$42,000 at 4% - via family relative
If we were to do cash-out refinance, this is the new number:
New mortgage: $483,500 at 3.875% (30 year fixed).
Monthly mortgage is $2,277/month
Cash out value: $116,000
We can afford to pay the new monthly mortgage. However, even with the cash-out, it's not even enough to cover all our student loans. We would still be short $13,410 which we could pay it off by end of this year.
1) Should we do a cash-out refinance with our primary house? We plan to live in this house in the next 5-10 years so we're not planning to move anywhere, or Should we leave everything as is and continue to aggressively pay down our student loans.
2) What is the best strategy to tackle our student loan? We would like to pay it off as much as possible. We live very frugal in a HCOL area and live below our means.
What are your thoughts? We welcome all suggestions/comments. Thank you in advance for your recommendations. Thanks