Income (after withholdings) -- ~ $8,600
(this takes into account the $1,000 plus we have to pay for health insurance; the $1,500+ we save for retirement through work, etc.)
$40,200 (long-term EF)
$3,700 (Disney Vacation Fund -- for some undetermined point in the future)
$1,020 (short-term EF)
$5,000 (Daughter cash savings)
$1,000 (Son Cash savings)
$16,500 (Daughter 529)
$1,500 (Son 529)
Retirement accounts are in good shape (plus DH will get a $2,000 / month pension when he retires (assuming he serves the full 30 years))
$55k total student loan. Of this $42,000 are Federal (interest rate at 5.25% I believe, payment is $383/ month, although I pay $450. These loans are prepaid 15 months in advance). The remaining $13,000 are private, with variable interest rate currently at 3.25%. Required payments are $50 X 3 separate loans ($150). I pay the minimum on two and pay $210 on the third (which has a remaining balance of $2,300).
$3,100 HVAC debt -- $100/ month 0% interest.
The car.... $450 / month payment at 2.9% interest. We plan on paying $500.00 a month. [Traditionally, I have always aimed to prepay my revolving accounts by 12 months. Not sure that is capable at this point....]
Now -- the issue that I am struggling with is where do we focus our energy. I feel like our cash savings could do with a boost, especially in light of the increased debt. So I have a couple of ideas.
Rebuild our Short Term EF by $1,000. Then focus on knocking out the lowest student loan, followed by the HVAC (even though it is 0% interest -- its a $100 a month required payment, so if the job is lost, its a payment we would no longer have to worry about). I'd ten focus on knocking out the remaining private loans, and leave hte car payment to just a hair over minimum payments.
Alternatively -- throw everything at the car.... Thoughts? I HATE debt, so the car is bothering me to a point, but I too feel MUCH better having out kids in a safer more reliable car (not to mention myself -- I drive a lot for work and always was worried about breaking down on a back country road. LOTS to think about!!!
Lots of people like to push for the debt snowball method, which I agree with. I'm not saying you're in major debt, but you have many little loans here and there. The snowball method recommends that you pay the minimums on everything except for your highest debt, where you put all of your extra money. This happens to be your largest student loan.
That's the method that, financially, makes the most sense, and you'll save the most money in the long run. However, it can be a little disheartening when your highest interest debt is also your largest because it's difficult to see the progress. Dave Ramsey recommends a similar method: pay the minimum on all your debts and put all of your extra money towards the loan with the lowest principal. You will occur more interest over the long run, but psychologically it's much easier to see your progress, and people tend to slip up less.
My one caveat - I'm assuming your HVAC system's interest rate of 0% will expire at some point in the not-so-distant future (probably in a year or so?). That's a low balance - I would definitely make sure to pay that off before interest kicks in.
It's tempting to throw everything at the car right now because it's the newest debt: you've been living with your other debt for a while and have gotten used to it. I really recommend tackling your largest student loan first. The principal is larger and the interest rate is more. You'll occur more costs over your SL in the long ran than your car debt.
While you should always be saving some of your paycheck (I recommend at least 10%), it doesn't really make sense to increase your savings more when you just added more debt. Unless you found a savings account or any sort of investment that guarantees 7% interest. In which case, please share