I am hoping to get some thoughts and feedback on my financial situation and plan for the next few years.
A few basic details:
Married, one child under 1 (no more coming, I am certain of this)
I am in sales, my wife is a PhD candidate, ~ 2 more years of dissertation left. She's a full time student / full time stay at home mom right now.
I won't disclose salary, but I am the sole bread winner right now. After all expenses, we have about $50k - $60k in free cash annually (I also max out my 401k).
Credit Cards: $0 balance (gets paid in full every month)
Car loans: $0 (we have two cars, 2006 and 2007, both are paid for and should get another 3-4 years of use each)
Student loans (wife): $99k (This is from undergrad mainly, around $10k from masters, nothing from PhD), $36k is at 3.5%, $65k is at 6.8%
Mortgage: $156k outstanding (3.25% 15 year loan, just re-fied in May 2012)
Cash Savings: $50k (earning around 1%)
Retirement Savings: $14k (just started contributing to 401k earlier this year)
Other liquid assets: $12k
Private company stock: $100k (details on this later)
Home value: $180k (based on purchase price in 2009, near bottom of market)
This puts us at ~$100k postive net worth.
I will have an opportunity shortly to sell at least 60% of my private company stock holidngs, generating around $60k in long term gains (yes, held 1 year, 2 years after initial grant date). Depending on a few factors, I may be able to sell all of it, but $60k pre-tax is guranteed. After taxes, we are looking at just about $50k.
My initial plan was to add those proceeds to cash savings (I like the security of knowing that I wouldn't have to work for a few years if things went really bad). $100k would last ~2.5 years based on our minimum monthly expenses.
As stated earlier, we generate at least $50k per year in free funds (after payroll deductions, paying the minimums on mortgage, student loans, my wife's tuition, and other living expenses).
My current goal is to be completely debt free within 4 years by using the $50k in free funds to pay down the various debts (starting by bringing the mortgage below a 80% LTV to kill PMI, then focusing on the student loans with the 6.8% interest, then all remaining loans).
Longer term goals include a $1 Million Net Worth (primary residence included) by age 35 and a $1 Million Net Worth (primary residence excluded) by age 40. We will eventually look to buy a bigger home (right now, we live in a 2/2 bed/bath condo). My wife, once she finishes her degree, can expect to earn between $60 - $100k teaching in her field (she'll likely teach part time though, so she can raise our son and eventually do some home schooling as well). My career prospects are fairly good, I earn well into six figures today and have a very desirable skill set. Unemployment is something I do worry more about than I probably should, but it's a worry I do have.
I guess what I am looking for is some feedback from the GRS community. I've thought about investing some of that $50k (soon do be $100k) in savings into something that yields more. I have a LendingClub account and have been dabbling there with a few thousand dollars. I also have a few thousand invested in some dividend paying stocks, between those two, I've been earning around 10% every year, but both are somewhat risky investments for the returns they generate.
My other thought was to use some of this money to pay of part of the student loans or mortgage, but based on the yearly free cash flow, and the fairly low interest on most of those loans, it seems like a bad choice.
Any feedback is appreciated.
Thanks & Happy Holidays