Finance Check-Up

[texasjo]

DINK, max TSP (legacy retirement, ideally O-5/6), 6+ month emergency fund in investments, $80k in student debt between SO an I (6.0% avg), no consumer/car/CC debt. Question is do we aggressively pay off student loan debt, or instead put that extra payment money towards our 6.125% mortgage?

The thought of being student loan free in 1-2 years is amazing, but I can't help but see the 10-15 year/$200k-300k savings of paying the mortgage off aggressively (not banking on refinance since lower interest rates seem like a pipe dream). You read about compound interest helping to build retirement, but that same compound interest is making the house more expensive than it needs to be. We hope to keep the house and potentially retire here in 10-15 years, if we sold soon it would be at a loss.

Curious for any and all input. Thanks!

 

[matt007]

@texasjo How many years active at the moment?

 

[texasjo]

@matt007 11

 

[matt007]

I’d pay down the mortgage and don’t skip medical towards the end of your career. When I retired and received my VA rating, I was sent info on the TPD discharge… right after I had aggressively paid off my student loans.

 

[holywalk]

@texasjo What do you mean "ideally O-5/6"? How big/much of a house did you buy that 200-300k savings would buy you by paying it off early? That sounds like $1M+, almost $2M house. By "Max TSP", do you mean $23k/year or simply the 5% match?

BL is 6% vs 6.1% doesn't make much of a difference at all. I would do the student loans first to get rid of them.

 

[texasjo]

@holywalk Currently O-4 at 11 YOS, so earliest retirement would be O-5/6. PNW, 3/2 is $520k, $3400/mo (no down payment which wasn't very smart in hindsight), 30 VA has $600k in interest. Putting an extra $1500/mo would be 15 year pay off, saving $330k in interest according to payoff calculators. $23k/yr for TSP, SO is $6k/yr in IRA.

 

[sofia555]

@texasjo You can do an IRA for yourself too. And if you are really concerned with the lack of down-payment, you can still put a chunk to principle and achieve essentially the same result (for interest savings at least, won't help the monthly payment).

 

[selinastella]

@texasjo Which has a higher interest %? Pay that one off first.