I had to add, I would ask your broker if you could reclassify the '08 ROTH contribution to '07. IT shouldn't be a big deal (I don't think?). Then you have a year to fund 2008.
The general rule is 403bs to match, then ROTHs to max (particularly since you are so young, but also because you can invest anywhere, whereas 403bs and the like are more limited), and then 403bs to max.
You should both be able to put in $15,500 each into your 403bs and that is what I Would aim for. I know it is the tax accountant in me, but the more you put in the less you pay taxes on (& the lower your tax bracket is, etc.). So I would do my best to max out. Then you can keep more of your money overall.
At this stage in the game your focus is probably more retirement than anything. It just depends if you have other life goals in the interim. Making sure college is funded, you have plenty of cash for a rainy day, and whatever else you want to do with your life in the interim.
But practically, retirement is a good place to focus your energies. You are young and the more you put in now, the less you should have to worry about it later.
We're kind of in the same boat. I identified with much of your post, down to the whole daycare thing. We have one starting school this year too, so what a load off. But we are a little further behind on our retirement contributions, and kind of where are energies will lie for the next few years.
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