Another student loan question

[Goldy]

My wife and I are trying to figure out what we should do about her student loans. There is about 35k left split between two loans, one with an interest rate around 2% and the other is somewhere around 5%. They are pretty much even in amount. I want to pay off the higher interest rate loan asap and make minimum payments on the lower interest rate loan. I'll outline our financial status below.

Age 25 and 25

Combined income ~135k
Savings account ~40k
Roth IRA ~ 35K
Stocks/funds ~38k
Bonds ~ 15k
Work 401k~ 30k (100% match up to 6%)

Debt:
Student loan ~35k
Car loan ~17k (0.00% for 48 months)

Future:
We might want to buy a house in a years time. Not too sure about that. We might have a kid in a couple of years too.


So do you think we should throw half our savings at that high interest rate loan and get that paid off or should we pay it off more gradually.

We both work for the same company in metals and mining so our job security is SO SO. Right now the metal market seems pretty strong but we all know how fast that can change.

Thanks

[arthurb999]

Are the stocks/funds, bonds in after tax investing?

[Goldy]

Yes they are. Why do you ask?

[arthurb999]

Cause if it was a pretax retirement account, you shouldn''t touch it.

How much money do you plan on spending on a house?

[wincrasher]

You are well positioned to afford a house in about a year if you stay on your current course.

Your interest rates on your student loans is low. Your total indebteness is low enough to qualify for a mortgage. So the issue becomes the downpayment. If house buying is a priority, then I'd ease up on the investing other than your 401k and put it to your house fund - in a very conservative investment. Your other option is to cash out your stocks for your down payment, if need be.

Also, if the plan to buy a house gets deferred, then you still have cash to weather any job loss.

I'd hold off on doing too much at one time. I'd tackle getting the house, then more savings, then a kid.

[Goldy]

Where we live right now is very much a renters market. Our rent is 650 a month and houses sell for 300k. Looking ahead, 300k is about the max I would want to spend on a house because I want to be able to still pay for the house if we need to go down to one income.

[arthurb999]

If I were you, I'd use the savings and bond funds and pay off all debt... then build emergency fund to 6 months salary, then save for a house... 20% down.

The market is recovering so I'd leave the stocks alone for now....


Your rent is super cheap... so in your situation... it might be worth being a renter and bank tons of cash...