How should I go about paying down my debt?
My fiancée and I have a lot of student loan debt. We also now have mortgage debt from a condo we bought a year and a half ago and a car loan that has 4 years left on the loan. We do not have any credit card debt. Our wedding is in about 4 months, so most of the money we have left over every month goes to that. We are paying for the wedding ourselves, in cash.
So my question is: After the wedding, which debt should we focus on? Let me give you some more details:
Fiancee’s student loan debt: ~$ 70,000, ~6.0% interest rate, ~$ 820 monthly payment
My student loan debt: ~$ 80,000, ~5.3% interest rate, ~$ 1000 monthly payment
Car loan: ~$ 12,000, 2.9% interest rate, $ 270 monthly payment
Condo: ~$ 125,000, 5.5% interest rate, $ 724 monthly mortgage payment (not including taxes and condo fee)
The student loans include many individual loans that could be paid off one by one to lower the monthly payment.
The amount we owe on the condo is about what it is worth, so it is probably safe to say that we are slightly under water on the mortgage.
I currently have about 2 months worth of expenses saved as an emergency fund.
After expenses every month my fiancee basically breaks even but I have about $ 400-$ 500 left over to either save or pay down debt. We are currently living in a one bedroom condo and would like to have kids 8-10 years from now which is how long we plan to live here. At the current rate that we are paying down the student loans they will be paid off 8-10 years from now when we will be ready to look for a new house. Houses in my area (washington dc area) are very expensive. Our plan was to basically put all our money into the condo so we would have a nice large down payment for a house when we are ready to sell. On the other hand, we would like to pay the student loan debt down, and also the car.
Some other points to consider: We could easily rent out our condo to cover all of it’s expenses plus leave us with a small monthly profit. We also expect home values in this area to go up. We already live within walking distance of a very desirable area where values for similar properties are double what we paid for ours. Also, within the next 6-8 years, the county plans on putting in a much needed streetcar system which will have 3 stops within walking distance from our condo.
Where should we focus our energy? Just the student loans? Just the condo? The car? Or all 3?
Thanks for your help.
This is pretty much the cheapest property that you can buy in this area. We are now spending $ 100 less per month than we were when we were renting. And like I said in the description, selling the condo now isn’t an option as it may be slightly underwater.