Debt repayment or savings/invest?

Hello,
I've been lurking on the list for a few months and I want to first and foremost thank everyone for the great advice that I've gleaned from the many posts
over that time. I have a question of my own that I'm not too sure what I should do and I appreciate any help I can get.
I am working on reducing my debt (better late than never) and I'm kinda lost on how I should proceed with paying it down, or (and this is the big question) should I bother paying it down in advance...
My debt is structured like so:
$7,000 - credit cards $33,000 - personal loan (0% interest for life, paying $500/mo, owed to a family member who's not too concerned with it being paid back early) $55,000 - student loans (3.35% interest (locked in), paying $290/mo) $112,000 - mortgage (6.5 or 6.75% interest (not sure off the top of my head, but locked in), paying $1020/mo)
I am working feverishly on paying down the credit card debt, and it will be gone by January. But after that, I have no idea where to put the roughly $1000/mo disposable income that I have left.
In my thinking, the mortgage rate is not bad, the student loan interest is not bad at all, and the personal loan interest can't be beat. Given that the mortgage and the student loan interest is all tax deductible, should I even bother paying any of them off early? Or should I sock the money away elsewhere? What would be more beneficial in the long run?
Thanks again for any help! Mike
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Mike wrote:

First, I'd be negligent to not ask; What is the status of your retirement savings? 401(k) maxed? Does your employer or your wife's offer matching? You see, a 50% match is worth more than even paying down that CC debt. Even with the 401(k), do you fund your IRA, Roth or regular? Do you have kids? Planning to? If you've been lurking you know what's missing, age, marital status, goal for early retirement, and likely a few other tidbits.
Kids can cost the time your wife is out, as well as all the new expenses a baby brings. A cash nest egg is appropriate for such an event.
Here's a thought: Your numbers imply a 15 year mortgage. An extra $1000 to the mortgage would pay it in full in 6 years. I can offer you the lecture that says the market will likely return 8%+ over the next 10 years, and at cap gains rates, net you a 6.8% return post tax. But wait, with only $6500 or so in interest, can you even itemize? You have enough property tax and state tax to be over the standard deduction? If not, the chance to make 6.8% vs a sure 6.5%, well, sounds like no-brainer to me. No one ever complained they paid off their mortgage too soon. (And yes, Elizabeth, I've come to see this the right way, your way, mostly) good luck. JOE
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

You're right, I did leave out some details... here's the bigger picture:
I'll be 30 in a few months. I'm divorced, have two kids that I have half time, and I get to claim one of them each year on taxes. I also have a live-in girlfriend and her daughter, both of which I claim come tax time too, but our finances are separate. Not planning to have any more kids.
I've made some dumb moves on my retirement savings in the past, having cashed out some 401k's when leaving jobs (I know, I know). So my retirement savings with my current company is a little over $3k, putting in just 3% which is the max my company will match (100%). I have no other retirement savings, and I have just over $1k in the bank for a mini-emergency fund.
The mortgage is actually a 30 year that I just got last month, the 1020/mo includes Insurance & Taxes.
The family member who loaned me the money and I have a healthy relationship ;) And paying off my debt is definitely a goal, however, that debt alone will be paid off in 5.5 years just making the normal payments. It's the 30yr mortgage and 30yr student loans (consolidated) that I'm worried about.
Thanks again for everyone's time. Mike
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Good for you to be getting your debt paid so that you can even be asking this question! If I were you, my priorities for this increased disposable income would be:
1. Increase your retirement savings. Contribute to an IRA, a Roth if your income will allow, and max it out. My personal preference is Vanguard, but both Fidelity and TR Price are other good companies. Increase your contribution to your 401k.
2. Build up your emergency fund. Many experts say you need 3-6 months expenses. Evaluate your job security and the employment picture in our area to determine the right level for you. Also think about what could go wrong and how you would pay for it - major home repairs/damage not insured, major auto repair, that kind of thing.
3. You don't mention a car loan and I congratulate you. But how will you pay for the next one? Put a little aside.
4. Pay an additional amount to the principal on your mortgage. As little as $100 a month will get that sucker paid off early and allow you to get out from under while you're young, yet old enough to be able to consider a shorter work week.
5. If there you still have a few dollars left after the above, start some sort of account for your children's education after high school.
I'm the Elizabeth that Joe referred to, so readers may be surprised to see I've put paying the mortgage in the 4th position. But you can see that I think you can do all of the things on the list by carefully splitting up that $1000. And, when you get that personal loan paid, you'll be able to do even more.
Again, congratulations!
Elizabeth Richardson
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Elizabeth Richardson wrote:

The $100/mo will pull this mortgage in from 30 years to just over 21. It's a remarkable thing to run the numbers. An additional $100 on top of that only drops it to about 17. Given the priorities, not too surprised at 4th place, and I'll vouch for your advice here. His follow up was the missing detail needed to formulate the better responses. JOE
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

How long do you have? Thumper
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
But after that, I have no idea where to put the roughly

Put $250 a month into paying off mortgage principle. You can do this once a year for convinience if you wish. Put $250 a month into a rainy day savings account until you have 1 years living expenses. Put $250 a month into a widely diversified stock portfolio or index that you won't touch until retirement. Put $250 a month into having fun. (You only live once, but you are dead forever.)
This is a nice problem to have. Lot's of good solutions. Good Luck!
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I can't believe some of the suggestions that you are getting and I will probably come across like a conservative old fart, but other than your mortgage, pay off your debt man. You owe it, what difference does it make if your personal loan lender is in no hurry, you owe, so pay. I think there would be a great psychological advantage to saving/ investing once you get out from under that burdensome debt. It's always hanging around like a ring in the bathtub until you get rid of it.
======================================= MODERATOR'S COMMENT: Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Lon wrote:

It's tough to tell a poster to pay the zero interest debt. OP will have an extra $1K per month, and the real issue for me is now knowing the rest of his financial situation. That $33K you'd like him to pay back could become $50K (due to tax break) in his 401(k), matched to become $100K, and in 3 years worth $125. His shrink may offer him the same advice you did. Maybe the relationship with the relative isn't healthy, and he'd somehow be happier once that's paid. But putting on the 'planner' cap, my goal is to maximize his wealth, within the envelope of his risk tolerance.
JOE www.blog.joetaxpayer.com
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

True enough, but I'd also like to mention that these folks - both the borrower and the lender of that $33k - might ought to consult an accountant or lawyer - the loan may nominally be interest-free, but the IRS doesn't see it that way.
Google for "Imputed Interest". The SmartMoney article that comes up is pretty clear. (The lender may owe income taxes on an imputed interest of some $1600/yr on that loan - and if the lender is also giving the borrow gifts, it may have gift-tax implications as well).
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
snipped-for-privacy@fractious.net wrote:

True - but if it was set up correctly the interest would be well below the gift limit, and since the OP is making regular payments, there's a paper trail to substantiate it wasn't a $30K gift.
Daniel T. wrote: > Yes, and what is the risk of the OPs benefactor dying? What will happen > vis-a-vis his $33K debt then? 0% interest is only half the story in this > case. If the OP has reason to believe that the debt will be forgiven if > his family member dies, then all may be well in the world, otherwise it > may be in his best interest to pay it back ASAP.
OP posted more details, which tell me that more than anything he needs to fund his retirement accounts. But from both your replies, I understand to be careful, that it's more than 'feeling good' regarding the $30K. I missed that the house payment included insurance, so it's a 30yr loan. My advice is now to split that extra $1000 between the mortgage and retirement savings, after he confirms he has enough emergency money, or access to emergency funds.
JOE
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

So my understanding is to put it toward funding an emergency fund, then retirement and mortgage payment. The zero-interest loan and student loans I should just leave alone?
Mike
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Yes, those 3 items are your immediate concern. You said you would have the zero-interest loan paid in 5.5 years. Because that is free money, there is no financial reason to pay anything additional. When it is paid, you will have additional discretionary income, at which time you can re-evaluate. (In fact, an evaluation of your financial situation should be done at least annually. I like to do this at New Year's.) Anyway, as your income increases, or you have gotten your emergency fund at the right level, you can begin addressing your other concerns. It sounds as if you are becoming debt-averse. Your student loan is at a very low interest rate, but if that is gnawing at you, you could begin to do something extra on that only after all other priorities are well-funded.
Elizabeth Richardson
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Thanks Elizabeth, I wrote this response prior to getting your previous one. Thanks much to all for not only telling me *what* I should do but also helping me understand *why*. I think I have my goals in order now.
Thanks again, Mike
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Yes, and what is the risk of the OPs benefactor dying? What will happen vis-a-vis his $33K debt then? 0% interest is only half the story in this case. If the OP has reason to believe that the debt will be forgiven if his family member dies, then all may be well in the world, otherwise it may be in his best interest to pay it back ASAP.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
In article
snipped-for-privacy@jadoti.com says...

First priority - build up a "rainy day" fund. I would just stash that $1K/month in a very safe place, like laddered bank CDs or something like that. And continue until I had at least twelve months of minimal living expenses.
Never dismiss the value of sleeping well at night.
Then, I would just pay the extra to the mortgage. While keeping up the minimums to the student loan and the personal loan.
--
Get Credit Where Credit Is Due
http://www.cardreport.com /
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.