Financial Advice--Keep our Savings or PAY OFF OUR LOANS!

[AnnieW625]

Huge congrats to all the debt you have paid off!!

That 60k is your efund? And your house down payment fund? Would you have enough for a 20% down on a home? Do you not have a rental agreement that you know you will be in that place for a certain amount of years?

I would for sure keep an e-fund. Do you and your dh work? If both 3 months and if only one income 6 months or more. This past year has taught everyone you just never know what is going to happen.

Do you have college savings for your children?

If this 3rd Covid stimulus payment goes through, can you use some of that to pay off the loan?

In a high COL like where the OP lives most people (including myself) don’t have separate accounts for each. We just aren’t that lucky. We aren’t the norm on the BBB though and would probably do much better in a low to middle COL area, but that just hasn’t been in the plans for people like us.

IME this past summer we had hoped to sell out house in a high to VHCOL of Southern California by moving (for DH’s job, which isn’t guaranteed 100% WFH) to a more reasonable (for SoCal) not so high (but still high) COL and had hopes that we would be able to buy a much bigger house for less money, and still have money left over to better fund our kids college accounts and have more than 6 months emergency fund, but covid and the shift of people being able to work from home and work from anywhere brought people out here and raised the prices. I am happy with what we got but we originally thought we would’ve paid less than what we ended up paying. My house in a comparable neighborhood in old city would range from $850k to $1.2 Million where as here we paid $638k for it. Our old house was 1100 sq. ft., small lot, 3/1 and we sold it for $645k. We couldn’t afford to go bigger in our old area. I think the OP lives in a similar area with very high housing prices.

We know a fair amount of people who still rent condos, apartments or houses and have families here, and some have two stable income jobs (like govt.) and don’t own a single family residence because the average here for a decent “BBB approved neighborhood” is probably $475,000 (and TBH that could be on the low end for much of SoCal.

Also some of us are only in our 40s and had children young enough to be able to work the entire they are in college. I can retire in 11-12 years and DD1 will be 27 and hopefully out of grad school, and DD2 should just be finishing up undergrad and will be almost 23.

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[dogmom]

An issue with this is if you leave that job (voluntarily or not), you generally need to repay the loan very quickly, or it's treated as a distribution (as taxable ordinary income + 10% penalty if you're under age 59). So even if you have a clear plan to repay it can go south very quickly if you're laid off.

OP - In addition to refinancing the loans if possible, I would look at some of the savings formulas for emergency savings, etc and err on the overfunding side, then use remaining amount to make a loan payoff, and also up your monthly payments on the remaining balance.

Right! Completely forgot about that, being that I’m never getting laid off!