Paying off Debt vs Savings

[frugalingtown]

Be patient with me as I am 52, married but not much saved to show for it.  Yes we misspent, yes we were stupid, foolish.......whatever adjective you'd like to use.  Hopefully I won't get bashed but could use some suggestions on saving vs paying off debt.

We owe $5060.14 for our air conditioner/furnace unit and $25858.38 for our mortgage.  No other debt.  We bring home about $4700.00 a month.  Dave Ramsey suggests saving up to $1000.00 then throw all the extra at the debt.  I am a bit leery of that because $1000.00 is really not that much. 

I've been reading articles on the internet and you know everything on the internet is true?   Well many people are "forecasting" that the economy will take another hit in 2015.  So there is this other side of me that says save all you can and pay the minimum or perhaps a bit more than the minimum.

What do you guys think?

DH will not cut out going out to eat.  He will agree to cut back but not cut out  

Thanks in advance for any suggestions!

[Deleted]

What are what are the rates you are paying on the loans? 

How much do you have in accessible money at the moment (EF, credit available, other accounts?) 

Do you have any retirement funds?

[Rocky Mtn Saver]

A $26k mortgage is fantastic, not something to be stressed about!  And only having $5k in debt for a home repair is also fantastic!  That all should be ridiculously do-able on $4700 monthly.  Why is that debt stressing you out?  It can't be much of a monthly payment.  Most people owe hundreds of thousands on a mortgage. 

As oped said, though,we'd need to know a lot more about your situation as a whole.  At your age, it's much more important to look at retirement numbers than at a $26k mortgage. 

[frugalingtown]

I'm not exactly stressed but bummed that we did not save in our early years.  Right now we a bit over $5000.00 liquid savings that we could withdraw with no penalty.  Available credit?  $15000.00 on Visa and $35000.00 on an equity line.  My retirement accounts have around $57000.00 in them.  I am not sure about dh.

[Deleted]

Ok, unless rates on those loans are very high, I'd say focus on tucking away every penny on retirement/long term savings at this point. 

You might want to take the plunge and post your entire budget ... We'll try to be productive and constructive in our criticism  

[Rocky Mtn Saver]

Sept 25, 2014 8:49:36 GMT -5 oped said:

Ok, unless rates on those loans are very high, I'd say focus on tucking away every penny on retirement/long term savings at this point. 

You might want to take the plunge and post your entire budget ... We'll try to be productive and constructive in our criticism  

 x 100.  It sounds like your mortgage is small and would most likely be gone long before you retire.  Same with consumer/home debt.  I'd be more interested in focusing on your retirement accounts unless you have pensions or other sources of retirement income. 

[Peace77]

Do you or your husband have a 401(k) available? Start by contributing up to the company match, if there is one.

Consider the $5,000 in savings as your Emergency Fund. Step 1 done.

Take any extra funds, and the money you save by cutting down eating out and use it to pay down the HVAC unit. Step 2 done.

When the HVAC is paid off, open or increase your ROTH IRA accounts to the maximum allowed.
Increase your savings so that the combination if savings and contributions to ROTH IRA equal or exceed 6-9 months of expenses. Step 3 done.

Pay extra on the principal of the mortgage until it is paid off. You may need to send 2 checks, check with your Mortgage holder for their procedure.

Invest the funds that you were using for debt and mortgage payments.

[justme]

Unless your DH has a huge amount in his retirement accounts I would focus 100% on upping your retirement. Only $5000 in savings and $57,000 in retirement would be really scary if that means you're spending almost all of your $4,700/month. That would lead to a huge lifestyle cutback when you decide to retire. I'm really hoping the liquid part means you have a fair amount of money that's in non-liquid savings. 

[Shooby]

  I consider 'savings" to incorporate all of my money.  Yes, i might have X in the bank.  But, in reality, what money do i really have access to that is liquid be it some other investment form or retirement.   Obviously, if it is in an IRA or some retirement vehicle where you would incur a lot of penalties, then i don't think of that as savings but if there are some other funds that are not but part of retirement, then i tend to count them.

 I think debt is also a mindset.  I personally HATE debt.  I hate the feeling of owing money to anybody.  Doesn't mean i don't use debt as a means to an end, i do, but i always pay off as quickly as possible.
I personally would want to pay off that $5k debt just to be done with it.