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[quote=Anonymous]You're doing a great job of living below your means. That's the best way to accumulate wealth.

I would focus on paying off the student loans. I have seen too many people have to stop working either temporarily or permanently much younger than they planned because of family issues or health issues. I have a friend who is a surgeon and she had to retire at 50 because of back problems; she couldn't comfortably stand in the operating room anymore. Not having student loans will give you a lot more freedom to make choices in the future. You don't want to be paying off your own loans at the same time you are paying for college for your child. If you have $4,000 extra a month and put all that toward the student loans (in addition to the $1000 a month you are already paying) you should have them paid off in less than four years. If it will make you feel better, put $1,000 a month into your house fund and put the rest toward the student loans.

I wouldn't put any money in the stock market that you might need in the next five years. I'm very comfortable with the stock market for long term investments (retirement, your young child's college fund, etc.) but it's not the place to save for the down payment on a house that you plan to buy in a couple of years.

For straightforward stock market investing, the Vanguard Index 500 fund or the Vanguard Total Stock Market Index Fund are good choices. They are both low cost index funds.

Also, you should have an emergency fund with a minimum of six months of living expenses in it. I'd shoot for a year since you are the single mother of a young child. When you get ready to buy a house, don't put all your liquid savings into it. Hold some back in case of emergency. You don't want to have to raid your retirement accounts before retirement age because you will owe a tax penalty if you do. [/quote]

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