Reply to What to do first? Debt vs Savings/Retirement

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[quote=Anonymous]Why were you unemployed recently? Could that happen again soon , ie are you a contractor or in a field with income fluctuations or frequent layoffs?

Why did your credit score suffer during your unemployment? It sounds like maybe the spouse who was unemployed makes significantly more than the other.

If I were you, I would first save $5000 in an emergency fund pronto (Cash), next I would contribute in IRA at work up to the employer match (5% at my job), next I would use any leftover money from the budget to aggressively pay of the debt, starting with the smallest debt balance. Once all the debt is paid off (this may take a while, since it took a while to build the debt!) I would then build that emergency fund to at least $15,000, max out Roth IRAs for both you and your spouse (think this will be $6,000 in future), then go back and max the traditional IRAs at your jobs (think this will be $19,000 in the future).

That should get you back on track. Fwiw, I followed this path with my own debt several years ago, and it was tough paying all the debt off, but once I got through it , I felt amazing! Since then I've managed to stay out of debt (except my mortgage) and grow my net worth and savings substantially, while also not having to worry about splurging (in cash!) for some luxuries in my life now (small vacations or a nice meal out now and then).

But you have to make eliminating the debt a priority! Nothing else matters until that car debt, credit card debt, and student loan debt are gone! [/quote]

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