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Post Covid Finances

Pharmist1720

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Dec 27, 2011
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Hello all, since March we've been paying the min on the wife's student loans, plus we sold a house so we've stockpiled cash and was wanting opinions on how to get the best use out of the cash.
Current situation: age - 35/31, 2 yo dependent
His income: $120,600 salary hospital staff
~$10,000 in OT/1099 job
Her income: ~$140,000 corporate retail staff

Retirement: His - 5% mandatory 403B with 10% added by employer
$19,500/yr voluntary 403B
Total - $223,000
Her - $19,500/yr, employer match 6%
Total - $115,000
Both with 90% in stocks, 10% in bonds

Her student loans - $190k at 4% refinanced thru sofi on 15yr term
Mortgage - $320k at 2.75% on 30yr term
No other debt
EF - $30k

After the sell of the house goes thru, we'll have approximately $70k on top of the emergency fund we already have in place. I'm thinking the best use of the money is to put a large chunk towards student loans then restarting the extra monthly payment and having them paid off as soon as possible. Am I overlooking any other options? Possibly starting an IRA for my wife or 529 for my son? Anybody see even a remote chance private student loans are forgiven post covid or after the election in November? Any opinions are appreciated. Thanks
 

TheBlaah

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Private student loans forgiven? No way in hell, at least not by Biden or Trump.

I'd start with reducing your student loans.

The interest rate on your mortgage is actually quite good. I'm not entirely sure what the loan market's like now, but you may want to look into refinancing it to a 15yr to see if you can get the interest rate reduced further.

If either of your employers offers a HSA, the money put into that is deposited tax-free, grows tax-free, and can be withdrawn tax-free (if used for medical purposes). Limit on that is 7k a year for married couples.

A 529 account wouldn't be a bad idea either.
 
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Pharmist1720

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Yeah the student loan forgiveness thing is a dream I know. Just thinking what if Warren is selected as VP then Biden wins, then maybe something would happen with student loans. I think HSA is definitely my next move actually. Good thought.
 
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Argentium

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Even the student loan interest rate is not terrible.

Agree HSA would be my first thing, would also consider looking at Roth IRA rollover, mega-backdoor if your company offers it, 529 which was mentioned, and then DCA into the market in a post-tax brokerage. Your interest rates are solid enough that I would consider putting it into the market right now, esp. if your retirement is pretty far out and you don't have any upcoming large purchases
 
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Genericrph2012

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Even the student loan interest rate is not terrible.

Agree HSA would be my first thing, would also consider looking at Roth IRA rollover, mega-backdoor if your company offers it, 529 which was mentioned, and then DCA into the market in a post-tax brokerage. Your interest rates are solid enough that I would consider putting it into the market right now, esp. if your retirement is pretty far out and you don't have any upcoming large purchases
How do you figure out if you can do a mega back door Roth?
 

pezdispenser

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How do you figure out if you can do a mega back door Roth?
Your 401k has to allow "after-tax contributions" and these are different to "Roth 401k" contributions even though a Roth is also after-tax. Then, ideally your 401k should also allow in-service withdrawals (while you're still working) so that you can transfer out your after-tax contributions to a Roth IRA ASAP so that you only pay taxes on the small amount of earnings, and then it will be completely tax free once in the Roth IRA. Alternatively, some plans allow in-plan conversions to convert the after-tax contributions to a Roth 401k, which will also be tax free from then on, but you won't have the choice of investments that you get with a Roth IRA.
 
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