Once the student loan debt is paid off, they can take the money devoted to that expense and apply it to mortgage payoff. Bankrate.com has a good calculator to help you figure out how extra payments will help. They should also look at their tax withholdings to make sure they aren't overpaying during the year. Instead of getting huge tax refunds, they could take the extra money in their paycheck every month and apply this to their home debt or student loans.
This couple shows that even good money managers can be better.
Another reader wanted some advice on how to apply some extra funds.
"In 2009, I was able to accomplish several of my financial goals -- refinanced my mortgage (4.75 percent fixed), paid off my student loans (YAY!), and with my December paycheck will have saved up enough for a six-month emergency fund," the person wrote.
Commendably, the reader is also generous. "I've contributed to charity every year, and have no plans to stop that habit. If anything, I'll increase it."
The issue: "I expect I'll have about $600 to $1,000 per month left over after expenses next year, and I'm trying to figure out what to do with it. How would you divvy up extra funds to maximize financial security long term and personal enjoyment in the short and medium term?"
The options the reader described:
-- Boost retirement. "I turned 30 earlier this year, and have total retirement savings of about $80,000."
-- Buy stuff. "I really didn't buy a lot of new furniture or stuff when I bought my place. I haven't taken a long vacation in some years either, so am itching to do that as well."
If you are in this great position, why not do both -- save more and spend some?
We can all save more, especially for retirement. If you've been an excellent steward, it's OK to treat yourself. So go ahead, get a great sofa and take a wonderful vacation. And bring me back a T-shirt.