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Greetings, EggFoolYung, and welcome.

<<Okay, I'm really enjoying learning more about how to manage my finances...but I am a bit overwhelmed. Maybe some of you more experienced Fools can help me.

After years of struggling, my wife and I have paid off all our consumer debt. We're in our mid 30's, with an 11 year old son. I work (she doesn't) and make about $80K per year. We rent our home, and the only other payment we have is our car lease (2 years to go). We have $2,500 in a passbook savings acount.

I have not yet started contributing to my company's 401(k). Here's my puzzle:

What do we do first? Do we save up 6 months of living expenses as an emergency fund? Or save the down payment for a house? Or save for our kid's college education? Or invest for retirement?>>

Yep….It can get kinda mind-numbing alright. All of your goals are important. As to which comes first, YOU and you alone have to decide that. With me, though, my first priority would be the emergency fund. If I lose my job through some unforeseen circumstance or if the washer breathes its last, then I want some cash on hand so I don't have to borrow. After that, I would tackle the house down payment and retirement in equal shares. When the down payment was covered, then I would move on to the college costs. Why that last? Because we all need a place to live, paying rent builds up the owner's equity not mine, and when I get old I don't want to be a burden to my kids. The kids may or may not go to college. If they do, I'll help all I can. But with limited resources, if it comes down to a choice of saving for old age OR saving for college, then old age wins. Children who want a college education bad enough will find a way. But who will take care of me in old age if I can't? The kids may be thousands of miles away with families of their own by then. Therefore, I can't rely on them. And that means my old age is MY reponsibility, no one else's, so that responsibility must take priority.

Just one Fool's opinion FWIW. Others to include you may differ. Regardless, the choice of priorities is ultimately yours.


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