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For the last 3.5 years I have been a stay at home mom and my husband's salary has been supporting the family. On his salary alone we are able to meet all of our expenses, save a little for retirement, and put $500 away into savings/e-fund. I am not in a position of having some freelance work. It won't necessarily be consistent, and I don't know how much money I'll make. But I am able to do it at home so I will not incur any childcare expenses or other expenses to do my job. (Except maybe needing a better laptop, but that's a one time expenditure I will only make if it looks like I'll be getting a lot of work.) So I'm trying to decide what to do with the money, and I know there are some very wise people on here.

Here's our basic financial situation. We have a mortgage with a fixed rate of 5%. We have student loans. Some fixed at 2.5%, some at 3%, and some variable but right now are at about 2.5%. We have no consumer debt. We have about 2 months of living expenses readily available, and about 6 more months worth in investments. DH and I both drive reliable but aging cars, and while we plan to drive them until they die, that could be next year or ten years from now. We have not put enough away for retirement, so I know that needs to be addressed.

Here's what I'm thinking. All of our debt is at really low interest rates and most of the interest is tax deductible, so I don't think it makes sense to aggressively pay down our debt right now. I think we should put all of the money into easily accessible savings until we have enough to replace at least one of our cars. Once that is accomplished I will max out our IRA's and put anything left into easily accessible savings until we have enough to replace both cars. If, in the meantime, the variable rate student loans creep up I will reconsider diverting extra money to pay those down.

So, what do you think? Good plan? Am I missing something?

Thanks

DEG
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