Like many of you, I always struggle to prioritize my saving/spending/debt repayment. My husband has recently deployed, and I spent today figuring out the best way to use our money while he is gone. It took me a while, but I think that I finally came up with a plan.
Here's how the thought process went:
I had five ideas for how to use our money. I made a list with the pros and cons of each option. (My list wasn't this fancy. In fact, you probably wouldn't even have been able to read it.
Once I'd made this list, it was obvious that paying off my Home Equity Line of Credit wasn't a very high priority. It has a low interest rate, it is tax deductible, I'm already making a huge payment every month, and I wouldn't be able to pay it all off. So I scratched it off the list.
Then I looked at paying off the credit card debt faster. I'm already on track to pay it off before the end of the deployment and it is at a low interest rate. I decided that paying it off faster than currently planned wasn't a very high priority.
That left me with TSP, emergency funds, and the Savings Deposit Program. The SDP is pretty amazing – you can't find 10% annual interest anywhere else right now. I decided that we should try to put as much money as possible into the SDP. If we somehow manage to max out the SDP (deposits are capped at $10,000, which is a lot of money,) then I think that we should try to put as much as possible into TSP.
Right now, my big question is: do I take our emergency money out of our emergency fund and put it into the SDP? It is earning very little interest right now and the 10% would really add to that money. I can't imagine any upcoming emergencies, but that's why they are emergencies – you can't predict them. Maybe I'll keep a little bit out and put the rest in SDP.
Working this all out has taken a good chunk of my day, but I think that I've made a good decision. Any thoughts?