How should I allocate my leftover money at the end of each month?

I am 25 years old and make about $60,000 a year. I have about $55,000 in student loan debt with interest rates ranging from 3.6 percent to 6.7 percent. I have $8,000 saved for a house with a target goal of $30,000. I have about $8,000 in a brokerage account. I max out my contributions to my employer's Roth IRA and have a tax-advantaged 457(b) deferred compensation plan, too.

I have about $300-$400 left each month. Should I put that money toward my student loan payments, my house savings, my brokerage account, or the 457(b) compensation plan?

Career / Compensation, Debt, Financial Planning, Retirement, Retirement Savings
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April 2018

It depends on your main priorities. If buying a house in the near future is your main priority, saving $400/mo will get you to the $30k you need in 4.5 years. If you want to buy sooner, you'll need to free up more cash flow by either pulling back on your retirement savings or by finding some sort of side hustle to make some extra cash. If buying a home is not your priority, however, I'd be looking at putting that extra cash towards your student loans, particularly the higher interest ones. You can use the debt avalanche method, where you allocate additional payments towards the highest interest-rate loan first until you have that one paid off then use all the money you were paying towards that one to pay towards the next highest interest loan. Mathematically speaking, this is the quickest and cheapest way to get out of debt. If buying a home or paying off your debt is not a priority, then you could save into either your taxable or your 457(b) plan. The 457(b) is tax-deferred and contributions lower your federal gross taxable income. However, right now your marginal tax rate is only 22% and if you were to max out your 457(b) contributions at $18,500/year, you'd still be paying around 22%. I'm going to say at your age, you should be focusing either on the home purchase or paying off your highest interest student loans, perhaps even at the expense of higher contributions to your retirement savings for a couple years. 

April 2018
April 2018
April 2018
April 2018