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Question:


How would you prioritize the following financial goals: children’s higher education, emergency fund, retirement, mortgage cancellation, debt cancellation (student loans, credit cards)?
-FiguringItOut


Answer:


These are all worthy goals. One school of thought is that you should put at least a little something toward each of them every month or quarter. An emergency fund is somewhat urgent by definition, so you might want to put it at the top of the list. As for the others, the pecking order should be set by the return you make or save. If your employer has a 401(k) plan or something similar, the total return when factoring in matching contributions from your employer and tax breaks is going to be tough for anything else to beat, so you should probably max out on that if possible.
 
On the debt side, the rates you pay on credit cards, car loans and other consumer loans are bound to be higher than your mortgage rate, so those obligations should take precedence. The college fund depends more on your personal circumstances and is harder to pigeonhole. If you have a kid who’s 17 and inquisitive, you might want to save a little extra.
-Conrad de Aenlle



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