Ahead of time

Stephanie and her husband are a little confused about the Baby Steps. She calls in from Dallas, Texas, to get Dave's help.

QUESTION: Stephanie from Dallas, Texas, talks to Dave about their mortgage situation, student loan debt and investing. She and her husband paid cash for a house, and she thinks they’re out of the Baby Steps. Dave corrects her on this and advises that they use their $100,000-plus income to go back and knock out $50,000 in student loan debt as quickly as possible.

ANSWER: No, you’re not out of the Baby Steps. You just got Baby Step 6, which is pay off your mortgage, done ahead of time.

I would go back to Baby Step 2, which involves paying off all your debt except for your house, and pay off the student loan debt. But don’t start investing until you’ve finished paying off that loan.

The good news is you won’t have to fight through a house payment while you’re doing this. So, just attack the debt. You’ll be done with it in no time. After that, move on to Baby Steps 3 and 4 — an emergency fund of three to six months of expenses then start investing for retirement.

You’re in good shape. You’ll be rocking!