New Member - Rochester, NY, What would you do with $10,000?

[Greg Baker]

Hello everyone!  Recently, I stumbled across BP while googling "save cash for future down payment or pay down current mortgage?"  While searching for an answer to my conundrum above, I started to learn simple vocabulary like depreciation, inflation, amortization, etc.  As I continued to read and learn, I was disgusted at the realization that simply keeping money in a savings account does little more than lose you money over time due to the non-existent interest rate v. inflation.  Once I came to that full realization I was determined to find a way to make my money work for me.

To give a bit of a background, I'm a 32 year old school administrator, my wife is a couple years younger and a teacher, and we have a 1.5 year old son.  We live in Rochester, NY and are lucky at this point to be cash flow positive when considering our simple income v. expenses on a monthly basis.  This did not come easily, we run a very tight budget which my wife hates!  Regardless, we have paid off all CC debt, we just paid off my car, and next, I was eying two student loans, each approximately $5,000 at 3.62% interest.  This is where my confusion and uncertainty lies...

Since discovering BP a few weeks ago, I've listened to 23 podcasts (quickkkk tipppppp), read the UBG, and searched a bit on the forums.  Given the fact that I have a full time job, expect to be a Superintendent in 3-5 years, buy and hold is the primary RE investment that piques my interest.  I love the idea of building equity by having others pay down mortgages, and hey, additional cash flow per door along with any appreciation is icing on the cake.  We actually live in a house that used to be a two family and plan to move in a year or two.  After running the numbers, meeting with our real estate agent, who is also a landlord, I've talked my wife into turning this back into a duplex and renting rather than selling when we move.  All this being said, back to my uncertainty above...

Anticipating a contract settlement with retro pay, tax return, annual vacation buy back, and standard income, I was planning to pay these two student loans totaling $10,000 off by next June.  In reality, the interest rate is only 3.62% and the payments are only $73 and $37 per month respectively.  For fun, I calculated the amount of interest accrued/time if I literally just paid the minimum and it came to 14.7 years with $1,436 in interest, and 6.3 years with $580 interest on the second.  I obviously will not take 14 years to pay off a $5,000 student loan, but regardless, it helped me realize I'm not really saving much by paying these both off in 6 months v. maybe 2 years and the $110 combination per month is not adding a significant amount to my monthly cash flow.  

So, if you were in my position where I want to begin buy/hold and had $10,000 to invest in 6 months would you literally just take that and try to find a single family unit or duplex to purchase?  Or should I literally just continue decimating our debt?  I really like the idea of duplex/triplex v. single family units.  Housing in my middle class area is reasonable, our current home cost around $90,000.  If it matters, I am also planning for retirement through the teacher's retirement system (62.5% of my final average salary), as well as a 401K.  I also dislike stock investments since it feels too out of my control.    

Thanks BP for the great (free) information and sorry for such a long first post!