Put extra money to reduce debt or put into savings?
I am currently putting about $ 1000 a month towards eliminating a debt incurred as a result of a divorce 6 years ago. At this rate, I will have it paid off in full in about 1.5 years. My new wife and I have seen a significant increase in our income in the past few months and we are planning on moving to a new home (we need more space). However, now we have a dilemma: Should we put that extra money towards reducing our debt, or should we put into saving for the purchase of a new home?
We have $ 2000 extra a month to ‘play’ with, either for Plan A: putting it towards the debt (for a total of $ 3000 per month), or Plan B: we could maintain the $ 1K per month for the debt, and put $ 2K per month into savings so we can purchase a new home. We had been doing “Plan B” but now I’m wondering if we should put all the money towards the debt, had it completely paid off by July, and then we’d have an extra $ 1000 per month to put towards savings for a house. But on the other hand, I REALLY want to get out of our current home. It’s much too small for us and our kids and dogs, I’d like to live closer to my ex-wive to make being with the kids easier, and it’s quickly coming up to the best time to put our home up for sale (spring).