Doing a quick look ahead to the coming year I am confronted with another familiar situation.

This past year was one that was slightly different from those I am used to. It was the first year I didn't get every cent in federal income taxes back. But that could easily be explained by the fact my wife actually worked most of the year and I had a couple nice raises to boost my income.

This coming year however, we are getting used to our newly born son. As such, the wife doesn't plan on going back to work and I am looking to be deployed for half the year. That will take my adjusted income to under $15K and with the various credits like the Retirement Savings Contribution Credit (which is freakin' awesome if you haven't heard of it) I will most likely get every cent back once again. So Uncle Sam will only be getting my continued military service and not my income (except for Social Security etc).

Back to planning for the upcoming year. Normally when planning my taxes for the year I adjust my withholdings to account for what I plan on owing. There is no reason to give the gov't an interest free loan. But to be completely safe this year I will withhold as if I am not going to get 6 months of tax free income. Better safe then sorry...

Okay, this is my first Blog entry so bear with me. I hopefully gave you a quick snapshot of my families situation under my info. What I'd like to throw out there today is my thought process on my 2008 goal of paying off my Auto Loans.

First of all, both loans were for 60 mos and I had no previous intentions of paying them off early. I got lucky enough to purchase both vehicles a few years back when interest rates were quite nice.

However, I was bored at work one day and was looking at my Money Market accounts interest. It got ~4.25% last month, well not actually 4.25% but 4.25%/12 or the equivalent monthly amount. Anyway... in the past I never thought about taxes, and since I am fortunate enough to still be in the 15% tax bracket and I was getting upwards of 5% on my Money Market I never looked into paying off my low interest debts early.

STATS:
Truck Loan: 3.25% - 16 Pmts Left
Car Loan: 3.9% - 29 Pmts Left
MMKT (4.25%) - Tax: 3.6% Yield

So now with the lower money market rate I set my 2008 goal to pay off my Car loan before I put my usual $500 a month into savings/investments.

So, $500 plus the approx $300 / mo that goes to principal on the car should get me paid off by Dec 08.

Now, in my mind there is a small struggle with the truck loan as to whether to pay it off early or not after the car loan. I am leaning towards knocking it out as I should be getting extra income starting this summer as I will be deployed.

There is no telling how this will go. We have a pretty tight budget set and even though I am comfortable with it, I am sure there will be things I didn't account for especially considering we have a newborn Son.

Wish us luck...