My fiancé and I find ourselves in the following financial situation:

We just bought a house (Jan. 06), 100% finance with two loans. 188k at
6.35% and 47k at 8.26%, both fixed.

We have a student loan (6k) at $150 per month at 5.5% adjustable.

Aside from that, there are no other debts (credit cards, car payments, ect...)

My company matches my 401k at 1.25 for 6% of my salary.

I make 68k, my fiance makes 33k. We are both 26.

We have ~650 left per month, after expenses to invest and are
wondering how to get the most "bang for the buck" with our investment
cash.

Of the 650 we have leftover, how much should we pay into the mortgage,
how much into my 401k, or is there a better investment we could be
making?

I?m looking for investment suggestions and pros/cons of paying
mortgage vs. contributing to my 401k.

FYI, now we are paying $400 extra principal into the 47k/8.26%
mortgage and $250 into my 401k

---

Clarification of Question by psukeefer-ga on 20 Jun 2006 14:45 PDT

important info.

we are saving for a wedding in october, putting 430 a month towards
that. so once thats over, we'll have about 1k a month for
savings/investments.

Your going to have to beat 8.26% risk free or you just pay off  2nd.the

How much other savings do you have?  You want to have an amount equal
to at least several months worth of expenses in something low risk and
liquid like a money market account in case one or both of you loses
your job.  Some are MM's are paying close to 5% interest now.  If you
are saying that your company will put $1.25 into your 401k for every
$1 that you put in, I would definitely look at putting the 6% into
that next.  Whatever money was left after that I would put towards the
2nd mortgage.