While I'd love to see all of our credit cards paid off completely, I've learned that I should let DH pay his own debts off. Although he wants to be free of them, he is also still willing to splurge on purchases with the intent of paying them off quickly... but it doesn't seem to work out that way. Those purchases accumulate, and by the end of the month are often $1-2k! We've paid off some of these 'smaller' balance cards several times over!
So instead I'll be putting the extra money elsewhere. I've been debating whether to add it to our emergency fund (currently $5000), set aside money for future house renovations, or put it towards paying off our second mortgage. The debt-freak in me wants to pay off our second mortgage as aggressively as possible, but strategically, it would probably be better to have that money in a liquid account.
One of my options would be to set up a savings goal through SmartyPig, using it to set aside money for the sole purpose of paying off the second mortgage. It wouldn't make much sense to have 20k+ sitting there waiting to be sent off, but I could build up a few thousand dollars in there (sort of a dual purpose, secondary emergency fund & mortgage principal reduction), then start sending all the extra money to the mortgage company.
How do other people balance paying off large long-term debts (like mortgages) with emergency savings? Our emergency fund represents a bit more than 1 month, but if only one of us lost our job (and could collect unemployment), we could likely last 6+ months.
