#FinancialFreedom #WealthManagement #Budgeting #Investing #SavingsGoals
Congratulations on landing a new job with a higher salary! Now that you have extra $1,500-$2,000 every month, it’s important to make wise decisions on how to manage and allocate that money. Here are some ideas on what to do with the extra cash flow to help you achieve your short and long term financial goals.
🏡 Paying off Debt and Saving for a House
1. Prioritize high-interest debt: If you have credit card debt with high interest rates, it’s essential to pay off that debt first before allocating the extra money elsewhere. Consider putting a significant portion of your extra income towards paying down your $6,500 credit card debt.
2. Emergency fund: Building an emergency fund should be a top priority, especially with a family and kids. Aim to save at least 3-6 months’ worth of living expenses in an easily accessible savings account as a safety net for unexpected expenses.
3. Save for a down payment: With your short-term goal of buying a house, start setting aside funds for a down payment. You can consider opening a high-yield savings account or a short-term CD to save for your future home.
💰 Retirement and Future Planning
1. Maximize retirement contributions: Since your current employer does not offer a matching contribution for the 401k, consider maximizing your contributions to your Traditional 401k. This will help build your retirement savings and potentially reduce your taxable income.
2. Open an IRA: Since you don’t have an IRA, consider opening one to further boost your retirement savings. Look into both traditional and Roth IRAs to determine which aligns with your long-term financial goals.
3. College savings for kids: As a loving parent, it’s natural to want to plan for your children’s education. Look into 529 college savings plans, which offer tax advantages and can help you save for your kids’ future education expenses.
📈 Invest for the Future
1. Build a diversified investment portfolio: Consider investing a portion of your extra monthly income in a diversified portfolio of stocks, bonds, and other investment vehicles. This can help your money grow over time and work towards your long-term financial goals.
2. Real estate investment: Given your interest in owning a home, you may also want to explore real estate as an investment option. Whether it’s purchasing rental properties or real estate investment trusts (REITs), real estate can be a lucrative investment avenue.
3. Seek professional financial advice: Given your unique financial situation, it may be beneficial to seek advice from a financial advisor to help you make informed investment decisions and create a comprehensive financial plan.
🔍 Review Your Budget and Expenses
1. Evaluate your spending: With the increase in income, take the time to review your monthly expenses and identify areas where you can save or cut back. This can help you allocate your extra money more efficiently towards your financial goals.
2. Create a budget: Establish a comprehensive budget that outlines your income, expenses, and savings goals. This will give you a clear overview of where your money is going and help you make informed decisions on how to allocate your extra income.
3. Automate your savings and investments: Set up automatic transfers to your savings accounts, retirement accounts, and investment accounts. Automating your savings can help you stay disciplined and consistent in building your financial future.
In conclusion, having an extra $1,500-$2,000 every month can be a game-changer in achieving your financial goals. By prioritizing debt repayment, saving for a down payment, investing for the future, and revisiting your budget, you can make significant strides towards financial freedom and long-term wealth management. Remember, it’s crucial to tailor these suggestions to your individual circumstances and consult with a financial professional to make informed decisions. With the right approach, you can create a solid financial foundation for yourself and your family. #FinancialPlanning #WealthBuilding #MoneyManagement #FinancialAdvice #PersonalFinanceTips.
First step is to pay off your cc debt which is likely around 20% interest rate. You will not likely earn that by investing.
You don’t have excess money until you pay off those loans and have an emergency fund. Once that’s done, you can invest in an IRA and start saving for a house.
1. CC dept
2. Depending on car loan interest rate – maybe may that off quicker
3. Emergency fund
4. Retirement savings / HSA contributions
5. 529 for the kiddos
Just follow the prime directive in the sidebar. It answers all your questions.
Pay off that credit card debt, build your emergency fund up to 6 months worth of expenses, pay off that car early if interest rate is great than 7%, stick the rest in retirement since you’re a bit behind. Only after you’ve run the retirement calculations and you’re on track to retire comfortably should you start to save for a house and contribute to 529s for the kids
Concentrate on paying off the credit card debt immediately because that interest will kill you in making minimum payments. Create a savings account for home down payment. Add an extra $100 on the car loan each month. Build your savings for at least 3-6 months living expenses just in case. Consider putting 10% into 401k regardless if employer matches. Make a plan and stick to it.
Until you have paid off your loans, you don’t have “extra” money. Make a plan to pay it off and then start building a college fund for your kids.
1. Pay off your CC debt in full
2. Build an emergency fund that is at least several months of your expenses
3. Contribute to the traditional 401K to reduce your taxable income
Credit card debt, clearly. You can’t afford to save for your kid’s college when you essentially have no retirement savings. You’ll need at least a 1.5 million retire. You’ll barely make it to retire at 65 if you save $2k per month.
You need to re-evaluate your financial priorities.
First step, develop a budget.
Second step, pay off credit card debt and car loan.
It’s a tiny bit comical to hear you describe yourself as having extra money when you have so much debt.
Yeah CC debt first, get your emergency fund beefed up to about $10k and then go nuts on a 529 College fund for your kids, unless they’re dumb as hell, then buy a boat and get them prepared to be heavy equipment operators.
First pay off the cc debt then work on your savings.
You don’t really have excess money until your credit card debt is paid and you have an emergency fund. The good news is with your increased income, you can do all these things.
Excess money with $6500 cc debt and 800 in savings?
What’s the interest rate on your car loan? Odds are you’re paying more in interest on the CC but that’s important information for us.
Paying off your CC is likely priority #1 (20ish % interest rate most likely). Then, if your car loan has a reasonable rate you can probably start piling money into a HYSA. Would it be possible to move to a nearby area that isn’t so high cost? You may have some flexibility here unless you’re dead set on the HCOL area.
Get rid of car, that loan is dragging you under. Pay off cc
Try to cut your spending budget
You need about 30k in emergency savings based on your spending, so that will take you over a year right there
You are massively behind in your retirement. So you need to max two Roth IRAs after you get your emergency fund. I would still consider contributing to new 401k.
I’m sorry but you don’t have the money for a 529. You need retirement before college fund
I don’t know what you are going to do about a house unless you pump up your income even more. You don’t have the margin to build your necessary emergency fund, try to build a retirement and save for a house. You can’t sacrifice your lack of retirement.
Every single answer says CC debt. Bet this guy will go get a new car instead.
0. Develop and budget and stick with it.
1. Build up a 3 to 6 month emergency fund. This is based on 3 to 6 months of expenses.
2. Pay off credit card debt.
3. Contribute and work towards maxing an IRA first, then 401k or save up to afford a house or a combination of both.
I have a preference getting a base level of saving for retirement before housing, but I understand wanting a house and stability, especially with kids.
Important thing is to eliminate the carrying of unsecured debt and not go back to having one.
You have to ask yourself if you choose to stay in the HCOL, can you afford with your income?
I wouldn’t consider saving for kid’s college until you get your own retirement in order.
Invest it into the s&p500 and be close to a million in 10-15 years
Have another child and that’ll cover daycare
You have 37500 in debt 800 in savings 13k in retirement and really don’t know what to do being 40 with 2 kids💀 u are cooked
With two kids an Emergency Fund would be my priority.
If you lost your job tomorrow, how bad would it be?
Step 1: Deductibles covered
Step 2: Employer Match (if no match can skip this step)
Step 3: High interest debt
Step 4: Emergency reserves (3-6 months)
Step 5: Roth IRA/HSA
Step 6: Max out retirement if able (Roth IRA/HSA/401k) or save at least 25% of income
Step 7: Hyper accumulation – wealth building phase (invest in brokerage account or purchase home)
Step 8: Prepaid future expenses
Step 9: Low interest debt
This might be tough to hear but don’t worry about your kids college savings right now. The best gift you can give to your kids is being financially prepared for your future and retirement so they don’t have to carry that burden. You aren’t that far from retirement so this should be a wake up call that the time is now. It won’t be easy but if you cut down on unnecessary expenses you can make incredible progress in a few years time but stay consistent.
Right now is one of the first times that renting is cheaper than buying. In your situation buying doesn’t make sense especially with $800 in savings. Focus on the financial order of operations and trust the process. Buying a home when you’re financially stable will feel a lot better than rushing a decision you will regret especially if it’s going to have you living paycheck to paycheck. Life is about financial freedom not slaving away to get by.
I don’t have extra income and a family. You could always give it to me. I’m sorry for your difficult situation. Best of luck to you, I hope you overcome your struggles.
You just said your goal was to pay off debt.
You have verrrrry low savings and too much cc debt (meaning more than zero). Get those resolved ASAP. What would your family do if you lose your job for 3 months? Homeless/move in with friends? I don’t say that to sound cruel but that’s how you need to think about the importance of having more savings.
Start saving more for retirement in your 401k or IRA. Even just putting money into a total market stock index fund … gotta get caught up as $13k seems low. I also live in a HCOL area and it sucks but you can make sacrifices to invest more. Never a good idea to have a car payment if you can avoid it. It’s a money suck for sure as I have a car payment and I’m trying to pay it off as quickly as posssibke
I’d focus on the smallest debt first and get rid of it. Then put that money that would have gone towards that expense towards the next debt and then put that extra money into an emergency fund and retirement planning.
Dave Ramsey style, build emergency fund to $1,000 from $800. Then payoff that credit card. I would do a 401k rollover to your new employer 401k plan, you don’t want to pay the fees for that account to stay open.
Yeah, OP definitely does NOT have excess money. They have NO retirement fund and only $800 in savings. They’re behind and the answer is a no brainer here. Emergency fund, retirement fund and then maybe the car loan.
Find your highest interest rate loan and pay that off . But if it’s below the 5% interest you see HYSA , CDs , Money Market funds give out, then just stash it there and build your savings/emergency fund
And if there’s like something your partner or kids want, maybe put a couple hundred or so and treat them . Seeing them smile is probably the best ROI you are gonna get 😌
Don’t listen to others about paying debt off first. That’s the traditional thinking, but they’re wrong. Even though the math might tell you to, saving is more important. But do both–put 1/3 in savings, 1/3 towards your debt and 1/3 towards more fun and self-care for you and your family. The debt will get paid off slowly without detracting from your present day abundance and you’ll have a nice savings cushion when you’ll need it and won’t have to re-debt to pay for emergencies.
Once the debt is paid off, then use that 1/3 to start investing.
Payoff your debts. No reason to be paying 20%+ if you can help it. Pay off your car too. Can’t imagine that is worth the interest you are paying on top of the price.
Except for your home and very low rates (below 4-5), you should not carry debt unless you need it for a business where you are using it as leverage to make more money. Get into a habit of not taking debt.
Excess MONEY. Well that new on this forum. Not going to happen to me? Sigh, I guess being a Walmart Greeter is where i stuck until 65. DAMN Should have studied High School when i was young, now paying the price for it.
Pay off debt, then sock away as much as you can.
Buy some index funds
> Short term goal is to pay off debt and buy a house.
Sounds like you already know what to do with that money. List your debts in order from highest interest rate to lowest, make the minimum payment to all except the highest and put all your extra money toward that. Move down the line until all are paid off.
Until you have done that, you don’t have any “extra” money, so don’t tell yourself you do. Otherwise, you are likely to do financially stupid things.
I see some comments that are saying to start a college fund for your kids after paying off your debt. I recommend paying yourself before a college fund.
Priorities:
1. Pay off cc debt
2. Build 6 month emergency fund
3. Max out Roth IRA
4. Kids college fund (not even completely necessary)
You need to take advantage of compound interest with an IRA or else retirement will only be a dream. I promise your kid(s) would rather see you be able to retire and enjoy life instead of working until you can’t breathe anymore. If they even decide to go to college, they can figure it out. Once you have your nest egg and are ready for retirement you can always help them then.
You are very broke
1. Pay off your CC
2. Save 6 months of expenses in cash
3. Pay off that car
4. max out your 401k
Pay down the CC debt. Bulk up the emergency fund. The contribute heavy to your 401k
Hard to say w/o knowing you and your wife’s total income. What I would do. Ditch the expensive car. Build cash bc it is a utility not a luxury. Invest in QQQ, use Charles Schwab or another platform. Pay more down on credit card than you spend, keep using card for credit to maintain cash. Sell stuff on Facebook you no longer use. Cut your own hair and wear inexpensive clothes for the next 10 years. Get a gym membership and stay healthy. Home ownership will be better when interest rates go down. Good time to be a saver.
Even if your employer doesn’t match, it’s still worth it to contribute to your 401K because it lowers your taxable income.
Op come on, you have less than half of the “extra” in savings, time to pay off the debt, save half of the excess.
only 13k in your 401k is not great for your age. i would try to invest all of that into your 401k after you clear your cc debt and build up an emergency fund
Credit card debt first, always. Then savings.
You may make more, but certainly don’t have “excess money” if you have $6500 of credit card debt and $800 of savings.
Step 1: Set up a one-month emergency fund. Sit down with your spouse and crunch the numbers on how much your basic living expenses (needs not wants) and minimum debt payments add up to, and aim to have that money in a savings account. $800 is definitely not enough for anybody, let alone a family of four. Assuming your spending stays the same and you save $1500 a month in a savings account, it will take you 3-6 months to save up a one month emergency fund, though I suspect you have frivolous spending you can cut in order to speed this up to 1-2 months.
Once you have a one month emergency fund, throw every penny you can at paying off your credit card debt. If you pay $1500 a month it’ll take you 4-6 months to pay off depending on the interest rates, though you really should do everything in your power to reduce your other spending in order to pay it off faster, and from now on, no more spending on credit cards unless you’re paying them off in full every month.
You can just pay minimum payments on your car loan for the life of the loan, you mentioned 5% in a comment, that’s relatively low and you’re better off with the additional cash in hand now for your other goals as opposed to killing this loan early.
Once you get a one month emergency fund and all of your bad debt paid off, you have competing priorities: saving for a house down payment and saving for retirement. Assuming 13k is all you’ve got saved for retirement, you’re terribly behind for 40 years old. In a vacuum, somebody who’s 40 years old and has nothing for retirement should be saving 25%+ of their income for retirement to catch up if they ever want any hope of retiring. Retirement savings also take priority over college savings for children. Student loans are a much smaller burden than having to support elderly parents who didn’t prepare for retirement.
Saving for a 20% down payment will be extremely difficult in a HCOL area with just $1500 a month, so you may just have to put 3% down and deal with a higher interest rate and higher risk of going underwater if there’s any type of housing crash.
Again, props to you for looking to spend the extra $1500 on improving your financial situation instead of inflating your current lifestyle, but you are currently in a difficult situation that requires course correction if you want to live a good life and retirement. It’s hard for me to evaluate without knowing how much your cost of living is and what your income is, but I suspect that there is frivolous spending going on in your household that is costing you more than you realize. If you can cut back your spending and free up another $1-2k a month, all of those timelines I gave for paying off debt and setting up an emergency fund can be cut in half, and you can significantly accelerate progress towards building wealth, whether it be through home ownership or properly funded retirement savings. I don’t really know how to advise on allocating money towards retirement vs a house down payment, as I’m just over half your age and don’t own a home yet, but you need to get your debt paid off and a proper emergency fund before you can make more forward progress. Best of luck, you still have time to turn things around.
Split the excess between savings and debt until you have 3 months of expenses in your savings. Then pay off your CC debt if you haven’t. Start saving for a house. I don’t know where you live, but 15-20k gets an average down payment where I live.