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But here is the thing, my family makes a comfortable 40k after taxes. We have zero debt, eat good food, live in a decent neighborhood, and don't want for anything. We put away 10k a year into retirement, and still have 6k a year for vacation. We have had a fairly constant income for the last 7 years, and have gotten very good at living at this level.
Soon our take home will double, and then triple just a few months later, but I have no idea how to adjust to that. Already our savings is a years worth of expenses, and our cars have less than 100k miles between the two of them.
First world problems I know, but any advice is appreciated.
Why not invest the money you are accustomed to not using until you have enough money to be independently wealthy.
Our credit union has a program where you can save money in cd's and have the interest dumped in a savings account every month. So save the first money in the cd's then take the interest it draws and start your stock and bond investing at someplace like Fidelity or Edward Jones, etc. This way you will never put the money you earned at risk, but will hopefully be gaining a higher percentage from the money your money earned.
Never put more money in any account from the salary than that particular bank has insurance on.
Some people like the 401k's but my theory is to not have any money connected to anything that can be controlled by the government. Government likes to think they have a right to control money and set rules for money that is in these programs sometimes. Of course this should be your individual choice and you may like the protections these programs provide.
I have not read all the replies but the first and best thing you can do is to sit down with your spouse and talk, for hours or days if necessary, about the future and your goals. Talk about education, desires, retirement, wants, needs, etc. Write it down and refine it.
This one thing will help you figure out what to do with your money. It will let you get to a place of comfort and stability. Dont just hope it will happen but make plans and have goals.
Note: We did this in the 80s and worked our plan to a comfortable retirement.
The second thing I would say is live below your means. If you live paycheck to paycheck you will not be in control of your future. When we got extra money, we always discussed it and tried to figure the best use for it. Sometimes it was for a debt if the interest was somewhat high, or a trip if we had one in our plan, or pure savings for future needs.
I don't know how old you are, but from personal experience, try to get an image of what you want to do when you're 50, after you've been laid off (through no fault of your own, just cause you're old and making six figs), and what business that would be.
Both my wife and I who went from having successful careers to being bounced out of corporate within a couple years of each other. We'd both doubled our income in the six years prior to being laid off. It was a pretty heady time as we could afford to do pretty much anything we wanted - and we did travel quite a bit, although we didn't buy a lot of new stuff.
At the point we were both out of corporate jobs, we were comfortable with our retirement/stocks/home equity, some of which went into starting a retail business, which itself became a convertible asset we sold after seven years.
Our saving grace when we moved up from a condo to a house (while we were both employed), we didn't buy what we could qualify for - we bought much smaller. The home we bought was in a great school district but priced almost exactly equal to one year of gross salary although we could've qualified for 2.5x-3x that much.
So my advice would be to look at this as an opportunity window, not as a permanent situation. Save what you can, invest wisely, but don't forget to live.
Not being "house poor" has enabled us to keep going despite the fact that our income is now 25% of what it was not long ago. And we are happy that we spent what we did on travel because we're not sure we'll be able to do that again - we have great memories that we wouldn't have had if we bought more expensive cars, a bigger house or other "stuff".
Notice nobody mentioned moving into a higher income neighborhood. Good because as soon as you move there you will be tempted to emulate their lifestyle with newer fancier cars, vacations to exotic destinations, etc.
Notice nobody mentioned moving into a higher income neighborhood. Good because as soon as you move there you will be tempted to emulate their lifestyle with newer fancier cars, vacations to exotic destinations, etc.
Oh man, I just got back from my winter vacation, had a loaded Chrysler 300 as my rental and fell in love with that boat (blows away my civics in power, comfort, quietness, safety, breaking and feel (also drinks gas, and I am sure costs a bunch to insure)).
I had a hard time adjusting to my civic on my drive home from the airport.
So maybe a new car is in the works for us, but we aren't much for keeping up with the joneses (we watched our families do that growing up and have no intention of ending up like them (storage units full of useless junk)).
But here is the thing, my family makes a comfortable 40k after taxes. We have zero debt, eat good food, live in a decent neighborhood, and don't want for anything. We put away 10k a year into retirement, and still have 6k a year for vacation. We have had a fairly constant income for the last 7 years, and have gotten very good at living at this level.
Soon our take home will double, and then triple just a few months later, but I have no idea how to adjust to that. Already our savings is a years worth of expenses, and our cars have less than 100k miles between the two of them.
First world problems I know, but any advice is appreciated.
Pretend you are living what you have been and either bank all the extra or consult with a financial counselor and find things you can invest in.
Definitely visit with a financial planner -- one who charges a set fee, not one who has commissions from whatever he sells you. That should be your first priority. Think about your short and mid and long term goals on the big issues: education, retirement, house/location. Have interim goals to meet on the long term stuff. Set aside play money and six months of expenses.
But here is the thing, my family makes a comfortable 40k after taxes. We have zero debt, eat good food, live in a decent neighborhood, and don't want for anything. We put away 10k a year into retirement, and still have 6k a year for vacation. We have had a fairly constant income for the last 7 years, and have gotten very good at living at this level.
Soon our take home will double, and then triple just a few months later, but I have no idea how to adjust to that. Already our savings is a years worth of expenses, and our cars have less than 100k miles between the two of them.
First world problems I know, but any advice is appreciated.
This has had happened to me. I kept living the same way and banked the rest. Thank God! Life is unpredictable.
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