My husband received his promotion order yesterday. His promotion from Captain to Major is effective September 1. This means a pay increase which we will see on his pay mid September.
I feel like I have been waiting all year for this! I'm sure he feels the same but for different reasons.
This pay increase feels like a lot of responsibility for some reason. It is a gross increase of $1,150.20 per month. I need to figure how much more taxes we will owe, adjust withholding if necessary, decide if we should increase retirement contributions and really decide overall what to do with the increase. I sure don't want to just spend it away!
As far as retirement contributions go, we currently save 17.8% of my husband's gross pay towards retirement. Do I try to maintain the percentage, or increase the amount but not worry about the percentage of gross?
In the end, I think I will play with the numbers over the next week and try to see what feels the most comfortable. I also should talk with DH to see if he has any preferences on what to do with his hard earned money! I think he will opt to save it in some way and we have discussed that previously.
As I finish writing this, I had the idea that maybe the entire increase (minus taxes) will get saved, but just among various places. Retirement, regular savings, and maybe a taxable investment. A little to each of those may feel good.
I'll let you know what we decide and how it will look. If you had a large increase in income what would you do with it?
The Promotion Has Been Ordered
August 27th, 2014 at 01:58 pm
August 27th, 2014 at 02:26 pm 1409145997
1) pay off both credit cards
2) make an extra payment on the mortgage
3) after 1 and 2, I would increase my retirement contributions by about 3%
4) I would also increase my monthly savings deposits by double what they are now.
5) I would also open a Roth IRA or regular IRA and deposit some funds.
August 27th, 2014 at 02:42 pm 1409146925
August 27th, 2014 at 02:43 pm 1409147031
August 27th, 2014 at 02:48 pm 1409147325
August 27th, 2014 at 03:02 pm 1409148150
If I had a large increase in income I would:
1) increase retirement savings
2) increase college savings
3) get satellite TV again
August 27th, 2014 at 03:24 pm 1409149441
August 27th, 2014 at 03:48 pm 1409150925
August 27th, 2014 at 03:59 pm 1409151565
August 27th, 2014 at 05:36 pm 1409157397
1) Pay off credit cards
2) Build up emergency fund
3) Pay off 401(k) loans
4) Look into backdoor Roth contributions
5) Increase 401(k) contributions
6) Pay off personal loans
7) Start chipping away at real estate debt
Clearly, I'd need quite a large increase in income to do all that! Still, it's fun to dream.
August 27th, 2014 at 06:39 pm 1409161148
August 27th, 2014 at 07:14 pm 1409163251
August 27th, 2014 at 10:17 pm 1409174264
Awesome news!! Congrats to DH. And yay for the budget.
August 28th, 2014 at 12:29 am 1409182199
August 28th, 2014 at 02:05 pm 1409231112
August 28th, 2014 at 02:07 pm 1409231277
August 28th, 2014 at 03:56 pm 1409237764
August 28th, 2014 at 06:28 pm 1409246906
August 29th, 2014 at 04:15 am 1409282133
If I had that kind of extra income, I'd
1. Max out my ROTH
2. Put 40% of what's left to savings
3. 30% to other retirement (once I qualified)
4. 10% for fun and giving
August 29th, 2014 at 12:50 pm 1409313012
August 29th, 2014 at 05:08 pm 1409328504
September 1st, 2014 at 06:34 am 1409549686
How much interest would you you avoid by using at least half the [net] increase to further accelerate paying off the mortgage? How will extra payment affect any mortgage tax deduction ? What path do you use to increase your own retirement contribution? What Is the a tax advantage? Are you better served with investment in a regular Vanguard program?
Long term, what does DH see when he retires from the military? Would he operate his own business or prefer to be an employee? With the house mortgage free, an anticipated military pension, and a retirement program modestly growing at 7% with 17% annual contribution what's the next chapter?