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The Promotion Has Been Ordered

August 27th, 2014 at 01:58 pm

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. Smile

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?





21 Responses to “The Promotion Has Been Ordered”

  1. crazyliblady Says:
    1409145997

    If I had that large of a pay increase, I would, over a period of months, do the following:

    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.

  2. Another Reader Says:
    1409146925

    Is your husband maxing out his TSP? In your shoes, I would put that at the top of the list. With kids near college age, I would look at reducing my cost exposure per FAFSA. Every dollar that is not counted towards parental contribution is money saved.

  3. PNW Mom Says:
    1409147031

    Congratulations to your husband!

  4. Mich Says:
    1409147325

    Congratulations to you both! well-deserved, I'm sure

  5. Bob B. Says:
    1409148150

    Wow, that's great! I'm sure that whatever you decide together, it will be the wisest decision you could have come up with.

    If I had a large increase in income I would:
    1) increase retirement savings
    2) increase college savings
    3) get satellite TV again

  6. Beawealthywarrior Says:
    1409149441

    Finally Smile Congrats again hubby!

  7. Butterscotch Says:
    1409150925

    Congratulations on your husbands achievement and thank you for his service!

  8. creditcardfree Says:
    1409151565

    @AnotherReader, I just gave similar advice to a friend but for the purposes of avoiding more income tax. I will have to do an FASFA estimate to see if this changes anything. Right now our income is such that were on the hook for paying for all of college.

  9. doingitallwrong Says:
    1409157397

    Glad the order finally came through -- congrats! I would probably do about the same as others have said if I got a large increase in income (or, you know, if I won the lottery Wink ):

    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. Smile

  10. Bluebird Says:
    1409161148

    Awesome!

  11. My English Castle Says:
    1409163251

    Great news! And look at our responses! Not a single Aaound-the-world cruise or luxury car!

  12. laura Says:
    1409174264


    Awesome news!! Congrats to DH. And yay for the budget. Smile

  13. starfishy Says:
    1409182199

    fantastic! congratulations to your husband and it sounds like you have some good ideas for the xtra income.

  14. Tabs Says:
    1409231112

    Woah, he's an Army Captain now? That is OUTSTANDING. Congrats to you both. Big Grin

  15. creditcardfree Says:
    1409231277

    @Tabs, He has been a captain since 2007...and just promoted to Major! Thanks, I'm pretty proud of him. I've known him since 1990 before he joined the Army. Moved up the ranks and commissioned as an officer in 2001 after he obtained his bachelor degree.

  16. CB in the City Says:
    1409237764

    Congratulations! Awesome!

  17. Tabs Says:
    1409246906

    Ooops! I meant Major lol.

  18. FrugalTexan75 Says:
    1409282133

    Congrats to your hubby!

    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

  19. creditcardfree Says:
    1409313012

    @FrugalTexan, when do you qualify for retirement at your new job.

  20. FrugalTexan75 Says:
    1409328504

    After Feb 1 Smile

  21. snafu Says:
    1409549686

    Congratulations to DH, who will reach status of Major in a few hours. I suggest you imagine yourselves 5 years in the future? What State/City do you see yourself living in 2019? Will you return to the workforce? What year will you buy your next vehicle?

    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?

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