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Started By
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What to do with 1 year increased pay?
Posted on 3/7/24 at 9:02 am
Posted on 3/7/24 at 9:02 am
I'm making a lot more money this year, but only for this year. My salary will revert back in 2025. I'm considering putting an extra $13k to max out my 401k but don't really want to as it's the safe and boring choice. I'd rather put it towards savings to buy a better home or maybe consider the idea of purchasing my first rental property. I also probably need to buy a new vehicle in the next year or 2. Let me know what yall think is best.
Currently single and 31 years old
Retirement accounts (401k, HSA, Roth IRA): $186k
Taxable Brokerage: $78k
Cash (including emergency fund): $57k
Debt: I owe $335k at 3.25% on a mortgage, probably have about $45k in equity. I'm paying PMI on this at $158 per month but don't intend to stay in this house long term.
Currently single and 31 years old
Retirement accounts (401k, HSA, Roth IRA): $186k
Taxable Brokerage: $78k
Cash (including emergency fund): $57k
Debt: I owe $335k at 3.25% on a mortgage, probably have about $45k in equity. I'm paying PMI on this at $158 per month but don't intend to stay in this house long term.
12
Posted on 3/7/24 at 10:10 am to Yeti_Chaser
I’d dump it in a HYSA
Posted on 3/7/24 at 10:36 am to Yeti_Chaser
Doing something with it to improve your monthly budget situation after your salary goes back down makes a lot of sense. It is an opportunity to free up discretionary spending at a lower income. That usually leads to less stress and more enjoyment.
Posted on 3/7/24 at 4:28 pm to Yeti_Chaser
Max out your 401k first. Your future self will thank you.
Posted on 3/7/24 at 4:38 pm to Yeti_Chaser
quote:
Taxable Brokerage: $78k Cash (including emergency fund): $57k
Well good for you.
Posted on 3/7/24 at 5:00 pm to Yeti_Chaser
401K then Brokerage would be my move.
Posted on 3/7/24 at 5:06 pm to Yeti_Chaser
How much is the pay increase and what will it go back to in 2025?
Posted on 3/8/24 at 5:59 am to Yeti_Chaser
You seem to be in a pretty decent spot for 31, why not do something for yourself with it?
Put half into maxing your 401k and spend the other half on a trip you've always wanted to do.
Or theres always cocaine and hookers... but don't forget about Iraqi Dinars
Put half into maxing your 401k and spend the other half on a trip you've always wanted to do.
Or theres always cocaine and hookers... but don't forget about Iraqi Dinars
Posted on 3/8/24 at 6:50 am to Yeti_Chaser
Max out 401k
Posted on 3/8/24 at 7:36 am to Yeti_Chaser
That PMI is really high. What do you need to get the mortgage balance down to in order to eliminate it? For example, let’s say at a $305k balance, PMI drops off. That’s $30k.
You are paying $1,896 a year in PMI. If you threw $30k at the mortgage, that’s pretty much an immediate 6.3% return on your money for eliminating PMI + a 3.25% return for paying down your mortgage.
There are some nuances to the numbers above, but given your excessively large emergency fund and increased salary, paying down that mortgage to eliminate PMI is a no brainer to me if you plan to be in the house at least another year.
You are paying $1,896 a year in PMI. If you threw $30k at the mortgage, that’s pretty much an immediate 6.3% return on your money for eliminating PMI + a 3.25% return for paying down your mortgage.
There are some nuances to the numbers above, but given your excessively large emergency fund and increased salary, paying down that mortgage to eliminate PMI is a no brainer to me if you plan to be in the house at least another year.
Posted on 3/8/24 at 7:47 am to Yeti_Chaser
Fund a Roth IRA and max HSA before more taxable investments. HSA I'd triple tax advantaged pay out of pocket if you can and keep reciepts for future tax free withdrawals.
Posted on 3/8/24 at 3:31 pm to Yeti_Chaser
I would get out of the PMI if at all possible.
My next choice would be to put aside about $2k and take a nice vacation or check something off of your bucket list then dump the rest into retirement and act like that extra money never existed.
You probably don’t “need” a new truck or house, but if you need this extra income to fund those purchases then you shouldn’t be buying that much car/house anyway.
My next choice would be to put aside about $2k and take a nice vacation or check something off of your bucket list then dump the rest into retirement and act like that extra money never existed.
You probably don’t “need” a new truck or house, but if you need this extra income to fund those purchases then you shouldn’t be buying that much car/house anyway.
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