Planning—Other / Got a nice promotion. But what to do with the extra money?
Aug 10, 2022
Got a nice promotion. But what to do with the extra money?
I wanna play this smart and not impulsively as I have in my past! My salary is going up by 30% that's an extra $15,000 but before I pay taxes. I'm 34, live in upstate NY, married but no kids. I have some debt: 1. personal loan debt of $3,540 with interest rate of 9.2% 2. private student debt of $12,100 with interest rate of 6.8% And some savings: 1. $18,900 in savings 2. $25,760 in 401K What are some smart moves I can make with extra income? Thanks for any tips you can share!
Replies (5)
Aug 11, 2022
@DraganaO2I, if it were me, I'd pay down that personal loan with the savings you've got now...Unless you have that earmarked for some other big purchase you plan to make in the next year. Then with the extra income I would definitely pay a higher monthly payment on that student loan so you can get rid of that one for good. Then keep saving and investing : contribute a higher amount to your your work 401k and if you qualify, think about an HSA too.
J
2,861
Aug 11, 2022
@BennieMJF, I'd add that setting timeframe goals like 3 months or 6 months or 1 year goals can help you stay on track! Goals like paying off all your debt in the next year, or contributing 2% more to your 401k in 3 months or saving $5,000 more by year end.
Aug 17, 2022
@DraganaO2I, work towards maxing out your work sponsored retirement plan, and if you are already doing that, then dollar cost average the extra money into investments like ETFs or mutual funds. First things first tho, pay off that high interest personal loan. Will feel great to wipe that one out!
Sep 03, 2022
@DraganaO2I, pay off the personal loan debt (there's no investment that's going to give you a guaranteed return close to that) and work to max your 401k if you aren't already. If you're maxing out see if you can stash away more with a Roth or Roth IRA.
J
Sep 17, 2022
@DraganaO2I, Start with the loan with the highest interest rate. Good that it is also the one with the smallest outstanding balance. Not sure about the student loan but def think about putting more away into your 401(k) and things like health savings accounts. Congrats on the promotion.