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How can we make the most of our sudden increase in income?

(9 Posts)
MagpieWife Wed 12-Apr-17 14:59:43

My husband and I (late 20s/early 30s, no children yet) recently moved to America to be closer to his family.

We moved on a bit of a wing and a prayer with no jobs to go to - but have been incredibly lucky to both find jobs at almost double our previous salaries. Our household income now will be $110 000 gross. Of course our living expenses will be higher when you factor in things like health insurance, and we need more savings as there is no safety net here.

I'm posting to ask if any of you have advice on how we can make the most of our new income. Should we be saving for a deposit or even to buy outright (house prices much lower here)? Should we be investing - and if so, where do we start? Should we just live the high life before kids come along?!

I hope this doesn't sound like a humble brag - I am genuinely looking for advice and I know we have been very very lucky. Innovative and creative ideas welcome!

Orangedaisy Wed 12-Apr-17 15:01:25

Give it to me grin.

GplanAddict Wed 12-Apr-17 15:09:53

After you pay your fixed bills, Set yourself a food/petrol budget (separate account helps to keep tabs) and another budget for monthly disposable income so you can treat yourselves every now and then, meals out, holidays. Stick to it, and save whatever is left. I don't know if US have a similar thing to an ISA but I'd initially save in one if those if possible.
Good for you for thinking of getting advice, I didn't and had a brilliant social life but wish I'd been more mindful with it smile

MagpieWife Wed 12-Apr-17 17:36:48

orangedaisy Haha would certainly be simpler!

Golan Thanks for the advice - I think you're right that we need to plan our spending because the temptation will be to just go crazy. I don't think they have ISAs as such but I'll look into the best savings accounts.

Thanks again!

Timeforabiscuit Wed 12-Apr-17 17:44:36

For the love of god do what gplan suggests

It will get frittered on meals out, shopping and electronics.

Do not start using a credit card "because we can clear it within a month of salary" you wont!

Overpay on mortgage and clear debts and build a nice nest egg where you cant get it.

Please dont be me sad, your lifestyle and behaviours change when there is more money in the bank so you get through it quickly unless you manage it. Is your dh on the same page?

MagpieWife Wed 12-Apr-17 23:39:56

Hi biscuit, yes my husband is on the same page. We are renting right now but will be saving towards a deposit.

Thank you for the advice. I think you always need encouraging to save and i can imagine how easy it would be to take the money for granted. I hope your situation is okay.

Timeforabiscuit Thu 13-Apr-17 07:22:50

Oh its fine smile ... because dh is still in his job - but it puts alot of extra pressure on when you think you can step down on pay, only to find youve taken on more expenses.

nannynick Mon 17-Apr-17 07:23:21

As you are in the US you can follow the Dave Ramsey plan fully.

wee.daveramsey.com/new/baby-steps/

You will complete some steps instantly, such as BS1 starter emergency fund of $1000, BS2 pay off debt, BS3 3-6 months of expenses emergency fund.

BS4 is going to be of most interest to you as it is about investing. In the US you have 401k plans, Roth IRA, traditional IRA. You need to learn about what those are and take advantage of the most tax efficient savings for retirement.

You may find the Retire Inspired podcast useful, www.chrishogan360.com as Chris talks a lot about the different retirement savings methods available in the US.

You will also want to look at saving towards a home, buying that in cash or with a mortgage but avoiding mortgage insurance by having at least a 20% deposit.

nannynick Mon 17-Apr-17 07:29:05

ROTH IRA is similar to a ISA but the max pay in amount is a lot lower.
401K is similar to an auto-enrolment stakeholder pension.

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