What to do with large salary increase?

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Questions:
1) Where do I stick the Emergency Fund cash in? I don't want to put it where it currently sits.. I dont even think it earns 1% lol.

It's a problem we all face. Security is #1, and a money market with (if you're lucky) up to 2% is better than risk for ready cash.

2) This salary would be just starting and may increase with bonuses.. What do you suggest I do with any future increases? Should I split any future salary\bonuses 30\30\40 to Entertainment\Investment\GeneralSavings?

In all seriousness, don't count your chickens before they're hatched. Read, read, read, and educate yourself so whatever percentage you choose comes from knowledge, not someone else's formula.

3) My current house I do not plan to stay at forever. I bought it with the idea of renting it out. It would probably cash flow positive as it sits for roughly 300-400 a month or so. What should I do in terms of buying my next house? I estimate my next house to be anywhere from $250-300k... How should I go about changing my budget to save for my next home?

You just answered #2.

[BackupMan28]

It's a problem we all face. Security is #1, and a money market with (if you're lucky) up to 2% is better than risk for ready cash.




In all seriousness, don't count your chickens before they're hatched. Read, read, read, and educate yourself so whatever percentage you choose comes from knowledge, not someone else's formula.




You just answered #2.

I know I shouldn't count my chickens before they are hatched.. And that may seem what I am doing... But in my line of thinking, having a plan for that "next step" is never a bad thing.. On the contrary, it's always been motivation for me to get to that next step. By having a budget now for any future raises or unexpected bonuses, etc... I already have a plan for it and can then strive for it. I think this is one reason why I've never really been afraid to ask for a promotion or a raise, unlike a lot of people who may get nervous... I see it as a "I have done over and above what was required of me to get the promotion we last spoke of... now show me the money"

So although it may seem as I am getting ahead of myself.. I see it as just getting myself motivated and prepared. Know what I mean?



Also....Very good point about answering #2, I don't know why that didn't occur to me. I think I may take 10k of that 50k leftover after the first year debts are paid off and combine it with a good chunk of any future raises\bonuses.... Along with bumping up 401k and Roth to fully funded, and tossing myself a little extra fun money as well each increase.

[kork13]

I'd say you've been able to think through a pretty decent plan, at least as a starting point. Obviously, you'll have to make real-time corrections as time goes on and you see how things actually play out. Be flexible, and reassess your situation periodically to see what changes need to happen.

But as for the idea of getting ahead of yourself, I disagree... It's never a bad thing to build a workable plan, even if it doesn't go as expected, because you can adjust as required. There is, I think, a difference between preparation and planning and day-dreaming.

[BackupMan28]

^I absolutely agree. I've never been one to be depressed or disheartened if things don't go quite as planned. That's life. Roll with the punches.. Maybe sulk for a day or two and then get back up and get back to the fight.

I look at finances the same way. If your original plan doesn't work, then modify it to plan for the new variables.

I just wish I thought this way about finances in my early 20's!