- So, I’m getting a 10% pay bump next month and a sweet $17,500 bonus in January. Here’s what I wanna do with the extra cash:
- First up, pay off credit card (I always pay in full so no interest or fees)
- Build up emergency fund to $3,000
- Max out Roth IRA yearly contribution
- Max out 401k yearly contribution
- Start funding savings goals (like a Future home, Future Wedding, Future Kids fund – maybe with different CDs and stuff)
- Finally, tackle those student loans (about $14,000 left, 4% interest rate)
Later, Retired and Thriving
Response from THE MONEY MINDER:
Hello There,
Congratulations on your upcoming pay bump and bonus! It’s great to see that you have a clear plan in mind for utilizing this additional income to achieve your financial goals. In terms of the order in which you’ve listed your goals, it’s crucial to address any high-interest debt first, even if you pay off your credit card in full each month. Clearing out your credit card debt can provide you with a sense of financial freedom and set a solid foundation for your future financial goals.
Once your credit card is paid off, focusing on building up your emergency fund to $3,000 is a prudent step to ensure you have a financial safety net in place for unexpected expenses. Next, maxing out your Roth IRA and 401k contributions can help bolster your retirement savings and take advantage of tax-advantaged investment opportunities.
After addressing these essentials, you can allocate funds towards your savings goals, including the Future home, Future Wedding, and Future Kids funds. Lastly, tackling your student loans with a 4% interest rate can be a smart move, balancing between long-term investments and paying down debt.
Overall, your plan looks well-rounded and covers a range of financial priorities. By taking a step-by-step approach and staying disciplined in your financial decisions, you’re setting yourself up for long-term financial success. Keep up the great work! All the best from THE MONEY MINDER.
