Significant Increase in Salary – What to do?

Ben3991

Ben3991

Ben3991

Associate
Joined
18 Sep 2011
Posts
167
Hi All,

I’ve been lucky enough to land a job which has more than doubled my current salary. We have our own home (mortgaged) and have no intention of moving anytime in the near future. My partner also works, we are by no means well off but have a nice home, OK cars, and slightly more disposable income than we manage to spend each month on my current salary.

I’m going to enjoy the extra money a bit, probably with a new car, but what have others done in this position? Consider a 2nd Property, overpay mortgage as much as possible, keep it in the bank, other investment ideas I’m not aware of? If we wanted to move then it would be straightforward, bigger house with bigger mortgage but we don’t want that!

Only major milestone to consider in the near future is kids probably in 2-3 years.

While it’s still nowhere near some of the salaries I’ve seen people mention on here, I think I would be silly not to consider options on how to best use this opportunity, at least for the next 2-3 years until kids!

Thanks!
 
you said you manage with what you currently have so
Whatever you have extra over than now with the new salary you could pretend you don't have it and save/pay off mortgage etc.
If you wanted to enjoy the money a bit then save say 75% of it to overpay mortgage / isa etc and use 25% for fun stuff like weekend breaks, holidays, etc.
It's a good position to be in
And if you have kids later in 2-3 years if you wanted you could let your wife stay at home a little longer as you will have the funds i.e take a year off etc.
Bear in mind if also if you don't have family support you will have to pay childcare etc - which is expensive !
 
Overpay the mortgage.
Perhaps consider putting away some into Stocks & Shares ISA’s for longer term
 
The greatest gift you will ever get yourself (apart from the aforementioned Gucci belt, obviously!) is becoming debt free as soon as possible. The smaller your mortgage, the more security you have in case life comes up smelling of rose manure instead of roses.

Congratulations, BTW.
 
What's with the Gucci belt and corner sofa? Are they OcUK memes like boxing stance and Hovis?

As for the OP - congrats. The rest of us get 0% or 1% if in the NHS, below inflation which ever way!
 
Save some, pay more on mortgage - clear any debts (credit card/loans etc)

Also - don't forget - enjoy life! Few extra nights out, holiday etc - do it before kids come along!
 
Congratulations. Ramp up your pension contribution if there's any appreciable benefits (employer matching, getting into a lower tax band), and start paying into a lower cost index tracker S&S ISA.

After that I would overpay mortgage so long as there aren't any punitive fees associated.

After that, put any spare cash into a 3 year fixed cash ISA for a decent rate (>2%) which you can put to use if needed once kids come along.
 
Obvious one is to make sure you max out your ISA allowance each year.

If your employer matches pension contributions then make sure you’re opting to contribute up to the full amount they’ll match.

If you have any debts with a significant interest rate then it is a no brainer to clear them (credit card, car loan etc..).

Unlike the other poster's suggestions I’d probably not bother with the mortgage overpayments as rates are rather low at the moment, it could be rather pointless/inefficient and you could well be better off with your cash invested instead - unless you only have a small amount of equity and are paying a high rate so could move to a much cheaper deal quicker.

Try and save most of it if kids are on the way, in addition to the ISA some funds/trackers might be useful long term investments and hopefully outperform your mortgage interest rate.

Obvs the suitability of any investments depend on your personal circumstances etc... DYOR etc...
 
It sounds boring but use the difference overpay your mortage to the max allowed and the rest into a retirement fund (plus employers pension scheme if the matching is worth it). I did that when I got promoted and claimed shift allowance - it's worth it, trust me.
 
You must log in or register to reply here.
Back
Top Bottom