Significant Increase in Salary – What to do?

As, mentioned overpay your mortgage but keep the current monthly payment the same. Usually max 10% of outstanding debt each year.

Pension contribution - boring but if you make old bones will be great.

Move to larger/nicer property if desired, or get your present house how you always wanted it. But large scale renovations is a *ing nightmare to live through. So if you have the funds live elsewhere while it's being carried out, if you can afford it.

And as you plan to have kids perhaps a college fund. We started ours recently. We tell the kids that they'll have to get part time jobs etc, which they will, to teach them value of money but our hope is to cover a lot of their debts once they've finished. But this is a long, long term investment and it's cash you still have access to if you need it. Plus, kids will definitely learn value of money if you have to dip into it...

Plus, kids are expensive full stop - regardless of income if they have clubs and hobbies. They'll usually find a way to suck up your extra income.

But, as has already been mentioned, I would wait a year and see how your new position pans out - allow for sods law.
 
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Got some disposable income and you've not got kids yet. Sod the mortgage - spend the money on as many exotic holidays as you can, that you simply wouldn't be able to do with kids (so - for the next 20+ years of your life).

Once you've got kids the cost of the equivalent holiday will be many times as much as what you can go for now (as in, you'll be paying for 3/4 people AND you have to go during school holidays - so you'll be paying through the nose) - and some destinations are just impossible with kids in tow.

I managed to go snowmobiling / quad biking in Icelandic winter and dune buggy racing across the Sinai Peninsula before we had kids. But I wish I'd have done more. No chance now. Camping in France is about as far as a few grand stretches nowadays.
 
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Considered a leather shirt?

Serious answer... whatever you do, don't expand your lifestyle to use the extra money. Keep your outgoings close to what they are now and save or invest the money. If you grow your lifestyle then you limit your options in the future. I wish I had taken that advice.
 
Bug One said:
Once you've got kids the cost of the equivalent holiday will be many times as much as what you can go for now (as in, you'll be paying for 3/4 people AND you have to go during school holidays - so you'll be paying through the nose) - and some destinations are just impossible with kids in tow.
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i would like to add an appendum to mine - this^^^.
 
Hades said:
Serious answer... whatever you do, don't expand your lifestyle to use the extra money. Keep your outgoings close to what they are now and save or invest the money. If you grow your lifestyle then you limit your options in the future. I wish I had taken that advice.
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Surely it depends on how you expand your lifestyle. What's the point of earning extra money if you aren't going to enjoy it. See the world but save some as well.

PS I don't overpay my mortgage but put the extra into a variety of investment under an ISA umbrella. I pay 1.8% on my mortgage and am getting an average of 6.5% return on the investments. At some point the value should be more than the mortgage and I'll consider paying it off. There is risk to this but over a long period of time (15-20 years) I will gain more.
 
Bulk buy tinned food , also water powdered milk tea bags toilet roll and try and buy a nuclear fall out shelter ;), got a funny feeling sommat bigs on the horizon. Get a few Lynx Africa in as well and koka dried noodles and a generator and a harmonica.
 
Royal Fleet said:
Surely it depends on how you expand your lifestyle. What's the point of earning extra money if you aren't going to enjoy it. See the world but save some as well.

PS I don't overpay my mortgage but put the extra into a variety of investment under an ISA umbrella. I pay 1.8% on my mortgage and am getting an average of 6.5% return on the investments. At some point the value should be more than the mortgage and I'll consider paying it off. There is risk to this but over a long period of time (15-20 years) I will gain more.
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Oh yes, of course there is a compromise. The point I was trying to make is based on what happened to me recently; I've allowed my family to dictate my lifestyle (I'm just as much to blame as I should have said 'no'). So over time I've had to earn more and more, to the point I was taking jobs I didn't enjoy because they paid well. All that meant was that I trapped myself in a cycle of having to earn a lot of money. My options for taking a lifestyle job rather than high pressure, high earning, job have diminished. I blame myself as it was me that agreed to it. But it's certainly not what I wanted to do years ago and wouldn't have done it if I'd stayed single.
 
Definitely as many cracking holidays and experiences as you can possibly fit in before kids take over you're life for the next 20 years per kid.

Can pay mortgage off when kids come and life changes.
 
We talking going from a fiver an hour to a tenner an hour, or 40k a year to 80k a year? We need some context here really.
 
Considering you’re possibly planning for kids in the next few years - I would start saving for that.

It never hurts to over pay on the mortgage though! (Unless your bank doesn’t like that :p)
 
Pawnless Endgame said:
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!
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They are newer memes, the belt one from a few weeks ago in GD and not sure on the corner sofa one but it seems that ocukers find them chavvy and low class? ... side note i dont own one lol
 
If you are a higher rate tax payer then increase the contribution to your pension (assuming it’s salary sacrifice).

I really do have no idea why people overpay their mortgage - it seems insanely obvious to me that it’s better to overpay into a salary sacrifice pension but meh!

Let’s say... we have £1000 gross.

Either, take ~£600 now and assuming you have a 2% mortgage save £12 ish a year

Or take £1000 and whack it into high interest fund. You automatically get an extra £400 and certainly make more gains than 2% on the whole whack.

I know that’s a really crude analysis but even with added detail it still makes the most sense to me.
 
As mentioned get the mortgage overpaid ,it's a great feeling when you do pay it off and the reason I'm in Cornwall .
One thing i didnt do is enable myself to retire at 50 ,that's something I wish I had planned for
I'm been made redundant in July and not at all bothered thanks to been mortgage free it's a hell of a weight on your shoulders to lose
 
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