Significant Increase in Salary – What to do?

No doubt mentioned already but if I doubled my earnings today I would, in this order:

Save 3-6 months emergency fund (if you haven't already got one)
Pay off any non mortgage debts
Split extra income monthly between overpaying mortgage, cash savings, invest in S&S ISA and increase pension contributions by a few %

Cash savings would be used for holidays and other fun expenses. Emergency fund is for unexpected bills and would be topped up as needed.
 
Psycho Sonny said:
A cat more enjoyable than children?

Come on. They call them crazy cat ladies for a reason.

Also those that go to private school tend to do a lot better not just marginally better than those that don't.

There is no excuses that way. It's the number 1 best opportunity you could give them.

You sound like fun to be around at a party. Glass half empty type of guy
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Eh I’m not sure... what is ‘better’? *shrug* I don’t need you to answer that because I am aware of the merits of private schools :p

With a big of appropriate parenting they’ll be alright no matter what.
 
Nitefly said:
Eh I’m not sure... what is ‘better’? *shrug* I don’t need you to answer that because I am aware of the merits of private schools :p

With a big of appropriate parenting they’ll be alright no matter what.
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Parenting is just one of many influences and on it's own not enough. Which is why you have examples of different siblings going down different paths. Also they won't have the same "connections" and contacts at public school.

Having a pool of rich friends and their even richer parents would most likely be a great thing to have.
 
dowie said:
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...
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Low at the moment but the odds are over the 20+ years the OP has got rates will be high again, maybe back up to 8%. Then you would be thankful at paying all those overpayments in the early and only having a small mortgage or having it finish 6 years early.
 
Psycho Sonny said:
Parenting is just one of many influences and on it's own not enough. Which is why you have examples of different siblings going down different paths. Also they won't have the same "connections" and contacts at public school.

Having a pool of rich friends and their even richer parents would most likely be a great thing to have.
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I’m not sure.... better to have a mix of friends I think. I’m probably highly biased, having not gone to a private school I don’t really see what benefits it would have given me.

Good that they get encouraged to be fitter at private school of course - lots of sport.
 
As long as you don’t end up spending the money in the future, if you can get better investment returns now, you’re better off doing that in the meanwhile and if interest rates rise in future use those returns to reduce your mortgage amount at the time.
 
FoxEye said:
Wait, you were a BTL landlord?

And you stopped "providing a service" when it stopped returning cash hand over fist?

So you weren't doing it for the benefit of the proles then. Given your political leanings.

How you do surprise me. I guess you're only following the example of beloved Labour MPs with millions in property portfolios. Because they care about the proles too.

Funny how people abandon their (alleged) principles if they think they can make some cold, hard, cash. Hah.
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The two properties were retail, not homes, but well done on never missing an opportunity for an Ad hominem attack.
 
D.P. said:
In the long term, a simple FTSE tracker should do better than a BTL property. This is intuitively right otherwise far less people would bother with shares and investors would all be in to property.

For BTL to work you also have to do a lot of work yourself and save on costs. You then have to weigh up what your time is worth
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It isnt just the time, it is also the nature of dealing with tenants and their life decisions having a knock onto yourself. I have lost all appetite for it. I suppose, to use the dreadful common phrase, i am now cash richer but much time poorer than i used to be and it has tipped that balance.

Relevant to the OPs thread though, i would just keep piling into tracker funds. Thats what i wish i could wave a wand and have everything in now.
 
Greebo said:
Low at the moment but the odds are over the 20+ years the OP has got rates will be high again, maybe back up to 8%. Then you would be thankful at paying all those overpayments in the early and only having a small mortgage or having it finish 6 years early.
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Not particularly, it isn't like savings rates and investments exist in isolation either. The principle is still the same regardless, if you're earning more from your savings/investments then it seems a bit needless. The benefit of overpaying in that case is mostly psychological, some peace of mind albeit slightly irrational peace of mind.

I guess perhaps if someone has little self control or might be a gambling addict or or perhaps an impulsive spender whose behaviour will change depending on ease of access to cash/credit etc.. then maybe they can't trust themselves with savings or any investment they have easy access to and so overpaying a mortgage puts the cash out of arms reach... it is again a psychological thing though.
 
D.P. said:
In the long term, a simple FTSE tracker should do better than a BTL property. This is intuitively right otherwise far less people would bother with shares and investors would all be in to property.

For BTL to work you also have to do a lot of work yourself and save on costs. You then have to weigh up what your time is worth
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Well not necessarily - does the BTL have a mortgage or not... the BTL can be a leveraged investment and it is up to the investor how much of the available leverage to use/how much risk to take on, ergo you can risk and potentially lose more than your initial investment if it ends up in negative equity and indeed you can do rather well when it goes up. You buy a 100k flat with a 20k deposit and it increases by 50% over 3 years.. well you've now got 70k in equity in that flat, stick 20k in a FTSE tracker, if it increase 50% over 3 years you've got 30k.

Likewise the FTSE drops by 50% in 3 years and you've got 10k, the BTL drops by 50% in 3 years and you've now got no capital left, but rather have an 80k mortgage to pay on a 50k flat giving you a 30k loss if you chose to sell.
 
Overpay your mortgage!

This is what we have been doing, will be mortgage free in 3 years. Family and friends are on higher wages than my wife and I yet never overpay their mortgage, it is literally throwing money away.

As soon as mortgage is paid off we will be paying mortgage money into pension.
 
Nitefly said:
I’m not sure.... better to have a mix of friends I think. I’m probably highly biased, having not gone to a private school I don’t really see what benefits it would have given me.

Good that they get encouraged to be fitter at private school of course - lots of sport.
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Its easy to get a mix of friends if you are looking for those with less money. Upwards is where it's harder. As they dont tend to hang around in common circles as much.
 
1. Clear any high interest debts like credit cards and store loans, car finance.
2. Top up emergency fund (3-6 months living expenses)
3. Assess what you want from life/priorities. Children/education fund/mortgage free/investments/pension/early retirement/buy to let property.

All well and good people saying pay off your mortgage but it really depends on where else this money could go right now especially with historically low interest rates at the minute. If you were to tie yourself into a 5 or even 10 year fixed mortgage then potentially investment may be an avenue worth exploring.
 
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