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Advice moving forward.

June 27th, 2018 at 12:36 pm

Looking for some advice as to how to proceed.

DH got a surprise email this week. He is also getting a raise - 7%! We both work really hard, so it's nice that our companies realize the potential and are recognizing it. While we're both still well below our full earnings potential, we enjoy our companies and work.

I'm trying to decide the best way to handle these increases. We don't currently contribute much to retirement: I do 3% and DH does 10%. I do not reach my max. Since it's 50% up to 4% of salary, I'd need to contribute 8% to receive my full company match. I have done the match in the past, but lowered it to get extra money to put to today's goals. Since we're still trying to pay things off, I've been keeping my contributions low for the past year or two.

What I'd like to do is keep my contribution static through December to give us a little more time to get on stable footing (hopefully one month ahead on income and pay off another 3 credit cards). Since DH's income is variable and I always underestimate it anyways, I want to use his raise to up his contribution to 15%. He'd still get a very small increase in his take home, but he'll be setting himself up well for the future. Since he came in with no debt, I hate the idea of my debts burdening his long-term security.

Is this a good way of handling it? Should I just take the hit and up my own to 8% now and find a way to live within whatever our take home is at that point? Since using YNAB, we've 'found' extra money that we've been using to cash flow projects we've been putting off, so nixing those would allow us to live on our current salaries before the raises. Since my raise was almost 6% and I'd up my contribution by 5%, I'd be working with a less than 1% raise plus DH's 2% to improve our current situation. I'm just not sure what's the best way forward. We'll have about $500/extra a month right now with our raises and keeping contributions as is (not counting the several hundred we spend on delayed projects). That should be more than enough to get up to last month's income and pay off 3 more cards to by Christmas (2 are under $1000). Upping my contribution would give us maybe a couple of hundred, so we'd have to stop the extra projects in order to really get any debt payoff traction.

I really don't want to keep putting things off - saving up for hypothetical future children, funding sinking funds, staining the stairs and fence, stocking up on tools, minor landscaping, fixing the fireplace, etc. But maybe taking care of my future self is a bigger priority. Thoughts?

5 Responses to “Advice moving forward.”

  1. crazyliblady Says:

    Another alternative is for you to keep your retirement contributions stable until the end of the year. Using as much as you are comfortable with to pay off debt, maybe you could pay it all off together? Just a thought.

  2. creditcardfree Says:

    I hope you are talking with your husband about these decisions. He may see you more as team than it appears you do. Maybe he wants to get the debt paid off soon, rather than increase retirement. I would definitely save some portion of your raises for retirement.

    I would probably try to determine your new net pay first and then consider the tax implications as well. Once you know what the pay would look like if you only adjusted for taxes you will know exactly what you have to work with. Sometimes seeing the incrase in tax convinces me to save more for retirement to avoid the taxes! Lol.

    But then figure out what your goals are. How much do you want to pay off in 2018, how much of that would need to come from the raise? What is a realistic number for the projects you have? Do they all need to be done this year? Can some wait until next summer? I would not continually risk my potential for retirement savings for house projects. Often some house projects are more wants to keep up with Joneses than true needs. Overall the goal should be as a couple to determine what you want to accomplish with your hard earned money. It's never just one thing or another, but usually a balance.

  3. ceejay74 Says:

    If I were you, I'd up your retirement to get the max match and hold off on upping your husband's until later. You'll be getting more bang for your buck as a couple.

  4. Jenn Says:

    I agree with CJ. You're leaving money on the table and you don't get another chance to get it back later. After the matched amount is maxed, then I'd use any extra for debt.

  5. Dido Says:

    I'd argue for upping your contribution to get the full match. You're leaving money on the table, plus the longer that money is invested the more likely it will compound to your benefit. Time as well as the money is being left on the table here, and with good jobs and a nice raise you have flexibility now in paying the debt off and that flexibility may not akways be there.

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