- September 27, 2023
- Posted by: legaleseblogger
- Category: Related News
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## Internal Job Move and Salary Increase
I am excited to share that I am making an internal move at my current company, which comes with a significant $38k increase in salary. This means I will now be making six figures, which is a major milestone for me. I am incredibly ecstatic about this opportunity.
With this positive change, I am also aware of the concept of lifestyle creep. I want to be mindful of not succumbing to impulsive spending just because I have more money. I believe in treating myself occasionally, but not to the extent where I make unnecessary purchases just because my income has increased.
## Seeking Tips and Advice
I would greatly appreciate any tips or advice on how to manage my finances with this pay bump. Here are a few areas that I am specifically considering:
### Renting
Considering the increase in my income, should I explore the option of renting a different place or upgrading my current living arrangements? It’s important for me to strike a balance between comfort and affordability.
### Student Loan
With this salary increase, I anticipate being able to pay off my student loan completely by January next year. The additional income will significantly expedite my repayment plan and help me clear this debt sooner than expected.
### Personal Loan
I currently have $6k left on a personal loan. I would like to evaluate whether I should allocate some of the increased income towards paying off this loan more quickly. It would be wise to reduce my debt burden and enjoy the benefits of financial freedom.
### Overdraft
My overdraft currently stands at $1k. I am uncertain whether it would be advantageous to prioritize paying off this debt or focus on other financial areas. Any guidance on this matter would be extremely helpful.
### KiwiSaver
I have $45k saved in my KiwiSaver account. Given the pay increase, should I consider contributing more towards KiwiSaver to maximize the benefits of retirement savings? I am open to exploring ways to optimize this investment avenue.
### Savings and Investments
Along with my KiwiSaver, I have $2k in a normal savings account and $500 in Sharesies. Are there any recommendations on how I could strategically allocate these funds? I am open to suggestions that align with my long-term financial goals.
### Insurance and Credit
I currently have life and income protection insurance through my work, which provides a sense of security. Additionally, I have no credit card debt and my credit rating has been gradually improving over the past two years. If there are any aspects of insurance or credit management that I should consider further, I would appreciate the insight.
## AI Legalese Decoder – Assisting with Financial Decision-Making
In this situation, the AI Legalese Decoder can play a valuable role in helping me navigate various financial considerations. By utilizing its advanced technology, the AI Legalese Decoder can provide personalized recommendations and insights specific to my financial circumstances.
For instance, it can analyze my current financial portfolio, such as rent, loans, savings, and investments, and suggest optimal ways to allocate my increased income. It can provide advice on prioritizing debt repayment, maximizing retirement savings, and making informed decisions regarding insurance and credit.
Moreover, the AI Legalese Decoder can provide useful tips on managing lifestyle creep and maintaining a healthy financial balance. It can offer strategies for saving, budgeting, and ensuring financial stability while also allowing occasional indulgences.
With the assistance of the AI Legalese Decoder, I can make well-informed decisions about managing my finances effectively and maximizing the benefits of this salary increase.
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****** just grabbed a
Destroy the non student loan debt, sock the majority of the increase somewhere you won’t spend it. Make it an automatic payment on payday.
Don’t put all the increase away, keep some for casual spending etc or it won’t feel great.
Congratulations ! I’m so glad your employer is rewarding your skills!
The most important things to do would be:
1. Pay off debts as fast as possible.
2. Save at least three months worth of expenses in a separate account, just in case.
3. Buy yourself something practical as a celebratory present. You deserve to recognise this achievement.
4. Make whatever money you have now you have no debts work for you! Think term deposits, stocks etc. Understand your risk appetite.
Congratulations on the move! Very nice work getting such an increase at the same company.
If you haven’t already, get a good budget spreadsheet going and track what you spend. You’ve worked for the money so you should allow yourself some slack, but pay yourself first.
Otherwise:
I would be more relaxed about student loans but pay off the other debts first before you start investing or buying treats for yourself.
For savings, first aim to build up an emergency fund that you keep fairly accessible. Say one to two months expenses.
Then most people balance between longer term investments and readier money.
I would suggest a low fee managed or tracking fund like Simplicity rather than Sharsies for the bulk of your investments.
Ready money can just go in a PIE at your tax rate.
But whatever you do, track it all in a spreadsheet.
heads up that when you get your student loan paid off, you’ll be getting a significant bump again in takehome pay. Enjoy that feeling.
As I just turned 40, I would just say that things like houses, kids, stuff and weddings present plenty of ways to spend money. So although you might want to have a few holidays, getting a decent habit of money into investment or savings for a couple of years might make a huge difference to your wealth situation.
One technique I particularly like is getting your regular spending set up in a single account, and clearing any unspent money out of there at the end of the week (a few ways to do that). So you know you have money but you aren’t looking at a $20k balance when you login to internet banking and are thinking about a big ticket spend being fine. Of course you can pull stuff out of savings for a medical bill or major spend, but you just don’t have that reminder you have stuff you could be spending.
Finally, I setup an automatic payment for small amounts to causes I care about. It feels good to have 5 or so years of contributions.
1. Pay off the debt with the highest interest rate first
2. Pay off the next debt
3. Don’t make extra payment to student loan as it is interest free. Due to inflation your interest-free loan is actually shrinking each day
4. Treat yourself properly after paying off each loan
5. Make extra investment in ETF? Increase kiwisaver contribution?
Firstly, congrats! That’s a healthy bump in pay.
First thing I’d do is to set up an auto payment into a savings account equalling to the increase of take-home pay (or increasing an existing one).
This is to ensure any leakage from lifestyle creep is accounted for, since the any lifestyle creep would decrease the running balance of the checking account, and you’d have to move funds (and active antion that hopefully keep you aware where money’s going).
And then what everyone else said – attack debts first, from the highest interest rate.
$38k increase with an internal move? You must have been underpaid or you have a very generous employer. So at a minimum you were on $68k before your promotion, thatÔÇÖs a whopping 47% increase!
If you have been able to live off your current salary, a good proportion of your new earnings should be ÔÇ£savedÔÇØ If you are not on 10% KiwiSaver consider lifting this . Alternately pay the min and save/ invest the balance .
Pay off all your debt first as the priority, including your student loan which takes 12% off your pay check. Get that 12% back in your wallet. Then save and invest, KiwiSaver, ETFs, managed funds etc. Give and spend after youÔÇÖve paid yourself first.
When this happened to me my usual spending and living budget didn’t change. 70% of the extra $$$ went to savings/investments and 30% to my student loan.
My dad always used to tell me “if you have money, you have options” … clear that debt and go build a sexy AF savings account for a year. Give yourself time to evaluate options while living comfortably ƒñÖ
So if it was me in a totally different situation to you, id still to do the smart thing and kill that debt.and once you kill that debt may aswell get rid of your student loan if that’s still hanging around as that will free up another few hundred a month …. Then enjoy life!!. Good job ƒÿü sounds like your kicking butt!!
Im 31m 4 kids a mortgage and me and the Mrs combined are only just on 130-140k. So safe to say your doing extremely well keep it up ƒÿü
Treat yourself a little bit and get that out of the way first. YouÔÇÖve earned it. Then go kill some debt.
Lap it up, buy some eggs and enjoy. If you want to invest, buy a hen
i do a bit of a split that way it all creeps proportionality
​
living costs 60%
fun money 10%
long term investing 20%
mid term/ holiday 10%
Increase your KiwiSaver contributions from 3 or 4% to 8-10% not only does it ensure financial stability long term for retirement you wonÔÇÖt notice it cause student loan eats up approx 12% of pay on top of normal k/s contributions.
Start saving now.
Max 401k contribution
Get financial advisor and put as much as allowed in tax deferred vehicles.
DonÔÇÖt increase expenses until all debt is payed.
Save for vacation in separate account.
Good luck!
Wish i had listened when i was first told!
The easiest answer is to separate the raise from your previous pay so the new money is immediately invested while you continue to live off the old salary. With $7k in personal debt the financially most efficient investment is repaying that, but you might choose to do that the hard way just to keep yourself living within your means.
An option which requires a lot more discipline is to budget all the money including a line item for investing. That would set you up better for the future because while ‘out of sight’ is really effective, it’s not perfect. You’d instead be making a decision each month how much to allocate for fun now vs save for fun later.
Personally I’d go with the former method – have the money disappear to an investment account and live off your old salary. Getting good at budgeting efficiently when you have with lots of spare cash takes a lot of practice, but it would be worth considering and potentially revisiting.
I see someone suggested increasing your budget a little so that you reward yourself for the hard work getting the raise. I wouldn’t, but I get a weird kick out of self-discipline, YMMV.
>6k left on a personal loan 1k in overdraft
Worth finding the interest rate you are paying on both – likely to be high. The overdraft one is probably 20% – super high. Pay them off asap.
>2k in a normal savings account 500 in sharesies
I guess the 2k in savings could be justified as ‘available in an emergency’ as you have no credit cards, although depending on the overdraft limit, you might have emergency access to funds via the overdraft anyway. It’s just kind of inconsistent to have these at the same time as paying high interest on the overdraft and personal loan. For example, it’s very likely that the return you get on the sharesies per year will be a wayyy lower percentage than the 20% you are paying on the overdraft money.
So long as you will still maintain access to some kind of emergency funds, I’d pay off the overdraft (today if possible), and pay off the personal loan very soon too.
Contrary to all the other advice (Which is correct in the bigger picture) I just want to add one thing that kept me in control of my finances and on top of debt my entire professional career up to this point. (30m)
**Pay yourself first.**
You do this by setting an allowance and always making sure that money goes into your ‘fun money’ account. For me thats $300 a month. Guilt free money that I can throw at any hobby/interest/cheeky takeaway without hitting my books in a meaningful way. This is the first thing I assign money to when the paystub comes in.
I started on 40k and have moved up to over 6 figures like you. In that time frame my allowance has gone from $200 to $300 but my income has increased massively and all that overflow goes into investments, the house, building a future where I don’t have to work anymore.
Lifestyle creep didn’t get me and I am as happy as ever.
That’s a good bump!
Maybe as you are renting this might be an opportunity to save and buy a house once you have a deposit?
The market appears to have stopped falling, so buying now might be a good time
Top 3 things:
1. Pay off your personal loan/overdraft ASAP.
2. Don’t worry about the SL unless the admin fees are higher than ~5% of what’s outstanding.
3. Build up your savings until you have at least 3 months emergency fund.
Once you get to that point, I would like at setting up a plan for how you distribute your income. Note this is what I do for my monthly net income.
Note: it’s tailored to me as I have really low expenses but adjust it to how you want it.
​
* 50% of my income goes to investments (mainly ETFs and index funds). The distribution is 40% total stock index fund, 20% international stock index fund, 15% tech sector fund, 15% goes towards discounted shares at my company (Fortune 500 company that pays good dividends), the remaining 10% goes towards my individual stock picks but you can split them between consumer staples, real estate or bond index funds.
​
The following you adjust according to you:
* 5% groceries (just for myself)
* 5% my mum
* 5% my GF (e.g. dates, dinners etc.)
* 5% towards my holiday fund (also for my GF)
* 5% towards a hobby / recreational. This is important as you need to splash a little but make sure it’s still disciplined.
​
The remaining 25% really depends on what expenses you have.
* I would recommend setting aside another small % to learn or build a business on the side that you can scale.
​
I typically don’t have many other expenses (I have fuel cards, no rent, very little utility bills, health insurance is provided by my company, car allowance) and so I put what ever extra I save into a high interest savings account or term deposit.
Have you considered making a fixed weekly/fortnightly sharesies payment? Could be a very good way to build up investments if you’re currently not missing not having this extra money ƒÿè
In the last 18 months or so, I managed a 60k+ increase.
Find a means to save your money now. A whole different account or wherever you choose to put it. You’ll be surprised how quickly life style creep will catch up. Don’t have it where you’ll access it. Keep 3-6 months of living costs in an account. Once you have that, have some sort of very basic set and forget investment funds and put what you were putting into your savings into that.
Don’t forget to enjoy it. Buy good quality food, experiences, and whatever makes you happy.
Just protect your future first.
If you can, spend as if you still earn your old wage. Balance either pay debt or invest (managed fund or anything top 100/500) don’t invest in individual shares unless you ok with the risk and time
I’ve always followed my grandad’s advice and (if you can afford to do so) always spend your first pay check! If that’s too much make sure you at least treat yourself to a nice dinner or something you’ve wanted for a while.
Then back to saving like a mofo.
Oz of weed per week ƒæì
Increase your kiwisaver contribution to 5%. But make sure you have a $3k emergency fund. As you don’t have a house yet, your kiwisaver is still reasonably accessible
Omg you are amazing