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Old 12-14-2016, 07:01 AM
 
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As a family we had a $30,000 increase in salary this year. It doesn't sound like a lot... but brings us from $100,000 to 130,000 annual salary. The average housing cost in our area is $250,000. It's very tempting to "move up" a little. We could sell our home for $350,000 and we owe $200,000. No car loans, pension for retirements. Fully funded emergency fund. It's tempting to move up to higher price in housing, but the other part says stay where you are at build some wealth?
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Old 12-14-2016, 07:04 AM
 
Location: Atlanta
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I wouldn't MOVE up just because i could. There has to be more to it than just that.. different schools? local amenities? do you need a bigger home? yard? I am sure if you looked hard enough you could FIND a reason to move up... but i wouldn't let the simple fact that you can afford it be my only factor.
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Old 12-14-2016, 07:11 AM
 
Location: Tennessee
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I went from about $25,000 to $50,000 annually a couple years ago - things definitely moved up.
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Old 12-14-2016, 07:20 AM
 
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A 30% increase off a base of $100 K is nice....but at that level it costs more and more to gain small increments in lifestyle.


Having been there...all the way up, and ALL the way down (wicked divorce) I would suggest that you put the funds away and go on with your modest lifestyle. Forget about the increment in terms of accumulating more fixed assets...like a bigger house. I bought a bigger house...too big (what did I need with 6,000 sq ft?)...and it was just a PIA.




There is a tremendous feeling of living below your means......but there is a really, really bad haunting which comes with living above your means--every month is a horror show...how am I going to pay all the bills? And if you have a major life event (like I did), it all becomes a nightmare.
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Old 12-14-2016, 07:24 AM
 
Location: Sugarmill Woods , FL
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Better up than down!
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Old 12-14-2016, 07:28 AM
 
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I would suggest you contribute to a Roth IRA and 401k account. Even though you have a pension, it is very nice to have extra , in retirement years. There should be no limit to fun when on retirement.

One pre-tax one post tax. "Sock it away " is what gramps always said. You never know what the future can bring, like a bad accident, loss of job, Illness.

Someone once told me, you can buy the fancy car, but you cant really afford it.

Yes , take a nice vacation , do some things to reward yourself, but don't go overboard.
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Old 12-14-2016, 07:39 AM
 
Location: The analog world
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Quote:
Originally Posted by kapikap View Post
I would suggest you contribute to a Roth IRA and 401k account. Even though you have a pension, it is very nice to have extra , in retirement years. There should be no limit to fun when on retirement.

One pre-tax one post tax. "Sock it away " is what gramps always said. You never know what the future can bring, like a bad accident, loss of job, Illness.

Someone once told me, you can buy the fancy car, but you cant really afford it.

Yes , take a nice vacation , do some things to reward yourself, but don't go overboard.
Gramps was a wise man.
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Old 12-14-2016, 07:40 AM
 
Location: Frederick, Maryland
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That is a nice little bump in income but how much is it really worth after taxes? Maybe 1600k or 1700k a month?

I'm assuming if you have a 350k home in an area where the average home is 250k, then your current home is pretty nice. Selling and buying houses is expensive as is moving and decorating a new house. Before you do anything, figure out closing costs for buying and selling. Increased property taxes on new home, higher utility bills and possible unexpected home maintenance expenses on a new house.

I'll echo what a previous poster said....do something special like a nice vacation and then go about living beneath your means. It's awfully nice to have a paid off house when retirement rolls around. Take the additional income and invest it wisely. You can never have too much tucked away for retirement. Or for emergencies for that matter.
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Old 12-14-2016, 07:52 AM
 
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$30k is nothing to sneeze at! Congratulations!

If you were me, I'd be inclined to live the same lifestyle as always and simply save the extra. Like others pointed out, you might want to see how this changes your taxes. Maybe save some of it inba tax deferred account like a 401k to offset the increase in taxes.
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Old 12-14-2016, 07:56 AM
 
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It's approx $2000 extra after taxes. We have mutual funds, college funds, no debt. I guess we could just sock it away and do some renovations to the house later. Our home is a modest 2200 square feet. We don't need more space.... layout could be different like master down and a larger kitchen ( this kitchen is tiny)... It's def livable. It's the cheapest house in our neighborhood mainly cause of size. You can't buy a new home in our area for under $400,000. The average home price in the last year for the area was $360,000, but average over the last 4 years is about $250,000. Starter home here would be $200,000. We bought ours for $290,000. I could expand the kitchen one day we saved instead of move.
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