Financial wunderkinds, what to do with an extra $800 a month?

[slackerinabox]

Through some quirk in the matrix our rent is being cut by nearly $800... We rent from a family member and after the arrival of baby #2 they kindly offered that we pay the mortgage and maintenance and just take care of the place until they're ready to sell in 3 years.. We've already renovated the place at our expense (painting, carpeting, floors redone) and care for the place like our own so I don't feel guilty, but I don't want to waste that savings and want to be low-risk and smart with it.

So $800 bucks a month, how would you best utilize that (no, coke and hookers wouldn't work... the neighbors are nosy). We're in our early 30s and our 20s were not devoted to fiscal responsibility, so feel free to talk down - I don't know a thing about investing and view this new influx as a chance to catch up. After we pay down some debt, most straightforward investment?

 

[Doodoo]

401k or Roth in a fund that tracks the S&P?

 

[Gunslinger08]

Pay off debts.

Save an emergency fund of 3-6 months expenses.

Consider where you're going in your life. Do you want to buy a home? You should probably start saving for a down payment. No interest in buying? Save for retirement and education.

Fund your employers' 401k plans up to max match. If you have some leftover, fund Roth IRAs for both of you. Your investment strategy is a very personal thing, but I'd recommend low cost index funds from someone like Vanguard.

 

[T9D]

Swingers party

 

[mizzou]

get a cozy cash egg, pay debts and then dump into investments.

 

[SSSnail]

Get a Jag.

 

[herm0016]

emergency fund, fully funded IRA, fund your 401k.

 

[Imp]

Hookers and maybe some meth... I don't see it being enough for good cocaine -- I don't know what meth costs, but I'm assuming less than coke because it's cooked up in bathtubs and basements.

 

[bbhaag]

Like others have mentioned put it into your 401k/IRA or open a 529 and start saving for their college tuition.

 

[Svnla]

OP, first of all. Do you have any debt such as credit card or loans? If so, pay them off pronto. Then set up a 6 months emergency fund and then you can start to invest for the future. You are welcome.

 

[Bateluer]

Spend it on beer.

 

[dmcowen674]

Financial wunderkinds, what to do with an extra $800 a month?

Invest in Black Gold

Oil Oil Oil

 

[Mai72]

Lottery tickets. Play pick 6 every week. $800 down and play the same numbers.

Guaranteed to hit!

 

[boomerang]

Talk to friends and co-workers and see if you can find a financial adviser/investment adviser in your area that is respected and trusted. You hire professionals many times throughout your life because they have the knowledge and expertise that you lack. Doctor, lawyer, mechanic, plumber, the list goes on. Why would you trust your money, your future to an amateur - you?

Here's the real important part. Go with an independent. To cite just one example, if the guy works for Edward Jones, he's not for you. His boss leans on him to sell certain products that may not be right for you. You want a guy that has hung his own shingle out. A guy that is looking out for your best interest. Who will suggest investments that are good for you, the client and not good for him. Here's another important thing to look out for. You want somebody that explains to you their fiduciary responsibility, their fiduciary duty and their commitment to that principle.

 

[edro]

1. Debt
2. 6 months of savings
3. Roth IRA, IRA or 401k

7. Escalade!

 

[mikeford]

In 36 months the house is going to be sold and you will need to find a place. 36 x $800 = $28,800, depending on your area that is about a down payment on a house, assuming baby #2 doesn't take up a good chunk of it.

First pay off debt, then see how much you have accumulated in about six months and put most of it into a solid short term investment. Repeat every six months or so.

Without knowing more about your financial details, consider putting some portion into IRA etc if you can still end up with a reasonable down payment in 3 years.

 

[vi edit]

- Pay of high interest revolving credit (Credit cards)

- Build up 6 month living expense fund and lock it away

- Put $250 into a Roth IRA for you and $250 into a Roth IRA for your wife each month. Set it up through Vanguard and just go with the Retirement fund that is closest in year to when you are 65.

- Put the remaining $300 into a college IRA for your kids. Depending on the state you may have tax saving options available to you. Or look at the basic college funds through something like College Iowa that partner with Vanguard and do the index fund plans they have available.

 

[FelixDeCat]

Just send it to me.

Ill invest it for you.

:sneaky:

 

[inachu]

Buy gold and silver with it. Buy a safe

 

[Jimzz]

Yep pay debt first, get a small reserve, max 401k match, then Roth IRA.

 

[alkemyst]

OP, first of all. Do you have any debt such as credit car or loans? If so, pay them off pronto. Then set up a 6 months emergency fund and then you can start to invest for the future. You are welcome.

QFT.

Put that $800 aside until you have 6 months of living expenses in the bank.

 

[slackerinabox]

OP, first of all. Do you have any debt such as credit car or loans? If so, pay them off pronto. Then set up a 6 months emergency fund and then you can start to invest for the future. You are welcome.

Good question, we only have a few hundred in credit card debt and own our aging volvo so it'll take us maybe two months to pay down everything that's not a student loan (including bringing all bills to zero balances, my wife's unpaid maternity leave left us paying bills late). But yes, paying up debt's the #1 priority.

Six months of living expenses is tricky, would you base that on our combined salaries for 6 months or literally a worst case scenario/cover the minimum expenses? If take homes we're talking about saving 80k+ as a couple, which would take 8 years. Suppose saving for that goal isn't a bad idea, but I feel like something interest baring would be the best.

401K, will check in with HR and see if I'm maxed out, I know my wife is.

Thanks for all the great advice!

 

[vi edit]

Six months of living expenses is tricky, would you base that on our combined salaries for 6 months or literally a worst case scenario/cover the minimum expenses? If take homes we're talking about saving 80k+ as a couple, which would take 8 years. Suppose saving for that goal isn't a bad idea, but I feel like something interest baring would be the best.

"Worst case" at the least. House payment, car payments, utilities, required medication, ect. The stuff you need to pay for and not hurt your credit. And it's not based on gross pay. If you guys make 160k a year, your net is more like 90k after taxes and other things come out. Realistically you are probably looking at more like a $20k-$30k buffer to cover expenses...but it really just depends on how much things cost you right now.

 

[slackerinabox]

- Pay of high interest revolving credit (Credit cards)

- Build up 6 month living expense fund and lock it away

- Put $250 into a Roth IRA for you and $250 into a Roth IRA for your wife each month. Set it up through Vanguard and just go with the Retirement fund that is closest in year to when you are 65.

- Put the remaining $300 into a college IRA for your kids. Depending on the state you may have tax saving options available to you. Or look at the basic college funds through something like College Iowa that partner with Vanguard and do the index fund plans they have available.

Vanguard/Roth sounds like a good idea. Here's a dumb question, is the amount locked in for the end of eternity? Meaning, when we do move we won't have that $800 free, in fact living expenses will increase based on market rents increasing in that time. Would we be locked into the say $250/month/per person allotment or could we adjust in time? Of course the goal is to be able to continue that through all time.

 

[vi edit]

No you aren't locked in at all. You just stop contributing.