Where to put extra money?

**Bob B.** · 10-21-2013, 01:32 PM

Increasing contributions to retirement is always a good idea. I increased my retirement contribution just this month.

It would also be a good idea to take at least part of your newly freed up car payment, and start saving for your next vehicle. When your current vehicle needs to be replaced, you can put down a substantial amount of money toward the purchase.

Not sure what your emergency savings are, but if your EF needs some beefing up, you should consider that, too.

**Jerry91** · 10-22-2013, 12:16 AM

You can also think of an emergency fund. This will be of great help to you in times of need. You should have at least 6 months of your expenses, saved in your emergency fund. This will be of great help to you when you are facing any financial or medical crisis.

**iliketosavemoney** · 10-22-2013, 07:51 AM

Thanks for your replies.

Just wanted to add some more info.
We're trying to do the "live off one paycheck" method so all expenses are paid from my paycheck.
With the wife's paycheck, we max our Roth IRAs and then save the rest in cash in a savings account.

The new(used) car fund was something I was thinking about but I think we save enough in our savings to cover this and the EF.

**terry0317** · 10-25-2013, 05:06 AM

i would invest them into cds

**terry0317** · 10-25-2013, 05:10 AM

either pay off credit cards or savings account

**scfr** · 10-26-2013, 07:06 AM

[QUOTE=iliketosavemoney;370060
I'm also contributing 3% into an ESPP. For every 2 shares bought, the company matches 1. Matched RSUs vest 25% per year for 4 years.

I was thinking of just upping the ESPP contribution to 6% since it's almost like free money (as long as the company stock stays steady) but it seems people say not to invest to heavily into one stock.

Appreciate any input.[/QUOTE]

This is really an "it depends" issue.

It sounds like you are living well below your means (living on one paycheck), are avoiding debt or paying it off quickly (having paid off the car loan & with a plan to avoid another), and are managing your finances well as a couple.

So it's not unreasonable to at least think about putting more in the ESPP up to the company match. It just depends.

What percentage of your net worth is currently in your company's stock? If it's already 10% or more, than I'd say probably not. But if it's just a few percentage points, then maybe ...

Is your company one with a stable stock price or an unstable one? Is it more like Procter & Gamble, or more like Google? Personally, I'd be more likely to put money in to an ESPP if it were a P&G type of stock.

Are you willing and able to take the risk that the price may plummet? If you understand and accept the risks, then maybe ...

Are you (or will you) keep track of your company stock, not let it grow to a too-large percentage of your total net worth, and seriously consider selling shares once they are fully vested? If you will, then maybe ...

**GoldReference** · 10-27-2013, 06:14 AM

An excellent way of preserving purchasing power over long periods of time is the investment in physical gold and silver.

**Augustine** · 10-28-2013, 01:06 AM

If you have any other high interest personal debt, you would want to get that paid off. Don't take too long to make up your mind though. Spending that extra money can be very tempting...

**LivingAlmostLarge** · 10-28-2013, 09:27 AM

We max out my DH's ESPP at 10%. When it hits long term capital gains we sell it and roll it into something else. with the 15% discount we hold it and gain something along with an enforced savings plan.

**ProjectDebtRelief** · 10-28-2013, 01:51 PM

You're already maxing out your Roth IRAs which is awesome. Beyond that, I like liquid cash because CDs simply don't earn enough right now to tie up money for 2-5 years if you were to need it for an emergency.

**iliketosavemoney** · 10-29-2013, 12:42 PM

Thanks for the replies!
For now, I've decided to just increase my Roth 401k contributions to 9% instead of putting it in the ESPP.

My reasoning was:
1) I'm too lazy to open a CD and I don't even know how to buy gold or silver.
2) I don't want to save it in cash because there is a very high chance that this money will be used to buy me a new gadget or toy.
3) Like scrf said, the percentage of my net worth that's in my company stock is too high (18%).

But I'm starting to think I should just not participate in the ESPP and just contribute 12% to the Roth 401k. Maxing my Roth 401k is a goal of mine and this would be a nice step towards it.

Where to put extra money?