I've put myself into a quandry about where to stash extra money in my paycheck. To be honest, it's a nice dilemma, and I'm not complaining. I guess I am more asking for peoples advice or suggestions on what to do.
Background: Last month I received my annual bonus at work. I wanted to sock most or all of it away in my 401(k) account, so I finagled my contribution to 50% that month and it all went in, when combined with regular pay. But because such a large amount when in all at once, I needed to put in a lot less each month, otherwise I would hit the $15,000 limit for contributions this year, probably maxing out in August and thereby losing the matching contributions.
So I adjusted the monthly contributions, and this months paycheck shows that I hit it just right. I will max out the contributions in December, and receive the matching contributions. That worked out perfect.
So now I am bringing home an additional $250 a month in pay. Which kinda sucks in that the 401(k) contribution was reduced by $370, meaning I am paying $120 more in taxes each month, or another $1200 a year! Can't help that though (I think!).
So it comes down to two questions: 1) Do I have $250 or $370 a month extra to put somewhere? and 2) Where should it go?
Question one probably sounds strange to you, in that actual take home is only $250. But by my convoluted way of thinking, I used to be putting $370 aside for later, so I should maintain that level. Of course to do this, it means I would need to squeeze that $120 out of other areas (which is managable, barely). The amount also depends on the answer to question 2.
Two, where should it be go? Spend, save, or pay down debt? Most financial advisers would recommend paying down debt, but the only debt I have is a mortgage and it's already gettting many hundreds extra each month. Based on estimates from numbers I plug into this amortization calculator I use, each additional $100/month would end the mortgage approximately 4 months early.
Save is always a good choice, and I could use it to fund the Roth IRA for next year. Spend? I like the idea, especially since I don't do nearly enough shopping to be a "proper" gay man! If I do spend it, then question 1 is easily answered, it is only $250. After all, the extra $120 would come out of this category to begin with.
Am I missing anything? What would you do?