The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: ysette9 on January 26, 2018, 08:24:31 PM
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In the next month my husband and i will both have some extra cash coming our way; I have some golden handcuffs maturing and he has stock options that will vest. I could use some input on how best to deploy the cash.
Option 1: invest per my investment policy statement asset allocation
Option 2: finally open that 529 for kiddo #2 and front-load it
Option 3: keep a bunch of cash in savings to pay for double daycare and other living expenses starting in a few months, and front-load my 401(k), reducing my take-home to almost nothing until I hit my yearly contribution goal
Not on the list:
Pay extra on the mortgage
Blow it all on hookers and booze
Other things I should consider?
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I actually like option 3 if you will be paying income taxes on the extra income anyway. I especially like it if you are not already maxing out your 401k and traditional or roth IRA. When you front-load your 401k, you are basically accomplishing option 1 anyway, right?
Regarding option 2, I have found decent success (hundreds of dollars) sending birthday party invitations and xmas cards with instructions on how to give gifts to my kid's 529 plan. This also cuts down on the amount of cheap plastic toys I trip over. Also, you can always fund the 529 later, but to save those taxes requires an immediate move.
Also see...
https://forum.mrmoneymustache.com/investor-alley/investment-order/ (https://forum.mrmoneymustache.com/investor-alley/investment-order/)
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Regarding option 3, I have already been contributing up to the $18.5k max. Changes to my employer’s plan have meant that I can now contribute more than that and do an in-plan ROTH conversion, so I plan on taking advantage of that.
I just need to figure out how to do the math estimating what our tax situation will be this year before making any adjustments. If only I could get as excited about taxes as I am for saving and investing. UGH.