Why does my paycheck get bigger towards the end of the year?
It is possible that you hit the limit for social security. For 2007, Social Security tax only applied to the first $97,500 of salary. If you hit that amount, your employer would automatically stop deducting social security from your paycheck and you would get a temporary raise in take home pay.
What is the best allocation of a windfall to pay down student loans?
The best way to allocated a cash windfall payment to a student loan is to target a specific loan balance.In 2018 my wife and I paid off $70,000 in student loans using several methods, one of which was a cash windfall. Typically a cash windfall comes from:Large financial gifts (Weddings)InheritancesTax ReturnsLarge sales (like real estate)A cash windfall is typically not accounted for within a budget making the use of it towards student loan debt a really smart move.But how do you apply the student loan payment strategically?Attack individual loans. Most student loan accounts are comprised of a bunch of small student loans that are serviced with one payment. Don’t just make an extra payment - target one specific loan within the account.Target Highest Interest Rate Loan. You can use the cash windfall to target the highest interest rate loan. This way you save on the interest that is potentially adding up each month. ORTarget Lowest Balance. With a cash windfall you can target the lowest balance to free up the minimum payment to use elsewhere.Either way, no matter what you do with your cash windfall make sure you target loans and you do not “Spray” your money!!!! Here is an example of applying a cash windfall payment.
If you received a windfall, would you pay off your house, invest the money in the stock market or spend it on fun things?
depends on the amount & my current financial position. I have plan or idea how to use the funds from as small as 5k to 100k.Do you have plans or even a slightest idea?Not knowing the amount would be hard to answer.For me, Using 10k, I would invest in Cashflow based investments, getting Cashflow return on a monthly basis. With tat amount depending on how much, I would use a portion to practise Forex, the other portion to save or reinvest back to Cashflow investment.If it's 50k, I would open a fixed deposit for 3yrs, then use tat as collateral for credit limit increment to at least 90% of it. Then take a low interest promotion balance transfer loan for 2yrs. Invest 30k in Cashflow investments, use the monthly Cashflow to pay for the monthly installments of the balance transfer.20k to split into 10k each. First 10k to work on at least 2 Forex investment strategy, the other 10k keep as backup funds, to use only for emergency including repayment of the balance transfer if required. 50k balance transfer loan must be cleared by end of the 3yrs. Then calculate your cash onhand, review, replan and proceed for another 3yrs.If amount of windfall is higher, I would add in property investing & other tools of Investment.
Pay off first: Car loan or Student loan?
How soon do you want to expand your family? How much can you afford to pay extra on the payments? What sort of savings have you accumulated? These questions need to be answered first. Paying extra on the student loan will save you money in the long run but may still take a longer time than you are willing to wait to start your family. Use an amortization schedule to see the effect of paying extra on both loans to get an idea of what time frame you are looking at. Let's say you can add $100 a month. that will significantly shorten the car loan duration. At that point you'll have nearly $300 a month you can apply to the student loan. That said, starting a family with no savings is going to hit you where it hurts - the pocketbook. So instead, pay an extra $75 on the car and save the $25 each month. You'll have over $1000 saved for the child's arrival and believe me, you will need it.
I'm getting a large settlement(700,000), what's the best method of living off the interest if possible
You should really sit down with an independent financial planner... don't talk to the guy at the local bank, don't go to the financial adviser arms of the big Wall Street firms... talk to an independent. 700k is not that much money, especially if you are young. At a minimum, it is not the type of money that you could retire off of. First, inflation will erode its relative value. With inflation historically between 2-4%, much higher then a traditional savings account, over time your money will be worth less and less in buying power, even if you NEVER touch the principle amount! 700k IS enough money to set you up pretty well financially though. First, I would get out of any debt you have to include credit cards, car loans, etc. Second, if you don't own a home, but you could use a portion of this money to buy one, you should STRONGLY consider it. Third, the money you have left should probably be invested (through the advice of an independent financial planner) relative to your goals... retirement, education for your children, etc. will all influence the type of investment strategy you should have. So, while it is a great windfall, it is not instant retirement money... sorry!
Should I pay my mortgage after a financial windfall (assuming the windfall is 2x my mortgage and I'll never receive this type of windfall again)?
I would recommend paying off your mortgage. There are those who say if you have a good interest rate, you should keep the mortgage and invest. That's wonderful if your investments make a great rate of return. There is no guarantee of that. And the spread that you might make (investment return minus mortgage interest rate), is likely relatively small, and would be considered a bad investment on it's own when factoring in risk. A better option is to pay off your mortgage now, and then take the money you currently spend on your mortgage every month, and start investing it. The benefit is that you stop giving away money to a bank in the form of interest, and you are still going to get to put that money into the market, just not all at once, and not today. And, you will have the ultimate financial freedom if things really go to hell. You will own your home, and as long as you can pay your property tax, nobody will every be able to take that away from you.
How do I plan to repay a home loan?
If your home loan comes with Overdraft Facility, (like SBI, PNB) its better to park your surplus funds in the same. This is adjusted toward loan amount and also in case of any emergenices, that amount may be withdrawn (and deposited in one month).Always plan to pay principal amount first (if banker permits) so that total EMI too comes down.