I am a single parent. I’ve always lived well below the poverty line. This September I am starting a real live grown up job that will pay me 4x what I’m used to living on. I need advice so I don’t go hog wild and make a bunch of rookie mistakes with my newfound riches.
Certain of my expenses will go up drastically. I’ll lose my childcare subsidy, for example, so daycare will go from $40/month to $600/month or more. I will have to pay for parking downtown and have fancypants work clothes. All of this is just part of it and I will work it out. After all my basic expenses are covered, however, I’ll have leftover funds. Probably at least $1500 a month. I won’t know how much for sure until I actually get a paycheque and bills for my new costs. how do I allocate this money? I want to be efficient with my money and not have my living costs get out of hand just because I have more cash. I want to stay frugal, but with less stress. Anyway, how would you prioritize the following?
-Mortgage – $44 000.
-Student loans - $40 000 (There is no interest on these until I finish my master’s degree, which will happen in ~2.5 years, and even then the interest will be prime and I will get tax breaks for having the loans. I am happy to ignore these loans for now)
-House – It’s a 120 years old and looks it, in a bad way. I love the location and lot size so I won’t move, but it needs serious upgrades. A lot of money could go into it if I let it. On the upside, work on the house will be reflected in the property value, as it’s in an up-and-coming area.
-Car – a 15 year old Subaru. The check engine light is on. I’m driving on the spare tire, and two other tires have slow leaks. Repair or replace? Keep using while I save? Discuss.
-My parents are at retirement age and, thanks to a medical emergency, have no retirement funds and serious debt. I am going to support them, at least in part. I think I’ll get them the kind of house they can retire in (no stairs, etc) and let them live there rent-free, so they can sell their home and have some money and also have lower living expenses. I would like to do this in the next five to ten years.
-I want to retire someday. I am in my mid thirties and have no savings.
-My younger son is profoundly disabled and will never live independently. Saving for my older boy’s education would be nice, but putting things into place for my baby is very important.
-I want to go on vacations and buy electronics and hire someone to clean my house and walk my dog… I could see the new money getting frittered away on these things and that would be terrible, but after years of very real deprivation I want to have at least a little fun money. I need some wisdom here.
Would you put everything into one debt or asset or obligation and go hardcore, then move onto the next category, or would you split the funds between goals/ needs? What % would you allocate to each?
I am so very lucky to be in this position and I am terrified of screwing up. Help me!