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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76388  
Subject: Re: dual incomes, now what? Date: 8/20/2007 8:33 PM
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Any thoughts?


A couple.

First, if you've been living fine on your paycheck all this time plus paying for school, I'd strongly recommend you continue to live on one paycheck, and that it be the smaller of the two. That gives you flexibility in a host of ways. It means that if someone loses a job, your lifestyle won't suffer, just your savings. It means that someone can take a chance and switch careers without missing a beat. It means that you can save for a whole host of things, some of which you haven't even thought of.

With all you will be able to save, I would max out the pre-tax accounts, but I would also put the remaining chunk in a taxable account. This can be used for a downpayment on a home, to fund college for kids when you have them, or to retire sooner. There is nothing quite so freeing as having a significant nest egg so that you're not tied to a job and so that you have money for emergencies or unplanned expenses as they come up.

This is exactly the plan that DH and I have followed for the last 25 years or so. It has allowed him to change careers twice with the last one putting him sort of in semi-retirement since he works for himself now doing what he wants to do in retirement and works when he wants to. It means that we were able to throw lots of money at fertility treatments that gave us the twins, and that we will be able to offer the kids tuition for the full 4 years at the college of their choice when they go in 2 years. And it means that we can retire sometime before 60, and probably really close to 55 when they get out of school.

I can honestly say that living like this has removed finances as a stressor for us, and we've been able to do things like pay for airfare to attend funerals and provide expensive medical things for DS when they were needed without having to worry about where the money would come from.

We've typically put our raises away, and have been able to save quite a bit of money while still having toys along the way. I think if you were to follow a path like this instead of spending both paychecks, you will find that you have a much easier financial path in life, and that the flexibility and peace of mind that accompanies it will be very welcome.

This is the advice my dad gave me when I was getting out of school, and it is what I tell my kids to do when they are on their own. I don't think you can go wrong like this.
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