People make more money as they gain experience

Q. My wife and I are 31 years old, and we have no debt except for our home. We also have an emergency fund and college savings in place for the kids. Over the last several months we’ve saved $22,000 for a newer car, but we’re also worried about retirement. We’ve been putting 15 percent of our income toward retirement, and we’re concerned that maybe we shouldn’t spend the whole $22,000 on a car. We make around $100,000 annually and have $50,000 in our nest egg. What do you think?

A. In your situation, a $22,000 car is not unreasonable at all. You guys are both 31, and you’re going to be in great shape for retirement if you just keep doing what you’ve been doing. On top of all that, you’ve got your emergency fund in place, in addition to a nest egg and car savings. If I’m in your shoes, I’d go out and find the best car $22,000 can buy.

You’re doing all the right stuff. Your kids can go to school debt-free, and you’re going to have the house paid off in no time. In short, you’re going to retire multi-millionaires at the rate you’re going – as long as you keep on keeping on!

Think about this, too. As a general trend, most people’s incomes go up throughout their lifetimes. That being the case, chances are you’re going to make and invest even more money in the years ahead. You and your wife could easily retire with $5 million to $10 million sitting there.

You’ve done a great job together. Keep up the good work, and enjoy that car!