Extra Money? What Do I Do With Extra Money?

A couple of months ago, I started a new job. The new job has bonus potential every month, and

English: RepRap v.2 'Mendel' open-source FDM 3...

English: RepRap v.2 ‘Mendel’ open-source FDM 3D printer (Photo credit: Wikipedia)

getting that bonus is largely under my control. Effectively, if I’m not a total slacker, I’ll get
about $500 every month, but it’s not guaranteed.

We’re also getting a small 4 figure tax refund this year. I wasn’t expecting that at the beginning
of last year, but one of my side hustles has taken a turn down a path I didn’t plan for, which
lowered my tax liability considerably.

Both of these things are money that we can’t plan for, so it’s not in the budget. It is extra
money.

What the heck do you do(responsibly) with extra money? It’s easy to take the money and run to the
spend it someplace fun.

Easy.

And tempting.

Very tempting.

But that wouldn’t be responsible at all.

The Dave Ramsey plan says we should put it on our debt, but our debt is down to just a mortgage,
and that’s down to $9000.

Retirement?

I actually over-contributed to my retirement last year, and had to file a form to get the
overpayment back instead of paying a penalty on that money. My wife’s account isn’t getting maxed,
yet, but she’s also way ahead of me in retirement savings.

So what to do with it?

I added a calculator that let’s me punch in a number and it breaks it out by our optional goals.

It has 6 categories:

  • Extra mortgage payment: 25%. My goal is to pay off the mortgage completely this year.
  • Retirement contribution: 25%. I do want to max Linda’s retirement contributions this year.
  • Emergency fund: 15%. We have an emergency fund, but I want to grow it to 6 months of our expenses.
  • Family: 15%. This if for whatever family thing we’re planning to do. It could be pushed into a down payment for another rental property, or a vacation, or a camper. We’ll decide this each time we get the extra money.
  • Jason’s Fun Money: 10%. This is for me to blow on something fun, like a 3D printer.
  • Linda’s Fun Money: 10%. This if for my wife to blow on something fun, like a present for me.

So, if we get $2500 randomly dropped in our mailbox, we’ll put $625 on the mortgage and a
retirement fund, $375 to the emergency fund and the family fund, and $250 to Linda and I for fun
stuff.

That lets us see progress on a few of our goals, while still rewarding how hard we’ve worked and
how much we’ve done without while becoming financially stable. 65% of it is pure grown-up &
responsible spending. 35% is generally fun, but can be repurposed if necessary.

What do you do with surprise money? Do you blow it or do something responsible with it?

1 comment

The Value of Hiding Money From Your Spouse

I have a confession, but it’s probably not going to be a big shocker if you read the title of this post.

Acceptance marks displayed on top left of this...

Acceptance marks displayed on top left of this sign (Photo credit: Wikipedia)

I hide money from my wife.

Some of you just started screaming at your monitor that I’m a horrible person.

That’s cool.

You’re wrong, but the fact that I got that reaction out of you makes me smile.

Ok, I might be a little bit horrible, but not because I hide money.

My wife has an admitted shopping problem.  If she thinks we’re broke, she shops less.  That’s a win and allows me to save up for our long-term goals and provide for our financial security.

I don’t lie about it.  If she asks how we’re doing, I tell her.  At least in general terms.

But I didn’t tell her about my annual bonus, until we had a bunch of car repairs come up that would have swamped our emergency fund.

I also haven’t told her about the cash I’ve been stockpiling.

A couple of years ago, the power went out here for four days.  It wasn’t just our house, it was 75% of everything within 5 miles of our house.

When the power came on in some places after a day or two, the phone lines were still down, which meant gas stations couldn’t process credit cards.

Quick, look in your wallet and tell me how much cash you have on you….

Most people live on their credit or debit cards.

Could you buy food or water if your plastic was gone?

I could that week, but not for long, so I started taking the cash payments from my side hustle and putting it aside.  I’d come home, give my wife a little cash, keep a little cash for myself, and put at least 80% of it away.  I absolutely refuse to touch that money for anything.

Part of the “set it aside and forget about” means not revealing its existence.  It would be too easy to dip into it to pay the pizza guy or when we go to Rennfest.

So I don’t talk about, and it gets to sit all by itself in the safe, comfy and warm.  It’s my security blanket, and nobody gets to touch my binky.

2 comments

My New Windfall

Tax season is over.

money

money (Photo credit: 401(K) 2013)

This year, TurboTax and Amazon teamed up to offer me a 10% on up to $1200 of my refund if I took it as an Amazon gift card.

$120 free if I spend that money with a company I’m going to spend money with anyway?

Yes, please.

I spend lots of money with Amazon.  I subscribe to many of my household items there, because I use them and I don’t want to have to think about buying them.  I get my soap, shampoo, toilet paper, paper towels, and garbage bags automatically delivered.  There’s a bunch of other stuff, too, but that’s what I remember off the top of my head.  If I have 5 items in a monthly delivery, I get 20% off.

Free money, free shipping, and none of the hassles of shopping?

Yes, please.

So now I have a $1320 credit with the company I use for most of my non-grocery shopping.

I also have 962 items on my wishlist with Amazon.

To recap: $1320 burning a hole in my metaphorical pocket and 962 items that I have wanted at some time in the past, begging me to bring them home.

That’s a dilemma.

The smart answer is, of course, to let that money hide in Amazon’s system and slowly drain out to pay for the things I actually need.

The fun answer is to stock up on games and books and toys and gadgets and cameras and, and, and….

Some days, it’s hard being a responsible adult.

I think I’m going to compromise with myself.  I’ll leave the vast majority of the money where it is, but I’ll spend a little bit of it on fun stuff, and a little bit more on stuff I don’t quite need, but would be useful, but not so useful that I’ve already bought it.

A new alarm clock to replace the one next to my bed that automatically adjusts for daylight savings time but was purchased before they changed the day daylight savings time hit so I have to adjust the time 4 times per year instead of never.  That’s on the list of not-quite-needs.

The volume 2 book of paracord knots is on the list of wants that can’t possibly be considered a need, but it’s going to come home, anyway.

I figure, if I spend a couple of hundred dollars on things I really, really want, I’ll scratch that itch and leave most of the money alone.

What would you do with a $1300 gift card at a store you shop at every week that sells every conceivable thing?  Spend it right away, or stretch it out, or something else?

Enhanced by Zemanta
7 comments

Net Worth Update – January 2014

This may be the most boring type of post I write, but it’s important to me to track my net worth so I can see my progress.  We are sliding smoothly from debt payoff mode to wealth building mode.

Our highlights right now are nothing to speak of.  We did let our credit card grow a little bit over the last couple of months, but paid it off completely at the end of December.  It grew mostly as a matter of not paying attention while we were doing our holiday shopping and dealing with some car repairs.

That’s it.  We haven’t remodeled our bathrooms yet, but we have the money sitting in a savings account, waiting for the contractor.  We haven’t bought a pony yet, but we did decide that a hobby farm wouldn’t be the right move for us.  We’ll be boarding the pony instead of moving, at least for the foreseeable future.

Our net worth is up $13,000 since September.  Our savings are up and our retirement accounts are down because there are two inherited IRAs that we need to slowly cash out and convert to regular IRAs.

Net Worth Jan 2014

Enhanced by Zemanta
No comments yet