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January 03, 2008


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I used $500 of my $3000 bonus to buy myself something for Christmas. The rest was sent to my freedom account to pay for those irregular yearly expenses that come up.

I didn't get one this year or last, but two years ago I bought a dining room set with it.

My bonus is 20% of my compensation. Here's how I use it:
(1) Significant % into retirement savings off the top.
(2) Largest portion goes to fund infrequent expenses. Examples: car insurance/maintainence/replacement, saving for house downpayment.
(3) Much smaller portion goes to increase emergency fund to reflect higher "six months expenses" number.

My wife received a very generous bonus last year. #1-5 above were all pretty much covered aleady so we used $5000 of it to make some needed renovations to our kitchen but were disciplined enough to place the entire remainder in our long-term investment portfolio. She also got a sizable 15% raise later in the year which we used to finally max out the remaining 4% on her annual 401K contribution without seeing a decrease on her bi-weekly paycheck.

I'm self-employed so no bonuses for me (I did max out my SEP though) :)

Here's how I spent my bonus last year:

57% - Debt Reduction
30% - Tuition & Fees for Grad School
10% - New Computer
3% - Home Theater Audio System

I used my bonus last year to pay for relocation costs to a different state. We were orginally planning on relocating Spring 2008, but when I received my bonus Spring 2007, I thought it was a great opportunity to make the move without taking a hit to our net worth. As it turns out, it was a great move as homes in our old neighborhood in Minneapolis, MN are down more than $40k from where we sold our home. On the flipside, real estate in Houston, TX remains strong.


My husband's company had a rough year, so his bonus was only $300, which happened to be exactly how much our property taxes went up this year. At least we didn't have to take money out of savings to pay the extra on the property taxes! :)

Heck yeah I saved it! (said with Napoleon Dynamite voice) I used it to pay down my stupid mortgage. My husband used his bonus to buy stupid tools. I hate spending bonuses responsibly (i.e., paying for "stupid" stuff), but I'm always glad inside afterwards.

i'm young, debt free, & on top of my retirement. so here is where my bonus is going:
60% - saving for a new house
30% - tempurpedic mattress (my current mattress is a 3rd generation hand-me-down)
10% - undecided, but something for myself. looks like a new DSLR camera

Put it towards my mortgage.

Right now it's just in the savings account, but I plan to buy a lot of plants for our backyard come spring.

I too am surprised to hear around here how many people have already spent their bonus money and have said they will be using their actual bonus to pay off the credit. Our bonus each year is based off of company performance, and though it has been consistent for some time, it is in no way guaranteed.

This year mine, along with a large tax refund due to my spouse going to school, will be making an emergency fund and making a 'unexpected expense' fund for those times that you just forget something. I will probably take some of the money and buy myself a toy like a camera, or a computer upgrade or something, but we'll see how it goes. You can't have a windfall go all to responsible things, enjoying the fruits of your labour IMO is a responsible thing though . . . so maybe you can :)

My husband did exactly what I knew he was going to do with his bonus: He purchased Music Equipment IMO- he did not need.

We have managed to come to a happy place with the bonuses. I take care of the finances and save, save, save during the year. He does with his bonus as he pleases. He does take my ideas into consideration, but typically does as he wants.

My husband received a bonus of 9%. I couldn't believe how much was taken out for taxes! He deposited the bonus into his checking account and it's been earmarked for our Roth IRAs (we're waiting to do our taxes so we can confirm that we can contribute the max).

My company is on a weird bonus schedule. If I get one this year, I won't find out until March and then I might not get it for a few more months.

My wife got a bonus this year- completely unexpected, first time bonus. Since we already had a budget for the month and every dollar was allocated (we didn't 'need' the bonus for anything) it went straight to a debt payment. That may not have been 'fun', but we were very happy with the extra debt reduction.

Yep - I did and it went 100% into our downpayment fund!

The only bonus we received last year was from the old owners of our company. They sold the company and gave everyone a nice bonus. I bought an engagement ring with part of my bonus. I'm going to pay down some debt with part of it. I'll have about $1,500 left that I'm still trying to decide whether to pay down credit card debt (3.9%) or start my emergency fund with.

Last year I did get a bonus. It was about 55% of my salary. I wanted to try and use it to pay off some debt. Funny thing is I still have the debt. So I did not use it for what I should have. This year it is looking like I will get about 17 - 18% bonus. My wife and I have talked about what we will do with it. I think we have agreed to use it to pay car insurance and life insurance for the full year. We are also going to pay a few of the credit cards off. We also plan not to use them. I really want to get to a point where we do not have to use it at all and we can put it away or invest it. If anyone has some good suggestions please feel free to let me know. I am really wanting to turn things around this year and get our finances in order.

My wife just got bonus of $5k (well, after taxes it was $3k) at the end of the year, and it was completely unexpected. Here's how we spent it:

- $500: Roomba and accessories. This was our "fun" expense, as we're both geeks, and this would be useful and we've wanted one, but just couldn't bring ourselves to buy one. I know it's all psychological, and it's all the same money...but since this was compeletely unexpected, we could let ourselves splurge

- $200: Freezer. I'm using some of my christmas gift cards and this bit to get a stand alone freezer for us. That way when we see chicken, turkeys, etc go on sale we can stock up. It also means I can get my wife to make a bunch of collards at once (she'll only do it a few times a year), and i can freeze a lot, and eat them over following months

- rest: student loans. Not our highest interest rate, but pretty darn close, and there's like 6 of them. I could consolidate, but they're all at the same institution, so it wouldn't really matter other than when I look at my credit report, net worth, etc.

I also received a 25% bonus last year in April, and then a 10% signing bonus when I started a new job. I'm not quite sure how much of it was split up between helping with relocation expenses since we moved, and I had money flowing through all of the accounts to deal w/closing at both houses, rentals, movers from rented apartment to new house, etc, but most went to moving related expenses, or was saved, which we are now sitting at ~5.7 months worth of expenses in our emergency fund.

Here are my reasons for not doing as Suzy recommends:
1. No CC Debt
2. Can't contribute to a Roth. Though I'm already budgeted to open traditional IRAs (first year not eligible for Roth) and max them out
3. Emergency fund was heavily bolstered by 1 bonus, now I plan on just letting it sit and grow from interest.
4. Already pay several hundred a month more towards mortgage.
5. This is something we should probably look into doing, but I don't think it should be done w/bonus money. Insurance involves premiums that have to be paid on a set frequency (monthly, semi-annually, annually, etc), and I don't want to rely on future bonuses to fund that insurance policy. if I can't budget for it, I don't want a recurring expense.

I received a buy-out bonus in June from my new employer to make me whole for the bonus I was forgoing at my previous employer. Changing jobs put me behind as far as maxing out my 401(k), so I lived off of my bonus while contributing 50% of each paycheck to my 401(k). I used the part of the bonus not set aside for living expenses to max out an IRA, establish a $10,000 emergency fund and put $18,000 into a taxable brokerage account.

7 months later, I've completely maxed out my 401(k) and I have about $2,500 left of the original bonus that hadn't been put into the IRA, emergency fund, or brokerage account. So I took a trip to Texas! :)

My 2007 bonus is being paid next Monday. It's not as sizable as the previous bonus, but I plan to put it towards my 2008 IRA, increasing my emergency fund by $3,500 (so that it's big enough to cover New York living, including ridiculous rent, for 6 months), and put the rest into my brokerage account. Now that my 401(k) contribution is a more reasonable percentage of my salary (it'll get me maxed out by year-end but not at such a rushed pace as 2007), I won't need my bonus to live off of.

I continue to be so very, very grateful that I don't have any credit card debt or student loans. I don't need a "mortgage adjustment" fund since I rent. I think New York is one of the few places where it makes more sense to rent since housing costs are even more ridiculous than rental rates. I plan to save up to buy a house somewhere far, far away where I won't need $100,000 for just a down payment!

There was a time in my mid-20's I got a large (for me at the time) amount of money. I went out an purchased a $30 bottle of perfume I had wanted for a while and then put the rest of the money in a mutual fund. All of my friends thought I was crazy for not spending it on clothes, etc. Course that amount has grown and who knows where they are with their silly spending habits. Last I saw one of them, she was still owing me money from paying her rent so she was not thrown out to the curb.

Yep, one paycheck's worth. So did I take Suze's advice? Well, item by item:

1. Nope. Don't have any (just mortgage) so this won't work.

2. Nope. This is what I used to do with it, but it's not a guaranteed bonus so I funded the Roth with automatic biweekly investments this year. It's already maxed out.

3. Nope. Well over 6 months in there at current (not minimum) spending rate.

4. Let's just say no, it's not in my plan at the moment (don't want to start that whole debate here).

5. I am adding some disability coverage, but not with the bonus. I have no dependents so life insurance is not a priority.

So what did I do? Well, 10% off the top went into the charity fund (as with all income) although I haven't spent it yet. Someone close may need some help soon so I'm holding it for that contingency. If that doesn't happen it'll go out to my main charity for the year (which I haven't decided on yet).

10% went into my retirement account (again as with all income). 10% is now more than the Roth maximum so it's kinda piling up in there, but not quite high enough to open an investment account. Should I jack up my 401(k)? I already save over 20% towards retirement (I'm 35). Should I open a taxable account? Still thinking. What a nice problem to have (compared to the decisions I used to have to make).

So what's left? Transport fund. I have a sink fund to buy my next car (in 2012 or later, so I call it that Transport12 account). I have an annual target for that saving, and an automatic fortnightly transfer, but I also use it for maintenance and repair. A little extra keeps the savings on track in spite of any repairs and maintenance costs.

Fortunately, even that account it getting a little ahead of itself in spite of over $2500 in costs for one of my vehicles last year, so this spring I might splurge on something fun like a new garage door and opener, or maybe a new back stoop and front porch railing. Heck, if the summer bonus is big enough maybe even new gutters! But for now it's in the Transport12 account.

I haven't been told yet whether I'll get a bonus or not, and there is no guarantee. However, if I do I plan on putting 10% in my emergency fund and the remainder towards debt.

In the past, we've frittered away any bonuses. SOME always ends up going to savings or debt payment, but most of it goes to "toys" or "upgrades".

This year, we've planned ahead. My husband is getting two bonuses in January, and I get an "extra" paycheck (paid bi-weekly). Our income for the month will be almost twice what it normally is - and everything extra is going towards one specific student loan. We should be able to have this loan paid off by May.

If we didn't have the plan for loan repayment, we probably would use this money to remodel our master bathroom.

When my wife used to work (she quit a year ago to become stay at home mom), she used to get bonuses which as a family we decided to donate to charity 100% of after tax figure. And it was usually pretty large sum, about $3000 after tax. Of course we are blessed to have no debt (we paid off our mortgage).

I did receive a bonus - a bit under 45%. The tax bill was rather extraordinary (I have been paying US tax for just 6 months and coming to terms with the high rates considering the lack of services).

I feel sure I should consider a house purchase but have not figured out whether the timing is good. This is doubly so because I do not know where I shall settle longer term. Right now I'm ashamed to say the money is sitting in a standard savings 5% account and I have no clue what to do next!

Considering that I expect to sit on the rental fence for some time before deciding on investing in a permanent home, do you have recommendations on where best to park some capital (say my $50k)? I'm wary even of Index funds over the next 12 months (and extrapolation of historical yield curves) as I do not believe we've seen the end of subprime fallout and its contagion effects.

New Tax Payer --

If I had money that I thought I'd need in under five years (to buy a house, for instance), I'd keep it in an interest-bearing account or money market. It's just too short of a time to put the money into the market (makes it too risky.)

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