Beating Broke Rules: Bonuses

Beating Broke Rule: Spend your Bonuses wisely.

Every year, many of us are lucky enough to receive some sort of bonus from our employer.  (If you’re self employed, that’s bonus enough. ;) )  And when we do, the inevitable question arises.  What do I do with the money?  And then, how to budget for it?

The simple answer is to spend it wisely.  In a more complex answer, it depends on what your goals are for your financial life.  Using your bonus to buy Christmas presents may make you feel good for a month or two, but will you feel guilty afterward?  You’ll feel much better, in the long run, if you spend the money wisely towards your goals.

198/365 - paydayHere’s the downside to that, though.  You’ll also feel guilty if you use it all for debt repayment.  Each of you will have a different situation, but here’s how we usually use our bonus here in Beating Broke.

Consider taking 10% of the bonus and blowing it.  Buy some presents.  Take your family out to dinner and a movie.  Whatever you want.  Give yourself 10% in cash and free rein to do whatever you want with it. You’ll feel better when you do.

With the remaining, take a look at your situation.  Do you have a purchase that you’ve been saving up for, or putting off until you could afford it?  I’m not talking about those gifts, or the television upgrade, but things that you really need.  Maybe some costco eyeglasses? For example, a portion of my bonus (if I get it) will go towards buying new tires for one of our cars and paying for a repair that one of them needs.  It won’t take the whole bonus, but a good portion of it.  And it will be extremely relieving to not have to come up with that money out of my normal paycheck.  If the bonus doesn’t come, I’ll still have to pay for those things, but it might take a little longer to pay for them.

Maybe your situation doesn’t have a purchase like that that you need to pay for.  But, maybe you’ve got some debt that it could help retire.  What we don’t spend on tires and repairs, will likely go towards paying off a debt.  It won’t pay off any of them all by itself, but it will cut the payoff by several months.  And, while that doesn’t give me the same feeling that just blowing the money on stuff does, it will leave me feeling much better for a far longer time.

The bottom line is this.  Think about how you spend your bonus and spend it wisely.  You’ll feel much better for it.

photo credit: jypsygen

Yearly Bonus on the Way

Yay!  The yearly performance bonus that my company gives out is coming on Monday!

The bonus is based on a set of goals for the company.  If the company reaches all of the goals, then we get 100% of the bonus.  Each goal is set a little differently, so one might only count for 10% and another for 50%.  In any case, we got the whole 100% of the bonus. The whole bonus means that I’ll be getting my regular paycheck on Monday along with the bonus check for 100 hours.  It’ll be a tish more than what my regular check is.  Basically, an extra paycheck this month.

My wife and I have been debating what to do with the money.  Of course, due to the timing of the bonus, the idea of being a little more generous during the holiday season always comes up, but we’ve luckily talked most of our family and friends into spending limits so that’s out.  Most likely (we haven’t decided entirely) we’ll use most of the bonus for paying off debt.  We’ve got one credit card that would almost be taken care of by the bonus, so it’ll be getting a check soon too.  I think we’ll save a bit of it aside for some home improvements that we’ve got planned as well.

What about you?  Did you get your bonus this year or did the economy ruin it for you?  If you did get it, how do you plan on using it? Or, how does the lack of your bonus affect your budget?

Get an Extra $20 from ING Direct

ING Direct is pushing their Electric Orange Checking Accounts this month and you could be the recipient of a nice $20 bonus.  And it’s pretty simple to do too!

If you have an Electric Orange checking account, you’re already enrolled.  You then only need to use your EO debit card to make at least 5 purchases of more than $10.  When they all show up on your November statement, you’ll get a bonus of $20 sometime before December 15th.  (Details at the ING page)

I just heard about this today and normally I don’t use the debit card for my EO account all that much.  It’s set up to automatically pay a few subscriptions, but nothing that would meet the qualifications for this bonus.  However, my family and I just returned from a vacation where we had saved for the expenses of the vacation in an ING Direct savings account that is tied to the EO account.  When we went on vacation, we transferred the money to the EO account so that we could easily access it with the debit card.

Unknown to me, we met all the qualifications for the bonus and are looking forward to the bonus!  Yippee!  There’s still a few days left to qualify for the bonus if you haven’t already.  If you don’t have a EO account, you might be pushing it to get one and get the card in time to qualify, but even if you don’t get the bonus, the 1% interest rate is still better than what most banks pay.