7 Things You Can Do With an Expected or Unexpected Year End Bonus


black and white check cheque close up
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‘Tis the season for an expected or unexpected bonus payment at work. Many people are fortunate enough to work for an employer who recognizes their hard work.

What to do with it? Depending on your situation there are different answers.

Save it – Saving it would be a smart option. Beefing up (or starting) an emergency fund is a great idea. Read most any article and you’ll see this is a foundational step. How much to save? That depends. Dave Ramsey says 3-6 months; Suze Orman says 9 months. I am a fan of Suze on this one. There is nothing like having some cash when things don’t go as expected.

Invest it – Adding additional funds to your retirement savings is always a good move. Whether you can defer more into your 401(k) or IRA, your older self will thank you for doing so. I frequently ask myself when I am thinking of spending money needlessly whether my older self would care that I spent money on XXXXXX. The answer is always no. This helps me clarify needs vs. wants. Not to say I don’t spend on wants, I just don’t get into the stupid zone with it.

Pay Down Debt – If you have debt you are trying to clear, then this might be a great opportunity to gain some ground on it. Using an annual bonus to make an extra principal payment on your mortgage can reduce your interest in addition to scheduling that “burn the mortgage” party earlier!

Education –  Have you wanted to take a class or start on a degree program? This might be the jumpstart you need. Have kids? You could put it into their 529.

Home Repairs – There might be a home repair you’ve been putting off that you would love to tackle over the New Year. This has the potential, depending on the repair, to increase the value of your home. You could do something big like a new furnace or something small like replacing your kitchen cabinet knobs with something new.

Spend it – Maybe you had plans and were saving up for something special and this puts you over that magical amount. Balance out your spending with other priorities. While items are nice, sometimes spending on experiences is well worth it, especially with family.

Donate it – I have a friend who donates her annual bonus every year split between her local church and a variety of good causes on her list. Some good ideas are food pantries, hospitals, conservation groups, homeless shelters or even a friend, family member or neighbor in need. There is no better feeling than being able to help somebody else.

Any of these or a mix of them would be great choices. The important thing is to plan out whatever you are going to do with it. You will then avoid that awful feeling of regret.

Do what you do intentionally. Your employer gave you the bonus to reward you for your hard work this year. Follow through and continue to do a good job for yourself.



Why Dave Ramsey is right about using cash

photography of one us dollar banknotes
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I have listened to Dave Ramsey since late 2007. My husband found his TV show on Fox Business one night. He came down the stairs and said “there is this guy on TV you might like”. So I watched and was hooked. Since then the TV show went off the air but in the interim I found the podcasts and listen to them regularly.

Dave Ramsey is a huge advocate of using cash and rages against credit card use. He has rational and logical arguments against this. I agree that they are really are a convenience.

In early 2008 we decided to make the switch from using credit cards to cash. I had used credit cards since I reached theoretical adulthood at 18. I thought it would be a minor change and in some ways it was, but not in others. Here is what I discovered when I made the switch.

Spending cash requires pre-planning. With a credit card I can go anywhere conveniently. If I am to spend cash, I need to go to the bank (or an ATM), and take out the right amount of money. If I don’t take enough out, or even if I do, I am limited. This resulted in the next thing I found.

I spent less. I had always budgeted but as many studies have shown, I spent more by using plastic. There is just simply a bottomless pit of money there. You are limited by your credit card limit but really, who thinks about that when spending? You would only think about that if whatever you were buying would bump up against your limit. If you are buying dinner for $65 and your limit is $3,000, you won’t give a thought to ordering a dessert. You will rationalize that it is only $8 and order that chocolate cake. How much would it cost you to bake a chocolate cake at home and save money? Next to nothing.

I had a hard time parting with my cash. This was quite surprising to me. This made it real. There was more of a connection between “feeling” my spending than with a credit card. I naturally limited myself because I wanted to hang on to the cash. This was probably the biggest benefit I found by doing this.

I stayed on budget. Really this statement is a no brainer. I only had so much cash to spend and when it was gone, I was done. The time I would need to spend to go out of my way to go get more money just wasn’t worth it to me. I am a busy person and didn’t want to do that. Inertia works in my favor there. The trip is not worth it to me. This was a built in buffer or “time out” from spending aimlessly.

The loss of the credit card rewards really didn’t matter. When you are using the cards, you think that you are being smart since you are getting some money back. Not using coupons but using your credit card? That’s okay, you’ll get rewards points. When you stop using them, you find that those rewards are much smaller than what you save by staying on budget.

I felt relieved. I handle all the money in our home. I use Quicken for our finances. Each credit card charge requires me getting a receipt, bringing it home, entering it into the software, reconciling the bill, then paying it on time. It was so liberating not to have to do all of that or keep track of it. I felt free.

I had no purchasing guilt. This is one of the things I heard on Dave’s show and it is real. He says having a budget gives you permission to spend. I agree except that I always had a budget. I didn’t always follow it, but even when I did there was always something “there” and I never noticed it until I switched to cash. It was stress. Stress for spending and not having the tangible cash in my hand. Even though I knew I had enough in my checking account to pay for it because I planned on spending $100 at that store, it was still there. I never knew it until I switched. Then I could feel it leave.

Freedom. I have never looked back. Try it.



12 Holiday Traditions our Family Cherishes

christmas home house light
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We live in the Northeast so the scene above isn’t all that unusual for us. The holiday season brings snow and cold weather along with the anticipation of time being spent with family and friends. Year after year we continue the same holiday traditions in our family and look forward to them all through the year.

  • Traveling to a tree farm two days after Thanksgiving to pick out and cut down our Christmas tree. The farm provides saws and sleds and three fields to choose the tree. My husband takes far too long to give his final stamp of approval on a tree. The colder it is, the more determined he seems to stay out longer looking over every tree. It is fun despite this and strapping it to the roof of the car, getting it in the house and finally trimming the tree is something the entire family enjoys.
  • A photo of my daughters in front of the decorated tree is next.  This will go on the holiday cards. I have seen distant relatives whose first comment is that they love the cards and keep them coming. This is not so unusual as I have friends who adorn their cards with pictures of their family. They do tend to take pictures in different places though and include themselves. Our picture is always only the girls and always in front of the tree. Boring you may say; tradition say I.
  • All the extended family members come to our house for holiday meals. The extended family comprises anywhere from 18 to 28 people depending on who can come which year. We serve the same meal every year – Prime Rib with all the associated side dishes, appetizers and desserts. I have nobody bring anything and I do all my own dishes. It is family time when they are there and not a day for chores.
  • Everybody gets a fleece blanket. We have a rather large sectional with recliners and in the family room, chairs and a love seat. All occupants get blankets for after dinner where they watch football or sit by the fire and fall asleep. It is cozy and definitely tradition.
  • This day would not be complete without a game of cribbage. Our front closet is stuffed to the ceiling with board games but yet cribbage is the only game they want to play. Relatives divide into teams and play for hours with laughter ringing out of the dining room where they play.
  • The leftovers have to leave. Everybody brings containers and takes every bit of leftovers home. My grandmother used to yell “No leftovers” loudly and in French when I was a kid.  I don’t use French but you get the picture. I make way too much food and darned if I am going to eat all of that.
  • Our family gives gifts to our service providers. There is the newspaper delivey, the hairdresser, you get the idea. Anybody in a service related field appreciates this more than you know. Most appreciate that you cared enough to do something for them.
  • We donate some cash to every person we see ringing a bell next to a red kettle. If they are going to volunteer their time to stand out in the cold ringing a bell to raise money, we are going to help them succeed.
  • We talk about how grateful we are in all that we have; we are truly blessed. My children understand you will always find those doing better than you and always find those doing worse. Find somebody doing worse and help them because they could use a lift any time of the year.
  • We stop at our local coffee shop and use the drive thru and pay for the person behind us. We find this to be gratifying probably because it is just so random.
  • One night we will go to dinner and leave the waitress an oversized tip. The closer to the actual holiday the better. One year we were out-of-town on Christmas Eve and the waitress told us about how her kids were disappointed she had to work. She was a single mother and needed the money. She got an outsized, crazy tip that night.
  • My daughters volunteer locally to help where they can throughout the year but pick a holiday event each year and help out. It is usually a community event like a local craft fair.

Some of these traditions cost money and some don’t. The ones that do, we save specifically for and get so much enjoyment out of doing them. The ones that don’t are just as dear to us. They are as big a part of who we are as the cribbage game.

Happy Holidays!

5 Important Considerations when Christmas Shopping

As Christmas quickly approaches, many of us scramble to finish or even start our shopping. For some, this is an enjoyable activity done on time each year and for others, not so much.

Here are five important considerations when Christmas shopping:

  1. Consider the recipient’s taste, style and personality. Remember to weigh heavily what this person would like (not necessarily what you would like). Does the recipient have a hobby or favorite activity? Are they an active person who likes the outdoors or a homebody who loves to cook? Do they love books? Self improvement? Like to spend an afternoon doing spa activities at home? Make a list of the things you know that they like and don’t like. Then sit back and review the list. You can utilize web searches to get ideas.
  2. Consider what is going on in the life of the recipient. Are they working a lot of hours? Visiting family more than usual due to illness? Make sure that the gift you select will fit into what is going on in their life. If they love experiences but are just too busy, maybe get them an experience gift only if you can also help them with their day-to-day so they can go and enjoy it. It is great to give somebody a gift that they would love but if they don’t have the time to enjoy it, it can put more focus on what they are dealing with at that point in time. You may want to adjust your ideas based on their present situation.
  3. Consider your own personality. Gifts are very personal items. While you should purchase the gift with the recipient in mind, something way out of character from you would seem, well…odd. The gift should reflect your personality and your relationship to some extent.
  4. Consider your budget. When you sit down to consider various ideas for a gift, don’t leave out the money piece. You need to revisit your holiday budget. Don’t have a budget? Spend some time, sit down and make a list of all the people you are buying for and give some thought to numbers 1, 2 and 3 above. In that context, assign an amount to the item(s). When you go shopping, stick to the budgeted amount. Sometimes when shopping you’ll find the gift you want to buy, but it is much more than your original intention to spend.  That is when you need to step back and find another option. It doesn’t mean you have to abandon your gift idea, but find another way to do it.
  5. Consider what is going on in your life. Once you have made your list and set your budget, you should shop for the gift. What time constraints do you have? Typically if you have more time, you can go to a physical storefront and look for bargains.  If you are pressed for time, consider shopping online as shopping in the store when pressed for time typically results in overspending. Online coupons can be found and used to stay within or spend under budget. Many websites have free shipping as well. As it gets closer to Christmas, be aware of deadlines for shipping so that packages will arrive on time for the big day.

The Christmas holiday will go as quickly as it came so make a commitment to start planning on the 26th.  Set a budget for the following year and fit a plan to pay for it into your budget. Pick up Christmas clearance while you can at reduced prices.  One year I purchased an entire Christmas china set with service for 15 for $20 representing 70% off. That was over twenty-five years ago and I still pull out that china to use for Christmas dinner every year.

Christmas is a predictable event in that it happens at the same time every year. Even if you didn’t plan this year, you can change all that in just a few short weeks.

How do you approach Christmas shopping? Share your tips in the comments section.  Happy Holidays!

My Money Story

My earliest memory of money revolves around my mother repeatedly telling me to save my money.  I did as she asked because, as with most small children, what your mother tells you is just true.  You don’t question what she tells you.

During most of my childhood I kept saving.  My mother was so proud of me.  She called me her little saver.  At some point it was time to spend some of the money.  I didn’t want to spend it.  I refused.  After all, mom said to save it so I struggled to let go.

After a couple of these episodes my mother encouraged me to spend the money.  She said there was no point in saving it if I never was going to spend it.  So I did what I was told.  I spent it.

It’s probably obvious to you now that I grew up quite conflicted about money.  Save it or spend it?  I could see why it was good to spend it but why save it? We never spoke about why I should save.

This back and forth behavior continued until my early twenties.  I took a job that kept me traveling with a group of colleagues early in my career.  My colleagues were men in their forties while I was a twenty year old female.  Conversations were frequent about money, investments and retirement and piqued my interest.  I decided at that point that I needed to learn about money.  After all I had nothing to contribute to the conversation without learning about it.  Those colleagues did me the biggest favor by having those conversations and getting me interested in the topic.

Fast forward to today and I am a CPA working in private industry as a Finance Director. Along the way I have learned the practical aspects of money: budgeting, saving, insurance, planning, investing and most importantly, putting my history in front of me and accepting how it affects who I am and how I do things today.

My goal with this blog is to share what I have learned with those of you who want to make changes to help improve your money knowledge and put that knowledge into action.

No matter how much knowledge you have, each of us is on a journey in life, including a financial journey.  Money touches everything in our lives so how can we not want to improve how we manage it?

I started with my beginning since that shaped how I view money.  How did you first learn about money?  What is your money story?