Windfalls Bonus or Bust

Windfalls: Bonus or Bust Have you ever dreamed that a rich, distant relative died and left you a fortune? Of course, you know exactly what you would do with all the money — a new house, gifts for the relatives, a major vacation around the world and even a little charitable giving. Despite the unlikelihood of this type of situation, smaller “fortunes” on which we fail to capitalize, come our way on a regular basis.

Think about tax refunds, cash birthday gifts, overtime pay, bonuses, garage sale proceeds, and overcharges in your impound account. These additional funds aren’t dreams, but financial “prizes” that can help you reach goals faster or throw you into depression if they are squandered or have to be used to catch up on bills.

We’re talking about windfalls. If you take a walk through last year’s checkbook register, you’ll find them sitting there, those wonderful little unexpected bonuses. If you’re like most of us, they evaporated, absorbed into the abyss of everyday living and bill paying.

Years ago, we decided to stop letting the windfalls evaporate. We designed a plan to deal with any excess, large or small, which came our way. But before we get into the specifics, we’ve got to define how to tell when you truly have excess.

Planned Spending We’ve always had a spending plan. It’s similar to a cash envelope system, except that we track our spending plan on paper while all the money actually resides in the bank. We have nineteen different account sheets to cover expenses such as Utilities, Food, Pets and Gifts. The balance in all the accounts, added together, equals the total in our checkbook. When we want to make a purchase, instead of consulting the larger balance of our checkbook, we review the smaller balance on the corresponding account sheet. If the money is there, we buy, if not, we wait.

When we were paying off our first house, this was the plan we used. Any excess would be divided into three categories: one-third to an extra house payment; one-third to charitable giving; one-third to special projects – buying stuff we wanted and having fun. Through the application of this percentage plan, we paid our house off in nine years. WOW, what a great feeling!

What might your plan look like? It’s different for every family.

Consider the following if you’re liquidating debt:

60% to liquidating your smallest debt 20% to save (emergency funds to keep from using credit)

10% to charitable giving 10% to enjoy Are you out of debt and paying off your house? Try the this:

30% to additional principal 30% to save or invest (emergency funds or retirement savings)

20% to house projects 10% to charitable giving 10% to enjoy No matter what the amount, windfalls will come your way. Be prepared – have a spending plan and a windfall plan. Then enjoy the bonus of reaching goals and laughing all the way to the bank.

Steve and Annette Economides are authors of America’s Cheapest Family Gets You Right On the Money (A New York Times Best Seller) published by Random House 2007. The also publish the HomeEconomiser newsletter 6 times each year. For more info and lots of free money saving ideas visit www.AmericasCheapestFamily.com



Windfalls Bonus or Bust - To learn more about this author, visit Steve Economides's Website.

Like this article? Share it with your friends

E-Mail | Print | More

Related Articles
Windfalls Bonus or Bust
	How do you deal with unexpected amounts of cash that come your way. Most of the time the money is wasted. We've discovered a way to keep windfalls from slipping through our fingers.
Demand More Money by Using your Ads to Ask for Action
	Lots of ads are beautiful, almost perfectly written, and quite convincing - yet they fail to ask for or demand action from their reader. If you want readers to have your product, then tell them so and demand that t...
Africa needs a technology bubble
	According to the WSJ, silicon valley is on the brink of another technology bubble bust like what was witnessed in 1999. According to the article the emergence of "strange" website names such as Orgoo and businesses ...
How You Can Stand Apart
	Find out what makes you stand out from your competitors...and enjoy the bonuses that involves.
Do Not Undervalue Yourself
	Generosity and working for free when you're first changing careers is one thing; undervaluing yourself is another.

---

Related Forum Posts