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Garga

How should we spend $3000?

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My dh got a “you’ve been at this job for 15 years” one-time bonus of just over $3000. 

What should we spend it on?  

We could put it toward the mortgage...toward paying off a car...toward a trip that’s already planned for this summer...into retirement savings...or to help pay for college costs.

Or...what else?  Or which of the above will give us the most bang for the bucks?

DH doesn’t have anything specific that he personally wants to spend it on, so we don’t really know what to do with it.  We don’t want to put it in with our regular money and just fritter it away mindlessly.  We want it to mean something.  If paying down the mortgage/car/trip/savings/college is really the best, that’s fine.  We can be practical with it.

Or is there something amazing that we’re not thinking about that we should do with it?  Something that’s not practical, but isn’t just frittering it away either.

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Put $1k towards retirement, but another $1k towards paying off the car, take the last $1k and split it between you and your DH to spend on whatever random something or other you might want.  New phone for yourself, some new toy for whatever his hobby might be, etc etc. 

Eta:  I actually think plunking the whole thing on paying off the car is the real way to go but you mentioned not practical 🙂

Edited by happysmileylady
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Put it towards the debt with the highest interest rate (car loan?), and then when that loan is paid off, put whatever you currently pay on the loan in your retirement investment account. Very few Americans have remotely enough money socked away for retirement.

As tempting as it might be to spend it on something fun, as long as you have debts, everything you spend on nonessentials is basically money you are borrowing, at interest, by not paying off the loans.

Edited by Corraleno
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Well I'd figure out if there will be taxes on it, but yeah I'd put it toward debt since you already have a trip planned. 

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First if all do you have a decent emergency fund?  If not, I would out all/most of it there.

Next would be towards credit card debt if you have any.

Then if those are covered, I might do $2000 into a Roth IRA if that isn't maxed out.  And take the $1000 for family vacation, etc  or $500 for dh to just do what he wants, something special for him 

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After the year we’ve had, I’d say take $100 out for a celebratory thing and put the rest in savings. We are all of an age where expensive emergencies happen—sudden medical event, older house/vehicles, etc. It’s super awesome when you have three of those in a month. 😭 I am team have at least $12k cash on hand that you can touch without blinking.

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Is it $3k after taxes? What best to do with depends at least in part in the interest rates on your car loan and mortgage. Also, do you have an adequate emergency fund? Are you maxing out your retirement savings each year? Does your state allow you to subtract contributions to a 529 college savings account from income for income tax purposes? If so, what is the income tax rate in your state? In my state, we used a 529 plan right before and during college just for the tax savings, since we immediately got a 9% return on our money.

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In my world, barring a huge financial problem and absence of an emergency fund we would:

$300 church

$300 for DH to spend on something for him

$300 for a date trip or family trip

The rest onto the car loan

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Sounds like practical is what everyone would do, maybe putting aside a tiny bit for something a little fun, especially for dh. 

We have a moderate mortgage and one car payment—that’s the only debt we have.  

We’ve been saving for retirement since I was 20 and have a decent amount in there, though the 17 years I’ve been staying home means I will need to work once the kids are out to beef it up a tiny bit more. We have enough to retire when we plan to, but just enough. 

We have money set aside for emergencies, though not a full $12k as someone above mentioned.  We’re at about $7 or $8K.  

So....it’ll probably go toward the car or to beef up the emergency fund, since the emergency fund took a little hit when we put a down payment on the car last year.

 

Or...like another poster said, we might split it up 3 ways into 3 different things.  And I need to look into the 529 info Frances mentioned.  But...it sounds like whatever we do, being practical with it is the way to go.  

Edited by Garga
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When I had debts, I put all my extra $$ toward paying off debts.

That said, I might do a few small things to celebrate ... like a nice dinner out and one or two extras during the planned trip.  If there was something we were denying ourselves because money was too tight, I would consider - for example, replacing clothes/shoes that were starting to look shabby, fixing some household issue that was being postponed.

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Nah, I’d go with 1) vacation (maybe towards the one planned, or an extra one since you (most likely) have the money already for the one coming up, or 2) new furniture. Obviously this is what *I* want. 😁 oh, or patio furniture. 

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I would buy peace of mind with it. Which option gives you the greatest peace? For me it would be eliminating the car debt as fast as possible. You house is working for you, but your car is depreciating. 

Edited by Chris in VA
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When we had extra unexpectedly, we put it toward our car loan.  It felt really good to get that paid off!  That said, you deserve a little something special for right now too.  I like the idea of a nice dinner out, or a couple nice dinners out (or something along those lines) that you might not otherwise do when you're on vacation.

Or, is there something you've been putting off that you need?  New eyeglasses?  Braces for one of the kids?

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I'd be sorely tempted to book a family trip to Norway but yeah you should probably do something someone else has suggested 🙂 

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Go on a fantastic vacation and make lots of good memories! It sounds like you've been very responsible with money all along, even with the car debt. I'd say it's time to be frivolous. 

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   We got a chunk of money once and I *still* regret not spending part of it for an epic family vaca. It would depend to me, if you are generally always buckling down then I'd take some to do something fun, if you tend to be a little looser with money then you should be I'd be more strict. Now, I'm very happy that we are entirely debt free but there are no ends of things to spend money on and no limit to how much you can save so I try to stick the balance between- spending and saving.

4 minutes ago, aaplank said:

Go on a fantastic vacation and make lots of good memories! It sounds like you've been very responsible with money all along, even with the car debt. I'd say it's time to be frivolous. 

 

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5 hours ago, Melissa in Australia said:

Every spare money we used to pay down any Debt. We now are completely debt free. It is marvellous 

That’s our goal. It feels like every time we dig out we have another emergency though 😒

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We are debt free too and it is marvelous!  I'd maybe pull 100-200 to do something fun as a family - fancy meal, stay cation.  There's no way I'd spend significant amount of any of that as mad money if you have a 17 year old coming up to college and debt other than a mortgage.  

We paid off our mortgage this year.  10/10 do recommend.

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1 minute ago, Arctic Mama said:

@FuzzyCatz congratulations on making your last mortgage payment!  That’s HUGE!

Thank you!  It felt great!  Now we pay for college instead!  🤣  LOL. 

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10 hours ago, Garga said:

Sounds like practical is what everyone would do, maybe putting aside a tiny bit for something a little fun, especially for dh. 

We have a moderate mortgage and one car payment—that’s the only debt we have.  

We’ve been saving for retirement since I was 20 and have a decent amount in there, though the 17 years I’ve been staying home means I will need to work once the kids are out to beef it up a tiny bit more. We have enough to retire when we plan to, but just enough. 

We have money set aside for emergencies, though not a full $12k as someone above mentioned.  We’re at about $7 or $8K.  

So....it’ll probably go toward the car or to beef up the emergency fund, since the emergency fund took a little hit when we put a down payment on the car last year.

 

Or...like another poster said, we might split it up 3 ways into 3 different things.  And I need to look into the 529 info Frances mentioned.  But...it sounds like whatever we do, being practical with it is the way to go.  

 

Is that 7 or 8k 3 months of expenses for an efund?  6 months if you don't work?  If not that is where I would put it. 

What % interest is your car payment? 

Do you have college savings for your 17 year old?  It sounds like you don't have a 529 at all. 

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With as responsible as you've been and as good as things are with your finances, from what you've said, I'd think you can afford a little fun spending. We have a list of house projects we want to do "one day" when we get spare funds, and that's what we'd do if it were enough for one of them. If not, a trip. I'm of the opinion that vacation spending is almost never wrong/vacations are almost never a bad thing to spend money on. 

Congrats to your husband on 15 yrs! 

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We would use the majority of it responsibly but save a little out to celebrate to mark the occasion.  Some couples love a fancy steak dinner but that’s not our thing. We’d likely use the little bit for a solo day trip (or maybe an overnight). No kids, no other friends. Just us driving and sightseeing and being together, talking. Because that’s what we like to do.  And our routine is that we take a selfie and it goes into the rotation of pics we use on our phone screens. We each have about a dozen such pics and they bring back such good memories. 

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13 hours ago, Garga said:

My dh got a “you’ve been at this job for 15 years” one-time bonus of just over $3000. 

What should we spend it on?  

We could put it toward the mortgage...toward paying off a car...toward a trip that’s already planned for this summer...into retirement savings...or to help pay for college costs.

Or...what else?  Or which of the above will give us the most bang for the bucks?

DH doesn’t have anything specific that he personally wants to spend it on, so we don’t really know what to do with it.  We don’t want to put it in with our regular money and just fritter it away mindlessly.  We want it to mean something.  If paying down the mortgage/car/trip/savings/college is really the best, that’s fine.  We can be practical with it.

Or is there something amazing that we’re not thinking about that we should do with it?  Something that’s not practical, but isn’t just frittering it away either.

 

The car and trip are already expenses you have to pay, with the added $3k or without, so I would use it towards either of those.

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4 hours ago, mommyoffive said:

 

 

Do you have college savings for your 17 year old?  It sounds like you don't have a 529 at all. 

We do, but I would look into if we should dump this money into it or not.  When I was thinking about spending the $3k, I wasn’t thinking of the 529 at all—it just didn’t cross my mind—, so it’s something to consider now that someone mentioned it.

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Not the mortgage, personally. It isn't enough to make a big difference on how long you'll pay on it.  

 

I'd put a chunk into savings, a chunk toward the car payment because that you will notice soon, and the rest toward college expenses or the trip, especially if it is the last trip before things start changing as the kids get older. 

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I'm all in favor of eliminating debt, but this is a one-time bonus that isn't going to eliminate your debt (which sounds pretty manageable). I'd absolutely spend a good chunk of it doing something special that we hadn't planned on. This might mean adding to the already-planned trip or something else, or a couple of somethings. Take everyone parasailing or ziplining or something equally memorable that pertains to your destination. Eat at the hibachi place that's normally too expensive and have them bring out a celebratory cake for dh and make a big deal, lol. 

In your situation, I wouldn't think twice about spending a third of it on memory making, if there were things we truly wanted to do. I'd spend it all on something amazing. Assuming I didn't, I'd put some on the side for college visits if that's coming up in the next year or so. They can get expensive even if you don't travel super far, but can also make for fun little family or parent/kid trips. Then I'd put the rest on the side, maybe even in a separate account, to have on hand for something you don't know might happen yet. Hopefully something fun, but it would be there for emergencies also. 

I don't know if I'd put any toward the car loan or note. I'd probably figure out how much interest it would save and decide if it's worth it. 

We are in good financial shape now, with our biggest expense being college for 2 kids. It took us longer to get to a really comfortable place because we always spent money on family vacations instead of putting it all into savings, but I have zero regrets.  We always had enough to pay the mortgage and fix the car and contribute to long-term savings, and I wanted to have some of my fun while I was still young enough to enjoy it, lol. 

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I vote spend it all on a special, extended family trip -- a once-in-a-lifetime memory-maker.
You and DH have been working hard for the past many years -- take a little time off to "stop and smell the roses" and celebrate! 
Your DSs are almost gone and out of the house, and you are going to be keenly aware of the empty place in your heart and home when DSs move on/away into their own lives in just a few short years. Right now, they are of a perfect age to take a special trip together as a family and make memories, see a part of this wonderful world.

Use $3K to rejoice in life, love, and family! 😄 


ETA
For perspective -- $3,000 is not a lot of money as far as using it toward paying down mortgage/debt, or save toward college:
- it's only 2-3 months of mortgage payments (and if you owe more than $50,000, you may get a better benefit from tax write-off of the interest by NOT using the $3000 toward the mortage
- it's likely not going to be enough to full pay off a car loan
- it only covers college expenses of books + the "misc. expenses" -- for 1-2 years (not all of college, and not even touching tuition or room & board)

It's just the right amount as a gift to spend on yourselves, to bless you for all your hard work, frugality, and financial responsibility. 😄 

Edited by Lori D.
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If the $3k is post tax, I would dump $1k into emergency savings, $1k towards debt and $1k towards the summer trip. 
As someone who has never been fully healthy, money can be earned back but family trips (and the lovely memories) are high priority and since this is a one time bonus, I’ll allow myself to splurge more. 

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