HomePersonal SituationWhat I am Doing with my Unexpected Bonus

What I am Doing with my Unexpected Bonus

stack of cash

I can’t believe that it was 2 whole years ago when I bitched complained made note that I received an unexpectedly low bonus and what I was going to do to rectify the situation.  The amount that was “lower than expected” was actually part of my compensation schedule.  Well, this year things are different.

The compensation portion of this year’s bonus was higher than any year in the past, and then in a completely unexpected move The Boss Men Decided to throw me another few bucks on top of the compensation schedule piece because the firm, as a whole, did really well.

What I am Doing With The Extra Cash from my Bonus

As you may have guessed from my recent posts on extra payments when dealing with an amortization loan, I have a few amortization loans.  In addition to the all too common, student loan and mortgage debt, I also have a car loan that is been alive for way too long.

However, I have to balance the desire/need/compulsion to destroy the auto loan with The Wife and I’s operation “hoard cash.”  This unexpected amount allows me to satisfy both fronts.

  • About 10% will be used to pay off outstanding Credit Cards that would have been paid off at the end of the month.  This makes me feel like my checking out gets breathing room since I choose to keep myself cash poor so I stay on track.
  • About 20% will go into our Tax Account since the bonus amount will be in the form of a 1099, I will owe taxes on it.  Do I think I will need all 20%? Nope, especially because of our new little tax deduction.
  • About 30% will go towards the hated auto loan.  By my calculations this will reduce my number of payments by 16 and save me over $750 in interest!  YOUR WELCOME FUTURE EVAN!
  • The remaining amount will go to Operation Horde Cash.

Have you received your bonus yet? Are you even expecting a bonus?



  1. This year our bonus was a Visa gift card, which I used this weekend. Was very nice not having to use money in our checking account for Christmas gifts. In previous years the boss man got us gift cards to Macy’s. We don’t really shop at Macy’s, but they have a really good return policy. We would buy something then return it a day or two later and they would give you cash back since a gift card was used to make the purchase. This year the Visa gift card cut out the step of having to buy something then take it back, which was nice.

    • I love the visa/amex gift cards! Just remember to use every last cent.
      I feel weird asking the cashier to charge the last $3.92 so what I’ll do is take all the random amounts and use it on an automated-online payment system.

      Usually I’ll sign into my account and just keep adding the gift cards and using every last cent.

      • Yes, every last penny was used. I spent $39.99 (no sales tax here in Oregon!) then the next place I went I had the checker split my bill and put $60.01 then paid the remainder out of pocket.

  2. Good thing you’re setting aside the required amount for taxes right away; otherwise you’d “owe” that money in the spring. As far as using to pay loans, auto loans aren’t amortization loans as far as I was aware. wouldn’t you be better off either paying a mortgage interest loan, any cc debt or just investing?

    • Darwin,

      Not sure what you mean that they aren’t amortized? Auto loans are amortized – Equal Stream of payments with a decreasing interest and increasing principal payment formula.

      As far as the other options:
      – No CC Debt
      – Mortgage Same idea as the Auto Loan idea except it is tax deductible (I do itemize) AND it will take YEARS to see any benefit vs. paying off this damn car loan within the next year
      – Investing – I have my 401(k) and Dividend paying portfolio going strong but haven’t REALLY been aggressive as I feel the need to hoard cash first. The Wife and I are looking to move within a year to 18 months and want a massive down payment so our lifestyle and monthly nut doesn’t change all that much (especially with the cutest tax deduction we just got)

  3. Oh maybe it is. I made extra payments to mine once and I just didn’t get billed for the next cycle. But it didn’t necessarily shrink my term. Perhaps it was just mine.

    Well, you’re in a good position!

  4. I love that you got a big bonus and can put it towards anything 🙂

    I like the breathing room idea. It’s better to have extra cash than JUST enough or NOT enough by $1 or something weird.

    I got hit with a fee once, playing that account balance game.

    • I got NAILED with fees a couple years back when I was STUPIDLY playing the bank bonus game when banks were just giving away cash for opening accounts.

  5. Sounds like a good plan! Rather than going extreme with paying off all debts (or the other way, spending it all up), you’ve broken it down into reasonable chunks.

  6. I’m not expecting a bonus but I am expecting some money for Christmas, which will go towards the transition into our new condo, as well as our savings/debts.

  7. Those sound like some solid moves with your bonus – I dont get one, but if I were, i’d put most of it to the auto loan just like you did. By the way, how’s the “little tax deduction” doing?

  8. I get my bonus early next year and I’m saving it for April 15. 🙁
    We are going to be owing quite a lump this year because I liquidated some stocks.
    Nice plan on paying down debt.

    • Just got the physical check today and they didn’t 1099 me like they did last year, so the check had about 39% taken out even though I am not anywhere near that bracket! SUCKS. I have to wait till next year to get my money back from the gov’t

  9. My bonus was $200, so not enough to make a huge difference. I am still deciding if I want to use it all toward debt, or save it for something. Right now, it sits.

    Congrats on your killer bonus…and on the new tax deduction! Kids are wonderful….just remember that there are no mistakes….just learning opportunities.

  10. Bonus? Raise? What’s that? 😉

    Seriously — I also love to throw extra money at debt, although we’re down to our 0% car loan and our mortgage. Our little ‘tax deduction’ isn’t arriving until February/March — hope your little guy is doing well!

    • Our little guy is doing fantastic! Just a 0% and a mortgage? That is fantastic WOW. I envy your spot. Even after the auto loan I’ll have LARGE student loan debts to pay back

      • I was very lucky to get a full college scholarship to a state college. I got into some great schools, but couldn’t stomach the idea of my (or my parents) going into that much debt for a nearly Ivy League education. I’m still happy with my (student loan-free) decision.

  11. I had a dream that they gave me a piece of paper with my bonus written on it, and they wrote the amount in scientific notation.

    Yes, I dream in nerd. Also, it was a $2×10^5 bonus, which is completely unrealistic for my job.

  12. I would definitely use it to pay down student loans that I can’t stand anymore. I really want to get rid of it and then attack the car loan and mortgage as well. But I am not as worried about the mortgage since we already pay more than we have to every week.

    • The student loans are likely tax deductible while the auto loan is note. Plus depending on your student loans (private vs public and when you got them) it is likely that the auto note is at a higher APR

      • Yeah I know. You are absolutely right. But we got the car loan in August 2010 only as my students loan are running for years. This is why there are my first priority. And because I know I won’t pay student loans for years again, I prefer getting rid of them and then put that money on the car.

        • And I forgot to say… the spouse does not have student loans and shows a lot of comprehension towards my situation by taking care of other expenses while I pay those. I would like to help the spouse more with those expenses.

  13. As a Teacher, I do not receive monetary bonuses! My bonuses are intangible! My decision point is what do I do with extra savings, invest, splurge or replace something. How we spend our money determines when we reach our goals, so it is very important.

    • The moment I read your 1/10th rule I knew I was breaking it and the worst part? I read your post and thought hmmm that’s a pretty good rule

      Car will be paid off in 2011 No Doubt in my mind

  14. I was able to just put an unexpected bonus in the bank last year. I haven’t used it yet but will for foreign travel next year 🙂 I have already paid off all (not mortgage debt) years ago. No bonus this year 🙁

  15. Nice job saving it rather than spending it. And the article about goals for 2011 was inspiring as well.


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