At this time of year we get our income tax refund, and the bonus from Grump's job. This year they totalled a little over $9,000!
Rather than do something stupid, (like go out and buy more crap we have to maintain and/or cart around), we exercised some discipline this year, and applied a bit over $3,000 to our ridiculous credit card debt. It didn't kill that debt off, (it was just too huge), but it did put a sizable dent into it. Now we should have credit card debt close to $2,500, and if we exercise discipline we should have it paid off in three months or so.
$5,000 went into an account we use to pay off our car loan, and keep money in should our rental condo suddenly become unoccupied. We receive almost $650/month in rental income from that property, so should the tennent move out we have not only that loss of income, but then also the mortgage and utility payments for the condo to cover. So, we have to keep a large chunk of cash set aside for that unforunate inevitability.
The final $1,000 went into a seperate emergency fund to deal with anything else stupid that comes up. For exmple, our cars were very nice to us last year, so one, (or both!), is overdue to throw a fit and generate a bunch of large repair costs.
Other than controlling our spending, there isn't much we can do at the moment to improve our painful cash flow problems. Because Dodong is still so young, we have decided that it is not a good idea for Sweetie to try to get a job. As for Grump's latest attempt to make money online, namely affiliate marketing ..... well, let's just say we hope we doesn't spend too much money on it!
If all this works out, then maybe, just maybe, NEXT YEAR we can actually do what clever people do, and sock away a large portion of our early spring windfall into some long term savings, rather than using too much of it to dig out of debt.
You mention "rather than doing something stupid" - you might want to adjust your W-4's, so you're not having Uncle Sam hold your money all year when you could be doing dollar cost averaging. Uncle Sam is a horrible savings investment and is the definition of stupid!
ReplyDeleteYeah, yeah ..... Look, I know letting the Feds have an interest free loan is like giving an alcoholic a quart of vodka, but I've been in the other situation, namely, OWING the Feds money in the springtime, and it sucks! Am I just too lazy to budget properly? Maybe. Or maybe NOT having the cash in hand means it doesn't get spent.
ReplyDeleteNot all personal finance decisions are based on math. In this particular case the emotional security of knowing my deadbeat uncle can't force me to hand over a big chunk of cash at his convenience, not mine, is worth losing a few dollars.