Tempted by the end-of-year bonus

I wasn’t expecting to receive a bonus from my employer this year. We’re in a recession, after all. So imagine my surprise when I received a bonus of about a week and a half’s pay. That’s quite a lot of money considering how little we spend.

I find that extra money is a lot easier to control when it’s expected. For instance, we know we’ll receive a tax refund this year. We’ve been anticipating it all year, and we already know where it’s going (savings).

However, when someone hands you a check out of nowhere, it can be tempting to blow it. After all, I was doing fine 5 minutes ago before I received the money. It’s not like I’ll miss it if I just spend it, right?

I have a feeling that no matter how committed I am to frugality, I’ll always have these moments of temptation. In that moment of weakness after I looked at the amount on the check, I started thinking about new furniture, a new TV, and a thousand little, inexpensive things I could use this money to buy. It would be a lot of fun to just blow this money. But then it would be gone, I wouldn’t be any closer to reaching my goals, and I’d regret it.

I quickly reminded myself that we’re in debt, and we’re nowhere near reaching our financial goals. Blowing money on things we don’t need is a good way to keep ourselves from reaching those goals.

So what is the practical side of me considering using the money on? Here are some thoughts I’ve had:

Summer fund

Two months of the year, Tony doesn’t receive a paycheck for teaching. He’ll find a part time job, but chances are it won’t pay as much as his monthly stipend. Last year we adjusted our budget and tightened things up to accommodate for our lower income. I’m considering throwing my bonus into a savings account to help us a little during those summer months of lower income.

Emergency fund

Our emergency fund is about 1/3 of the amount we want. This money could help us beef it up a little.


This is the least appealing option. After all, my bonus is dwarfed by our $60,000 in student loan debt. However, every little bit does help.


This is a tough one. Tony and I are 24 and 25, and neither of us has a retirement account. We’ve wanted to open a Roth IRA for some time, but it has taken a back seat to debt and savings. I’m considering using this bonus to jumpstart our retirement saving. While I don’t think it’s enough to open an account (I think I need at least $3,000 for that, but I’m not sure), it could at least get us started until we have enough saved to transfer it to a Roth IRA.

While I really want to get started on retirement saving, I’m hesitant since we are considering moving in a year and a half. We really need all of our savings to be liquid so we can use some of it for the move if that’s what we decide to do. So I’m leaning toward putting off retirement savings for another two years until we’re settled down somewhere.

I could use some advice. What would you do?

9 thoughts on “Tempted by the end-of-year bonus

  1. claire

    hi, I just found your blog. As another wife of a humanities phd, i enjoy reading it! I would stick the bonus in your EM fund. But, I would take a small, small slice of the bonus, and do something that you find fun, but normally would not do. ie, not a prada bag, but perhaps a coffee out.

  2. Angie

    Any time that my husband and I get some “unbudgeted money” (tax return, going away gift, bonus) we take a little out for us ($20 – $50 per person) and put the rest away for a rainy day. Year after year of being disciplined at paying off debt is great, but never having a little bit of money to spend on a ‘want’ instead of a need is depressing. We don’t just blow that money either. I might buy something from pampered chef that I really want for the kitchen, and my husband might buy a tool for the shop. Because we’re so frugal we never blow money, but we always methodically spend our “fun” money on something that we’ll use but we don’t budget for. Through 5 years of cranking out $65k+ of debt, we found it really works to treat yourself every once in a while.

  3. anne

    I agree with the the two comments… i would take out $10 or $20 and buy a small treat, then put the rest away. I usually receive Christmas bonus at work and also feel tempted to buy something extravagant!

  4. tiffanie

    i agree with the others. i would beef up savings after taking a bit to (lightly) splurge on yourselves…maybe a nice dinner out or a little something you’ve wanted to buy but haven’t? i think it would make the biggest impact in savings.

    tiffanie’s last blog post..free iPods and more!

  5. MargeM

    I would put it toward debt. Then you are magnifying the money in terms of how much you’ll be saving on interest payments. And when the time for the move comes, hopefully your husband can negotiate for his employer to cover some or all of the moving costs.

  6. H

    Put it in a Roth IRA. You can always take it out again if you need the money for an emergency. I think the major funds have minimums lower than $3000, I know Vanguard has several funds with minimums of $1000.

  7. Tracy

    You don’t have to have 3K to start a Roth IRA….I started one 3 years ago with nothing, but I have a amt. drafted from my checking to this acct monthly….it is not a large amt, but it is adding up….and when the economy turns around I expect it to do well….

    Treat yourself, but also start the retirement funds…especially if you company matches…..just add what they match on, most companies match on small amt, 1-3%….that way you don’t miss out on the free money.

  8. wcw

    Start your ira… the years between 24 and 64 go fast and there will always be a reason to put off socking money away in one because we always feel will do it tomorrow. At 24 you have time to make more money but at 64 the time to make and the chances to make more money are almost over.

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