Spending my unexpected windfall

4325797829_280db25ffe_zGood financial fortune is smiling upon me this month. It turns out that I over-paid my 2015 income taxes and am due a refund! Note to self: adjust my 2015 withholding. On top of that, I was excited to learn that my employer is paying a bonus due to the company’s solid 2015 performance. Between these two surprises, it’s enough of a windfall to warrant some time to consider how to use it.

My first impulse is “What can I buy with this!?” Ugh. I’m sure that’s a natural reaction, but not productive in ways that I’d like. I will surely spend some of it, but not until other financial priorities are met. Here’s my plan:

Pay off credit card (20%) – I use one of my credit cards regularly to earn 1.5% cash back (then apply it to the balance). I pay it off in full each month to avoid interest. I recently paid my annual condo insurance using the card, and now have a larger balance than usual that will need to be blown away in the coming weeks.

Roth IRA (10%) – I automatically deposit $150 monthly to my Roth IRA ($1,800 for the year). With the annual maximum being $5,500, this is an excellent opportunity to fund it up!

Niece/nephew college fund (6%) – A portion of my Betterment account is allocated to the education of my niece and nephew. I only drop $25 per month into it, but it’s better than nothing. I haven’t decided how to use it once they reach college age. I could buy their books, chip in on tuition or housing, or even take them on an international trip (my favorite idea). With my nephew now a few years from high school graduation, dropping a larger amount into this fund would be prudent.

Fun stuff (4%) – I can’t deny myself a little treat at the mall, so just a wee portion will go to picking up clothing pieces that I’ve wanted ever since doing my capsule wardrobe in January. I’ve got my eye on a new pair of jeans, a pair of booties, and a few tops.

Plain old savings (60%) – All that remains will go into my not-too-thrilling-but-very-important online savings account.  If I want to get real about taking a mini-retirement break in the next couple of years, this needs to be funded up more.

*Bonus bonus* My automatic 401k deduction (18%) was taken from my bonus check. Woot!

(Image: TimSimpson)

4 thoughts on “Spending my unexpected windfall

    1. Yup, that 10% doesn’t max out my Roth. Right now, I’ve got more of my emergency savings in Betterment than Capital One 360. My thinking is that it’s better to put more of this found money into the non-investment account, since there’s a chance I could need it in the next few years (either for a true emergency or even a mini-retirement).

    1. Hell yes, booties! A sweet pair of Franco Sartos that are comfy and go with everything. Girl can’t beat that.

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