I just received a profit-sharing bonus from my company because we had a very good quarter. The bonus is about one month’s salary. This is just the start of what seems like a huge money stream coming in. I received $150 from one of my cell phone rebates, and another $150 from the other cell phone will be on its way soon. I just got a new job (and a new raise), and I will be receiving about 2 weeks extra pay for my extra Paid Time Off. I should be receiving another $2000 from my tax return. Needless to say, my wife and I will be coming into a lot of money that we have no idea what to do with.
With this new money, I have come up with a lot of topics to write about, but I will start with the obvious first question. What should I do with my extra month bonus? I had planned on putting 2/3 of it into the Emergency Fund. Some of this money going into the Emergency Fund will be used to buy baby stuff (as my wife is due in July). We do not need any baby things right now, but just knowing we have the money waiting for it gives my wife and I piece of mind. The other 1/3 will be divided between an extra principal payment towards the mortgage (7.25%) and my wife’s private student loan debt (9.85%).
One of my goal’s for this year was to pay about $7000 of my wife’s private student loan debt. Let me just say that this is just the tip of the iceberg as she has around $14,000 in private student loan debt, $16,000 in federal student loan debt, and I have about $14,000 in federal student loan debt. The federal loan debt does not concern me as the interest rate is around 4.5%. The private student loan interest rate, like I said before, is 9.85%. This is the highest interest rate on any loan I have, so my goal is to get this paid of as fast as I can.
I was thinking about investing some of this new money, but I am a very passive investor. I do not like to lose money, ever. When I do the ShareBuilder promos, I know that the stock I buy is basically free as I get the money back. I think I will wait for some of the other money I have coming in before I start investing. I will just take a good chunk of the money I have and put it into my 4.75% savings account.
yeah. I think you got it right. Pay off that private student loan asap. Or you can open a roth ira with vanguard.
Martin,
I’m still not completely “in the know” about your entire financial situation, but are you considering putting some of your extra money into a retirement account like a Traditional or Roth IRA?
I am putting together a post about my recent decision to open a Roth IRA at Vanguard and invest in one of the Target Retirement Funds. It has very low expenses (.21%) and is basically as passive as it gets when it comes to investing in the stock market (broad index funds in both stocks and bonds).
Just a thought. It’s good to have more money than you know what to do with.
I like everything about the post except the part where you are going to put funds into an emergency “fund” but expect to take them out to buy baby stuff.
An emergency fund is a place to put cash in case you need it in an emergency. Your plan to buy baby stuff doesn’t sound like an emergency to me.
Instead, I’d put the money into a money market savings account dedicated to baby expenses. Don’t get in the habit of tapping into that emergency fund unless you absolutely have to.
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