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SwanSwanHummingbird's avatar

How much of my end of the year bonus should be used to do something for myself?

Asked by SwanSwanHummingbird (1255 points ) January 1st, 2014 from iPhone

I’m in a small amount of debt and most of the money will go toward that, but I busted my butt and I earned that bonus. I think I deserve to spend a bit of money on myself.

How much is reasonable? I could get rid of half of the debt on my sole credit card if I used the entire amount of my bonus on it. I’m not talking about a vacation to Hawaii, but how much of that money could I use for myself and not feel like I’m using to much?

I buy things I need, but never spend money on big purchases. I really want some new shoes and a new purse.

What do you think?

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21 Answers

funkdaddy's avatar

“I deserve it” is a dangerous pattern, it’s really easy to talk ourselves in to things we want and much harder to make a goal with a reward and stick to that. We always deserve it.

That said, me telling you that doesn’t really make it true for you and this whole question is something you need to decide for yourself. What works for you? So…

Do whatever you want. Reward yourself or don’t reward yourself.

Go the other way next time.

See which makes you happy and which makes you feel like continuing to “bust your butt”, if they’re the same, do more of that.

jonsblond's avatar

How long do you want to be in debt?

you are the only person who can answer this question

snowberry's avatar

I assume you’re already signed up with Obamacare. As I understand it, if you don’t get insurance through the company you work for, they’ll take your refund check to pay for it.

I took Financial Peace University, which is an awesome program to get out of debt, and stay out. If you took that course, you’d have this sort of thing all sorted out. It really is helpful.

WestRiverrat's avatar

I think you could spend about 10% on yourself without feeling guilty for not buying down more debt.

While it is important to get rid of the debt, reminding yourself occasionally that you are special and deserve a little pampering is not going to break the bank, as long as you don’t use your plastic to pay for it.

yankeetooter's avatar

@snowberry…I don’t think they can take your refund check to pay for health insurance, but you might have to pay a penalty out of it.

jca's avatar

I say get rid of the debt and for the shoes and purse, save up. You’re paying interest on the debt so its like you are bleeding. You need to stop the bleeding.

LuckyGuy's avatar

Do you realize that paying down debt IS doing something for yourself? Especially Credit card debts with their usurious rates! If you have a typical rate, 22%, the amount you owe will double in 3 years! Pay it off now.
If you need to get a purse or shoes limit yourself to $100. Do not get into the pattern of rewarding yourself by spending. That is not very different from rewarding yourself by eating, or drinking, or whatever. That is a dangerous pattern.

Pachy's avatar

My suggestion is to add to (or start) an emergency savings fund and dump part of your bonus into that and the rest into debt. Chances are you’ll need extra cash more later than you do now, so having that fund (which you should add to regularly) will be a real blessing one of these days.

filmfann's avatar

When I had extra money (and that won’t happen again), I either bought things for others, or paid bills. If you have debts, spend the money on yourself by making your life easier, and pay your bills.
It’s all how you look at it.

Wealthadvisor's avatar

You should be saving 15% of your take home pay each year. For some people, 15% is just too much with family obligations and other things. So you start with 5% or 10% and work your way up.

I would take 15% of the bonus and save or invest it. Of the remaining 85%, I would use 65% to pay down debt, and put 20% of the bonus away for yourself.

The problem with saving the 15% and putting the rest on your debt is that you have a desire to do something for yourself that will continue to tempt you. Eventually you will give in and then charge something for yourself, thus adding to the debt. If you have a set amount set away, you can then use that money instead of charging it.

As someone mentioned earlier, paying down the debt is doing something for yourself. Look at the money in saving and reduced debt as a reward. You will feel much better seeing a smaller balance on your credit card and money in savings.

Cupcake's avatar

10% or $100, whichever is less.

Paying off your debt IS doing something for yourself.

glacial's avatar

I don’t think any penalties for not signing up for ACA insurance will be charged before March.

If you can cut your debt in half with one cheque, bonus or not, you should probably do it. This means you will throw away less of your money on interest payments, and can instead put that money in the bank for a future gift to yourself, if you choose. The faster you pay off your debt, the more of your own money you’ll have to spend soon.

The bonus cheque is sort of “found money” in that you haven’t budgeted for it. I would definitely use it to slash my debt in your position. It will make your immediate future much easier.

JLeslie's avatar

I wish we knew how much money we are talking about.

I think use every penny to pay down your debt, assuming you already have some money in the bank for savings. Want to be able to treat yourself in the future, get rid of your debt now. Imagine if you had zero debt, you could blow your entire bonus on something if you wanted to.

How much interest are you paying on the credit cards? Like throwing money in the street. You probably give the credit card company hundreds or thousands every year in interest.

However, if you feel extremely deprived go ahead and spend $100 on shoes or a purse. Did you get any gifts for the holidays? If you received something impractical or that you won’t use, return or exchange it.

You need to be more frugal. You have credit card debt, which means you really have no money to spend at all.

snowberry's avatar

Don’t get too excited about spending your tax refund check. Make sure you’re going to have anything left if the IRS gets it first.

@yankeetooter
“IRS will garnish your tax refund to make you pay Obamacare‚Äôs individual mandate” http://washingtonexaminer.com/irs-will-garnish-your-tax-refund-to-make-you-pay-obamacares-individual-mandate/article/2509593

SwanSwanHummingbird's avatar

I like to live in the now. I’m buying my shoes and waiting for the purse. I only have one credit card and no other debt. And I only use my credit card for emergencies. What debt I do have is from the new transmission I had to buy last year. Everything else is paid off. I have the BEST health insurance already; I do not need to use the affordable healthcare act.

Shoes…here I come.

jca's avatar

Hoe much do you owe on the card?

SwanSwanHummingbird's avatar

I’m not comfortable disclosing that info. It’s only 4 figures. XXXX.XX

glacial's avatar

@snowberry This question is about an end-of-year bonus, not a tax refund. The OP is at no risk of having her bonus garnished.

YARNLADY's avatar

If you owe money, then you have already spent your bonus (on yourself?) so just pay it off.

JLeslie's avatar

Great way to put it @YARNLADY.

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