Comments on: Spend Money Before You Earn It

By: Linette

Linette — Tue, 21 Jul 2009 18:13:06 +0000

I love the idea of using percentages to know where unexpected money goes. I am going to start using this idea on my pay checks too since my check is extra since we “try” to live off one paycheck.

By: Bible Money Matters

Bible Money Matters — Mon, 20 Jul 2009 19:59:24 +0000

i also loved the bait and switch with the title. Shocking title leads to common sense article about planning ahead! Nice one!

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 20 Jul 2009 12:14:54 +0000

Great Post! Nicely presented.

By: Squeaky

Squeaky — Fri, 17 Jul 2009 19:58:58 +0000

That title was rather shocking, but it led to a great post about allocating and planning how to spend windfall money. We read a lot about how to save and budget, and how to use a cash reserve to get through the “down” times, but not so much about how to deal with the “up” incidents in a way that doesn’t financially destabilize us in the long term.

One thing I try to be mindful of is purchases that commit me to ongoing payments, such as cell service contracts or gym memberships. It’s possible to spend a windfall in such a way that I not only go through the money, but end up with less discretionary income because I’m committed to those payments a long time.

By: Maria

Maria — Fri, 17 Jul 2009 18:48:13 +0000

Great article. I worked a 2nd job for a year to pay off $18,000 in (mostly) unforseen debt (part of which was a whole new roof). ALL my income from that second job went towards paying of the debt. Once it was paid off I gave up the second job because I felt it was important to have some quality time with me, my friends and family. Anyway, I still do occasional extra work and I usually split the income between different ‘goals’ but it is random. I like the idea of having a specific percentage. It removes the scrutinizing and analyzing, and makes it really straightforward. And straighforward always works best for me.

By: Lisa

Lisa — Fri, 17 Jul 2009 18:30:51 +0000

Just had to deal with this! Got an insurance check for hail damage on a vehicle that really isn’t worth it to me to fix (a farm truck) as it is only cosmetic and we won’t ever sell the truck as it is paid for and a work-horse. I went out and bought a new bicycle that I really *wanted* but didn’t really *need* although I did justify it by saying I am handing down my other nice bike to my daughter. And I am going to be making more 20 mile trips to town, now that I have a cross-bike instead of just a road bike. Yeah yeah, I am not sure I am even convincing myself!

By: Craig

Craig — Fri, 17 Jul 2009 16:10:29 +0000

Any sort of extra one time cash I get whether bday or otherwise I try to have a plan. It’s usually more into a fun savings plan like a vacation I would like to save for in the future. It’s extra money, it should go towards something fun.

By: Early Retirement Extreme

Early Retirement Extreme — Fri, 17 Jul 2009 15:47:53 +0000

I never really thought about that. Random income always went in to what I call the “general fund” (really just a checking account), where everything that is not spent gets saved. My spending is quite stable and unrelated to the income as it is, or perhaps rather was, quite a bit lower so I could retire early.

By: Erica Douglass

Erica Douglass — Fri, 17 Jul 2009 15:22:29 +0000

“People love to ask the question “What would you do if you won a million dollars?” Most of us won’t really need to answer that question…”

Actually, I’d suggest you take that question seriously. And answer it thoroughly.

I never really did, until I realized my goal of selling my business for over $1 million, and then had a lot of “OH SH*T” moments as I realized I needed to suddenly understand a LOT more about investing and saving.

Also, I cried for weeks. This may have been compounded by the fact that I was suddenly no longer working and felt like I had no purpose in life.

A lot of people think it’s all rainbows and sunshine when you come into a lot of money. It’s not. Also, others think you can just pay someone else to take care of it — something else I’d never recommend. (I did pay an accountant to figure out my tax situation, which suddenly became a lot more complicated.)

Fortunately, I love to read, and investing and money management became a passion of mine and led to my blog and me putting on a personal finance conference last year.

No regrets, but I do understand now why most blow it. It’s a heck of a lot easier to just go out and buy a bunch of consumer goods than to suddenly figure out the inner workings of the stock market, bonds, real estate, and the numerous other investment choices out there.

Not to put a damper on it or anything — I enjoy having money — but people really need to take this scenario far more seriously.

-Erica

By: JerryB

JerryB — Fri, 17 Jul 2009 15:15:43 +0000

I have two sources of irregular income. One is my bonus at work, which can be anywhere from $0 to $250 a month. I send the entire net of that to my debt reduction (currently <$34k).
I also have some occasional income from a referral program. It can range anywhere from $10 to $200 and I always consider it “fun” money. This income is very unpredictable, two years ago it topped $6000 (including an all expenses paid trip to Puerto Vallarta), last year not so much and this year it’s questionable if I’ll even top $500.