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Old 01-25-2016, 03:21 AM   #21
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Money is fungible. For me, a bonus just increases annual income.
Agree. When I was working, my bonus represented a large proportion of my toal comp, around one third. Base salary was only about 15% with equity based incentive comp the rest. My basic plan was to live on the base salary plus bonus and save the rest. Worked out very well.
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Old 01-25-2016, 06:26 AM   #22
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For me, it's been based on need - if we didn't have anything pressing it went into savings. This happened most often. Otherwise, if it lined up with the year we needed to replace our vehicle, roof or some other such thing, we used it for that. I'm still w*rking and it looks like this year will be the car year.
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Old 01-25-2016, 08:11 AM   #23
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Just before bonus issued I would increase my 401k contribution to 50% and catch up to 50% , then most of the bonus would escape the tax man.


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Old 01-25-2016, 08:45 AM   #24
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I've always treated a bonus as free money, so its been saved or used for debt reduction. No need to develop spendypants habits with a bonus when its not guaranteed every year.
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Old 01-25-2016, 08:54 AM   #25
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Usually after taxes and 401k the remaining 55% was spent on life. In fact we never saved any money beyond our retirement accounts.
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Old 01-25-2016, 09:09 AM   #26
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Some years, I save all of it. Others, I save most of it and use some to pay for home improvements (replacing a furnace, installing A/C), though this year's will likely go toward a vehicle for my wife. This will probably be the first year I don't save more than we spend out of it.

Wait, that's not true. I paid for our honeymoon with bonus money (though my "bonus" is a known amount, paid on the same day every year... it's only "bonus" in that it's over my base salary and one lump sum!).

I agree that it's fungible. We don't view it as "extra" in any way. The fact that it is a significant lump sum is the only reason it gets treated or used any differently than regular paychecks.
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Old 01-25-2016, 09:20 AM   #27
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usually save/invest
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Old 01-25-2016, 09:33 AM   #28
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We always save bonuses. They are treated as regular income; any money earned above expenses is saved.
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Old 01-25-2016, 09:51 AM   #29
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For seven years, it went mostly for the kids college tuition expenses, last year some for a wedding and some for a new car for my wife, and this year it will again partially go for another wedding. Maybe next year I can save some and spend some on me for a change.
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Old 01-25-2016, 09:54 AM   #30
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Do to the labor laws where I worked and the type of job I had, my bonus income was never less than 16% of the total yearly compensation, and some years was over 50%. From the first year employed we learned to make do with the monthly paychecks, so that bonus money was automatically put aside, for savings and investments.

Medical and other emergency expenses ate most of the savings over the first 10 years. After that, though, the discipline of not viewing that part of income as "spendable" paid off, which is how we were able to set aside enough to retire early. Spending, like saving, is habit forming, and also tends to be self-reinforcing. Once you start doing one or the other, it is easy to continue doing the same.

Spending bonuses is like eating potato chips. There is a moment of enjoyment, but it is short lived and then you want more.
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Old 01-25-2016, 10:26 AM   #31
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My bonuses are generally 10-13K. 75% of my salary goes into my 401K, so I front load my 401K and max out by the end of March. I have done it as early as 2/28, the full 24K.

Increase your 401K contribution and have a larger paycheck at Christmas time, when you no longer need to contribute.
I like your way of thinking. Frontload it...

Mine gets put towards debt (mortgage, car loan). meh, I am only 34, I have time. Cars are brand new, home is practically new, so its not terrible debt.
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Old 01-25-2016, 10:51 AM   #32
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Bonus !?!
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Old 01-25-2016, 10:54 AM   #33
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Bonus !?!
"an amount of money added to wages on a seasonal basis, especially as a reward for good performance"
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Old 01-25-2016, 12:00 PM   #34
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My wife and I work for the same company and bonuses are all over the place year to year. For that reason, we never "count" on it for anything. Almost always we use a good chunk of it for travel, which we love to do and place a high value on. From a weekend getaway, to 1-2 weeks out of country. Never takes much to convince me to spend it that way. Otherwise, it is used to fund something that we need or were planning to do... but had no idea how we were going to pay for it. Might be a new car purchase or a major home renovation project.

While we are very committed savers, I can honestly say that I don't think we have ever put any bonus money away for retirement......
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Old 01-25-2016, 12:37 PM   #35
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We do not have a budget, so we spend money as needed and save the rest. There is no concept of that a certain amount of money has to be spent. We just consider any bonus or additional income as the INCOME. In this sense, the bonus or additional part is actually saved since the spending part does not change where or not there is a bonus.
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Old 01-25-2016, 01:01 PM   #36
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I've gotten very healthy six figure bonuses for the last ten years. We've either put them into mutual funds or used them to pay off the house/invest in real estate. The fastest way to FIRE is to keep your spending flat while amping up your investments.


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Old 01-25-2016, 01:36 PM   #37
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My wife and I both deferred every bonus we ever received over a period of 20+ years. This is one of the best retirement savings strategies: live within your salary and bank the bonus.
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Old 01-25-2016, 01:39 PM   #38
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In the early days, the bonus would go to the friendly bank manager to pay off our demand loan which we used to live on. Once we were LBYM, it went into investments. We always used to include necessary purchases and travel in our regular budget, even before LBYM.
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Old 01-25-2016, 01:46 PM   #39
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I always tried to take 25% (after taxes and 401k ..ie take home) and just spend it without guilt. I would try to spread it out over 12 months, things like maid service once a month or flowers or a few weekend getaways planned throughout the year.. something like that so I could enjoy it until the next one came.

The rest went to paying down debt (when I student loans), refilling emergency (when it was low) and then savings.
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Old 01-25-2016, 04:01 PM   #40
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The one memorable bonus I got, I could have done something reasonable, like put it in the bank. However, I got a postcard that said, "Fly a jet". The rest is "Priceless". I do not remember the money, but I remember the experience. That's living!
As a Naval Aviator I already did the jet stuff, but one year my wife got a nice bonus and I was going to save it and she said "no way!" So we went to Napa Valley for 3 days and went on a balloon ride. And just like you, I don't remember the money but the balloon ride was awesome.
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