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Anonymous
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 Posted: Sun Dec 23, 2007 2:35 pm Post subject: The Best Way to Spend a Year-End Bonus |
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What's the best way to spend a year-end bonus? Here's what Yahoo suggests:
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One of the best things you can do is to put that money toward maxing out your 401(k). This year you can contribute up to $15,500. If you're over 50, you can contribute $20,500.
This way you won't be penalized by Uncle Sam for that holiday bonus. If you have a mortgage, you may want to consider paying down more of your principle. This will reduce the amount of interest you end up paying over the life of the loan.
And finally, it's a good idea to check your emergency fund. Make sure you have at least 3 to 6 months worth of living expenses. If you need to pad your fund, consider a high-yield savings or money market account.
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Ok, so what if you already max out your 401k, don't have a mortgage, and have an emergency fund? And besides, is this really the best way to spend a bonus? After all, we know that there's a better option than simply maxing out your 401k (401k total match, Roth IRA, 401k max.)
Anyway, here's what I did with my bonus this year: I saved it. Yep, all of it. We're thinking of buying a new home and we either want to pay cash for it or (at least) have so much available that we'll be able to pay it off in a few years at most. So we're saving for that new home and that's where the bonus went.
How about you? Did you get a bonus (or do you think you'll get one)? If so, what did you do with it?
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