What would you do if you found an extra $500 in your budget? I mean, after you dry your tears of joy and dance around the kitchen (quietly, though, there’s a baby). After my salary was slaughtered this year thanks to an unpaid maternity leave and a bizarrely written contract that landed me with a prorated income for the remainder of the school year, I thought I had a handle on our finances. I didn’t like our much more meager budget, but I understood it. More importantly, it worked. So now where do I put the extra money?
Where I Won’t Put It
While I may not know where to put this extra income yet, I certainly know where I won’t put it. In my closet. I have not–and will not–ever declared a formal shopping ban. But for the past three years, I have enacted a moratorium on clothes buying and bags and accessories and shoes. With the exception of a few things that wore out and I didn’t already own their duplicates, I haven’t bought much. That even includes ten months of pregnancy (40 weeks equals 10 months, I don’t care what the baby books say!) and another seven months of nursing where I sprang for maybe a dozen items total. As much as I would love it, there is no shopping spree in my future.
Other things I am also not doing with my dollars:
- Swing by Vegas and put it all on red. Penny slots are all I can stomach. And I can’t imagine sitting in a casino long enough to blow through $500 that way.
- Splurge on home decor. We have maybe five wall hangings in our entire house, and I don’t buy knick knacks because we don’t have end tables in most rooms. Additionally, if we had a prenup, surely there would be a clause on throw pillows.
- Log onto Coinbitbasepursewalletthing and put it all on pretend money borne from an Internet meme. I refuse to invest in things I don’t understand. Unless Vanguard walks me through it. If they get on board, then I’ll come around.
- Eat my way through all the new restaurants I’ve been dying to try. Back in our YOLO days, we would eat out at least three times a week. Not only did we burn through hundreds of dollars a week, I finally gained the 15 pounds that never showed up in college. Getting 10,000 steps a day is hard enough. I’m not looking to up that number because I can’t say no to bread baskets.
Our 403(b) options are still terrible, but we might throw more money in there. We could also max out our Roth IRAs early. If we go this route, though, I’m not sure what we will do with our tax-time
windfall interest-free loan to the government that finally gets repaid. The other option would be to put more money toward our taxable account with Vanguard. I opened that as an experiment a while back, and it’s been fine, but I’m still too much of a white-knuckle investor to dump heaps of money into it. Plus, I’d rather look for more ways drop us into a lower tax bracket.
We could add it to our emergency fund. We are currently sitting on approximately two years living expenses in cash. Most days, I feel that it is way too much money to have sitting in an account earning 1.5% interest. I’m losing money! But then there are days when I remember that we need to re-side our house and pop for new windows sooner rather than later. If we do those things, we can kiss the vast majority of that money goodbye. (Rent forever, you guys.)
Extra Mortgage Payoff
Hello, old friend. The final option that I could come up with for the extra income would be to add more to our mortgage payoff. We pumped the brakes on extra payments when we were stockpiling cash for my leave, opting to make a whopper of a payment at year-end instead. The thought of being able to regularly commit to paying 2.5 times our mortgage makes my heart sing. If we took this step, our budget would start to resemble what it did before my salary took a five-figure hit. I know that I will get more return on my money in the market (correction be damned) in the long run, but there is something about paying down this debt that makes me so happy.
So Tell Me…What would you do with an extra $500 in your budget?