If you got a bonus of $10,000, what would you do?
Before you start spending it all remember these key facts:
1. You will get less than $10k after payroll taxes are deducted.
2. Set aside something for the tax man – Depends on your tax situation.
Here's a suggested order of use:
a. Fill up your emergency cash
b. Pay down credit cards – Start with the highest interest rate and work your way down
c. Pay down other debt due in the short-term, i.e., within the next 12-months
d. Pay down other high cost debt, perhaps a personal loan or car loan
f. Pay down mortgage
g. Invest in wealth building assets
h. Consider a donation to your favorite charity
i. Buy someone you love a gift
j. Watch that Broadway show that you always wanted to see – Make sure to keep this expense to no more than 10% of your take home amount of bonus. So maybe not Hamilton 😊, at least not this time.