CNN Money used to run this series called Extreme Savers, detailing the fiscal discipline and ingenuity of people who save a BIG percentage of their income. The profile that still sticks in my mind is that of Jessica Nixon, who started saving at 16 and had almost $50K in retirement funds by the time she was 23.
This is what she said of financial windfalls such as bonuses or tax refunds:
“I don’t even consider it income, I’ll buy one thing I really want and the rest I split it up between retirement savings and shorter-term savings.”
This got me thinking. I recently got a bonus – unless I consciously decide on its purpose, the money will probably just disappear into everyday expenses that I won’t remember in 6 months.
I decided to follow Ms. Nixon’s example and put the bulk of the money into the Freedom Fund, and keep a little bit for myself.
But then difficulty arose: what’s the ONE thing that I really want?
1. I love shoes, but I don’t feel flush enough to splurge on Louboutins or Manolos (just curious – does any of my readers have them? and how much do you love them?).
2. I love food, but I feel like I treat myself fairly regularly as it is – frequent dining out at inexpensive but yummy places and occasional treats at fancier restaurants.
3. I could purchase a new computer to replace the laptop I’ve had since first year of college. But this laptop is still chugging along despite its advanced age, so I’m hesitant to chuck it for a younger, sleeker model. History, people, must count for something.
In the end, I just could not make up my mind on ONE thing (and I feel a little like any luxury that I might want should be paid for by regular income). So I decided to put everything in the Freedom Fund. (But because money is fungible, this means that I’ll feel more lax about spending out of regular income, which means that there probably will be more little “treats” for myself here and there.)
And I am definitely not as uncertain as this kitty!
Well Heeled Blog 
Ha I love that lolcat, I just put that on my blog a few days ago. No real expensive shoes for me but I was just at a work function at my boyfriend’s job and I admit I got a little shoe envy.
Congrats on your bonus! Way to go on putting it in your freedom fund. I’ve been thinking about what to do with mine when I get one at the end of the year… I know it will mostly go towards retirement and savings, but the ONE thing I want right now is a trip to meet a friend in SE Asia! 🙂
I do an 80/20 rule. Save 80% and burn 20% on something fun. Your options depend on how much $ you have to play with.
Suggestions:
A posh but memorable dinner. E.g., chef’s table at your favorite place, which is enough outside the norm that you might not have done it already.
Classic clothing pieces: a quality winter coat in wool or camel hair; a status handbag; a custom-fit blouse. These will last awhile.
New sheets…can’t compare to good bed linens. Plus you spend 1/3 of your life in there!
Massage, facial, or other pampering.
A weekend away somewhere fun. A friend just went skydiving! I still want to try hang gliding out near Kitty Hawk.
I would recommend that you actually do something big, rather than frittering it away over the course of the next few months. Remembering that weekend away or toting your sweet new handbag serves as a better reminder of why you bust your *** all year long at work.
Oh and my other suggestion is: go toy shopping 😉
I have two pairs of CLs and I love them. they’re classic, timeless, comfortable, and don’t stretch out.
I recently just bought a pair of your standard metallic strappy evening shoes from jimmy choos and I’ll probably wear them for every formal I go to, including my wedding (which wouldn’t happen for another 10 years).
I think it has to be love at first sight. if you feel the slightest discomfort or irking towards a pair of shoes, then they are definitely not worth the $600. I used to buy cheap steve maddens like it was my job, but now I only splurge on ones that I absolutely love.
I was going tomention sheets as well. You can’t go wrong with Egyptian Cotton.
I vote for buying the Manolos. If you buy a classic pair that you can wear with everything for years to come it will totally be worth it. I love mine and wear them all the time for work.
I consider it income. Since it’s extra income, it’s all saved. Actually I spend it on stocks.
In terms of windfalls …, getting a tax return means that I have paid too much taxes and thus foregone interest returns and thus I am behind. That should not be rewarded Therefore everything goes to savings. Bonuses are the same. It’s work that has not been compensated yet.
Hmmm… I guess if you already have everything you want, it’s different?! Like for instance, I keep telling people not to get me anything for my birthday or xmas. More stuff is just annoying.
I usually allocate a percentage that I’m allowed to use to have fun with. Typically 10% is for whatever I want and the rest is divided between various savings/retirement plans.