This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
In the past week I have made a bit of extra money – last Sunday I made several correct bets on the Super Bowl, and on Saturday night I won a poker tournament against 350 other people. In all, my total winnings are just a few hundred dollars (I am a decent gambler, I just don’t play for very high stakes) but it is a bit of a windfall in comparison to what is normally available for me to spend on a monthly basis, which amounts to around $100. Other than a possible bonus at work, I really don’t get any unplanned money coming in over the year, so this is kind of a pleasant surprise.
So, what am I going to do with this money? I figure I can use this money in two different ways:
- I could use it in a boring matter. By increasing a mortgage payment, which would put me that much closer to my end goal of having the house paid off as soon as possible. Although this small amount of money would make very little difference, if I did this with every spare cent I received, it would probably add up to a few thousand dollars over the next few years. A few thousand dollars would reduce the amount of time I’m paying my mortgage by maybe a month or two, which would put me that much closer to my goal.
- I could use it for “fun”. I have a list of stuff that I would like to buy at some point in the future and could apply this money towards one of these things. This could be something as small as a book or as large as a new television, but allows me to keep the “things” that I want in perspective.
So, what will I do? I’m going to spend it on something fun. Maybe a nice bottle of Scotch (something which I have recently acquired a taste for), a fancy dinner for my wife and I (an upgrade from our usual Swiss Chalet “date”), or some other experience (such as a round of golf at a higher-end golf course if the snow ever melts) that I normally wouldn’t spend money on.
Why would I disregard my boring financial plan? I am usually very conservative with my purchases, but the receipt of a small windfall will allow me to buy something different than I normally would be able to or to try something new, that wasn’t budgeted for. If this was a larger amount of money, such as a lottery win I would eliminate my whole mortgage, but this small amount of money will have minimal impact on my debt-load.
What would you do, or what have you done in the past with a sudden infusion of money?