Happy Tax Day! I did my taxes last month, but I’m glad that April 15th is here because I got a cost of living increase today. While not a windfall, I’m very excited to get some extra money in my paycheck each month. Now to figure out what to do with it.
Increase My Standard of Living
I enjoy being thrifty, but it would be nice to get some new clothes and shoes, splurge on a vacation, or even get cable. I need to get a new laptop soon and think the extra money would be well spent on one.
Save it All
I could add the entire increase to my Roth IRA to help me meet the maximum contribution. I feel like I’m fairly comfortable with my lifestyle and that I don’t need the extra money for any necessities.
My Choice: Spend Some. Save Most of It.
The most financially prudent thing to do would be to save the entire increase, but I’ve decided to splurge a little. I’m using the first month’s increase in pay to buy new shoes. I feel like I’ve worked hard and deserve to buy something that I want to reward myself. The rest will be split between my Roth IRA and an ING savings account. I’ll increase my monthly contribution to each account automatically, so I won’t be tempted to spend the extra money on something else.