What do You Do with Extra Money?Financial
You may be thinking what extra money? I’m just making it. However a lot of us receive money we didn’t count on sometime throughout the year.
Think about tax refunds, overtime pay, cash gifts, payments from insurance or legal settlements and annual bonuses from work.
Many of us receive these unexpected windfalls, only to go out and spend it all. A few months later, we wonder where the money went!
Instead of allowing these funds to be absorbed into everyday living and bills, I suggest a proactive approach to dealing with windfalls. I have a Windfall Breakdown we utilize each time we receive "unexpected blessings."
It's the "10-60-20-10 Rule" & here is how it works!
Any extra income would be allocated as follows:
• 10 percent to charitable giving
• 60 percent to your smallest debt(s)
• 20 percent to savings (emergency savings to keep from using credit in the future)
• 10 percent to enjoy
Carol and I followed this strategy as we accelerated our debt repayment. We prayed for God to perform miracles in our lives and He did!
One year as we were working to pay off debt, I received a $10,000 bonus at work I didn’t even know I was eligible for!
Following the plan, we wrote a $1000 check to our church. Paid $6,000 in debt and put $2000 in our emergency fund. That left us $1000 to enjoy, so we took a family trip and got toys for the kids.
This plan allowed us to have some fun but more importantly it accelerated our ability to reach our financial goal to be debt free.
Time and time again, God blessed us with bonuses, tax returns, gifts from friends and family, and unexpected extra funds. Each time we utilized this Windfall Breakdown.
Really the key is to be prepared to handle God’s blessing when it comes your way.
Decide to use any windfall that comes your way to help you become debt-free and to build wealth.