Meet Tara
Age: 33
Salary: $5,800/month (combined household income)
Tara’s main concerns, in her own words:
We have the following monthly expenses:
- $1,300 mortgage
- $500 Child care Oldest
- $867 car payments
- $510 Insurance/Fuel
- $670 Utilities
- $1,000 Groceries
We have a bonus potential of $35,000 each year. In the past we use this to pay for $9,000 in child care for my youngest child, vacation, and renovations on our house (new carpet, new hvac, bathroom renovation, etc). A good chunk of this goes into our savings account and we use this to supplement our monthly income as needed. We also use a Daycare Flexible Spending account to pull from “as needed”. We can only contribute $5,000 to it a year, and this money is used for things that “come up”. Washer/Dryer breaks, car breaks down, etc.
My question is what is the most effective way to spend this bonus money, and how should we be budgeting our monthly bring home. We will be losing a car payment next year, and I want to begin focusing on how best to save our money for the future.
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.