Bonus ended up being smaller than last year. No complaints. I received OT (paid out as a lump sum every year) at my last job. Was usually $5K+. Have settled into $5K+ annual bonus at current job too. (Usually $5K but sometimes higher.) The nice thing is that I don't have to work any OT but still continue to get a lump sum annually. I like the end of the year bonus re: taxes. For now, my tax withholding is mostly non-existent and I use the bonus to settle up my taxes for the year (re: unpredictable bonus and MH's income, etc.). But in the future when I don't have dependents and taxes are significantly higher, any bonus over-withholding will be refunded quickly when we file our taxes.
I came up with owing $1,300 tax, when revising tax projections for the year. Which means we probably did a good job estimating taxes, and this is what I was left owing on the bonus. (I think only $300 would have been taken out otherwise, if I didn't adjust. Like I said, my tax withholding is mostly non-existent.) After taxes and 401K (minimum for match) I was left with $3,000 net.
We usually never spend windfalls or bonuses. I don't like the rule of thumb to spend X percent. I don't need to spend money just because I receive it. Historically we always throw at the mortgage, savings, etc. But of course, doesn't mean we never splurge and enjoy. We just like to divorce the unexpected money rolling in from the decision to spend it. If the cash is piling up then we think about spending it.
But this year I spent money. I counted my eggs before they hatched. Was expecting some birthday/christmas money in addition. I bought a luxurious winter jacket (love it!) and some clothes and shoes and a new electric skillet. I don't know what else we bought (off the top of my head) but I put $570 of my bonus towards spending. These were mostly November purchases.
Not necessarily a good thing. I think at the end of the day I just felt too pushed to the side re: MH's movie and paying for college x2, etc., etc. I over compensated in November (by going a little crazy on the spending), but all the extra money worked out and all is well. & I have to admit I enjoyed it. The prior year we paid a big chunk to the mortgage. The year before that my entire bonus went to MM(20)'s wisdom teeth surgery. I expect this magnified my feelings and I was delighted to do something a little more fun with some of the bonus money this year.
The rest of my bonus went to planned mortgage paydown of $2,430. This payment shaved off 4 months and will save $1,145 interest.
Need to come up with average of $1,500 per year to pay off mortgage in 30 years. Still have another 18 months to shave off.
My primary goal is to reduce mortgage principal by $10K every year (going forward), but my secondary goal is to not have a mortgage (on this house) for longer than 30 years.
I have other stretch goals in mind. We had a mortgage on our first home for 2 years and so eventually I'd like to knock down another 2 years off and not have a mortgage at all for more than 30 years. & of course, we'd really just like to knock the mortgage out once the kids are done with college.
While I have two kids in college, the goal is just the extra ~$1,500 per year to continue to pay down the balance by $10K every year. (I think technically we need to come up with $2,000 next year but then only $1,500 the year after that. The amount is dropping down rapidly).
Current mortgage balance: $89,999 🎉🎈