Let’s Talk Money: It’s Bonus Season

With the end of the working year comes the bad (a mad dash to hit your hours) and the good (bonus time).

If you’re fortunate enough to work for a firm or organization that pays bonuses, you may find yourself with anywhere from a few hundred to tens of thousands of extra dollars lining your pockets.  Where you fall on that scale will probably impact what you do with your windfall, but here’s how I suggest spending that money:

1)      Treat Yo Self: There’s no harm in using a little bit of your hard-earned cash on a gift for yourself. But don’t blow it just to blow it – buy something you really want.

2)      Pay Down Debt: If you’re paying off student loan or other debt, take advantage of a windfall to pay some extra on the principal balance. (For more advice on this, see my earlier post explaining how I paid off six figures of debt in five years here.)

3)      Save: Bump up your contribution to your retirement accounts, save to a short-term savings account, or invest in the market.

4)      Spread the wealth: Earmark some of your funds for the charity of your choice.

How much you devote to each of these categories is obviously up to you, but I suggest directing at least 75% of your bonus to paying down debt and/or savings.

What you should avoid at all costs is using the money for lifestyle creep, meaning don’t assume you will always get a bonus (even if, historically, you have), and don’t treat the bonus as part of your monthly income. Your salary is your salary. Your salary is not your salary + bonus.  Live on what you get paid in your regular earnings and treat your bonus like the awesome gift it is.

Pic Credit: Fabian Blank (via Unsplash)

Let’s Talk Money: How To Pay Off Your Student Loans

It’s no secret that many people graduate from law school with significant debt.  Tuition can run $30,000 or more per year, and many students take out extra loans to cover books, rent, and personal expenses during school. After graduation, they may take on more debt to cover living expenses while studying for the bar exam and before starting work. Some firms offer a salary advance or even a signing bonus to help students bridge the gap between school and work, but even with that extra help, you may end up owing more than six figures in debt by the time you graduate.

At least, I did.  And less than five years after graduation, I had paid it all off.

There are many ways to think about paying off your loans. How quickly you are able to do it depends in large part on your salary, but even if you’re not making biglaw bank, you can create a plan to pay down your loans quickly by setting your priorities and managing expenses.

Paying my loans off quickly was a priority for me because while I was fortunate to have a biglaw job after law school, I had no idea how long it would last. I also didn’t want to have to make all my career choices based on money while my loans were hanging over my head.

So here are the five steps I took.

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