Ramit Sethi at I will teach you to be rich recently asked what we would do if we were given $1000. I have had this opportunity a few times over the past year and I saw an opportunity here to share what I thought I would do vs. what I actually DID do. I view myself as a wise, somewhat frugal person. I have always had the saver mentality but in the right circumstances I can be known to splurg a bit. When ever I think I’m going to get some money I look at my debt and think “where would this money best be spent?” My first instinct is to put the whole thing toward debt. What ends up happening with the money is interesting and I believe it is an invisible script of sorts in my life that many of us have. It really is one of those psychological disconnects that I think many of us face where we say one thing but end up doing another. Before I can tell you what I actually did with the money, I need to share a bit of background to give you context.
My wife and I have a budget/spending plan. Using Ramit’s awesome techniques all of our money goes into my ING checking account and is divied out automatically to the appropriate sub savings accounts. We have accounts for Emergency, Travel, Gifts, Gas, Utilities, etc… We even have a “stuff” account which is basically money we can use for anything. We will sometimes save up this stuff money to buy something larger if we have a need for something but usually it ends up going to little things here and there.
What I believe I will spend money on
As I mentioned above, I always think that I will spend the money on paying off debt (be careful buying a trip package on your credit card, and never put doctor bills on your credit card.) This is because we have, and can, save and buy larger items from our spending money so we shouldn’t need to put lump sums toward things. Sometimes we have something that has been on our list and we think we will put some of the money toward that so that we don’t have to wait as long to buy it.
Where the money comes from
At my workplace we sometimes get bonuses. They aren’t always as large as $1000 but some are larger. We have 3 kids and I do usually get a couple thousand dollars from my tax return (I also do freelance website development so this can act as a buffer if I need it and this savings is actually good for us.) I also can get income from my business which allows me to spend it how I want.
What we have ACTUALLY spent our money on
I know this is what you have been waiting for. Here is a list of things we have actually spent money on the last few years. New dishwasher, Digital Piano, Computer, Part of a King size bed (we had saved part of it and this is considered a necessity in our home with 3 kids…), Wii w/ wii fit, 36″ TV, exercise bike, Trips to visit family in New York, Down Payment for Minivan, and some debt repayment. The thing that makes me sick is thinking that if we had put all that money toward our debt, we’d have none, and the monthly payments since then could be going toward our stuff fund and buying all the things we bought.
What would you do with $1001?
As I mentioned Ramit is running a contest to win $1001. If you are wondering what you would do with $1000 enter and find out!