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amother




OP
 

Post Sat, Jan 01 2022, 7:16 pm
When a big chunk of your income comes in the form of a bonus at year-end, how do you manage cash flow during the year? We ended up having to rack up credit card debt over the year and just paid it all back this week after my husband’s bonus came in. We don’t have enough cash flow on a typical month to cover all our expenses. Is there a better way to do this? Maybe pay tuition all at once with the bonus?
Looking for suggestions.
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Ellie7




 
 
 
 

Post Sat, Jan 01 2022, 7:17 pm
One thing we do is backload my 401(k) with my bonus, so we contribute less to it throughout the year and then max out with my bonus.
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amother




PlumPink
 

Post Sat, Jan 01 2022, 8:06 pm
We pull money out of our home equity line and pay off when the bonus pays.

This years BH we had unexpected expenses (think wedding) plus we did work on the house etc and took out zero interest credit cards.

It’s hard until you get ahead one year and gave savings for the next.
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Fave




 
 
 
 

Post Sat, Jan 01 2022, 8:11 pm
I put my year end bonus into savings (it’s about 15% of my income but only 5% of the family income). I don’t count on it as part of our annual budget.
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amother




OP
 

Post Sat, Jan 01 2022, 8:14 pm
I need the funds as part of my budget. It is 40% of my husbands income. We rely on it.
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amother




Scarlet
 

Post Sat, Jan 01 2022, 8:28 pm
What rate are you paying on the credit card? Wouldn't it be cheaper to use an equity line of credit? Can you ask schools to not charge tuition until your dh receives his bonus?
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amother




Daffodil
 

Post Sat, Jan 01 2022, 10:17 pm
Why not have a talk with his employer about reconfiguring his salary setup? That doesn’t sound like a good setup to me
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amother




Cyclamen
 

Post Sat, Jan 01 2022, 10:34 pm
I don’t know how this could happen. But it would be great if the bonus could be used toward future expenses snd not past.
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amother




Bottlebrush
 

Post Sat, Jan 01 2022, 10:47 pm
We borrow money from family to get through the year until the bonus comes
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amother




Raspberry
 

Post Sun, Jan 02 2022, 7:38 am
amother [ Daffodil ] wrote:
Why not have a talk with his employer about reconfiguring his salary setup? That doesn’t sound like a good setup to me


This is normal in certain industries and not going to change.
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amother




OP
 

Post Sun, Jan 02 2022, 7:44 am
amother [ Raspberry ] wrote:
This is normal in certain industries and not going to change.

Yes he works for a large investment firm. The compensation structure is not changing.
It’s not a huge amount, we need about $15k extra (net) and that went on a credit card this year.
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amother




PlumPink
 

Post Sun, Jan 02 2022, 7:44 am
This. My bonus is twice my regular salary.
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amother




Lotus
 

Post Sun, Jan 02 2022, 7:54 am
Okay. So we get our salaries on time, but we rely on our tax refund which comes once a year. So, yes, sometimes I prepay tuition.

But, if I cant prepay, then I take all that money and put it in a checking account. I dont spend it. Then, when the bills come up throughout the year, I pull from that checking account.

SO, op, is this something you can do?
Dont spend the bonus. Hold onto it, and when you need that "extra" to cover your expenses, you pull from the bonus in that account. This way even though the company pays the bonus in jan or..., you will "give it to yourself" in monthly payments when you need it. You need to be disciplined for this, but really everything regarding budgets requires discipline.
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amother




OP
 

Post Sun, Jan 02 2022, 8:25 pm
Is it really so bad fo build up a credit card bill and pay it off in one large payment at year end? Is it a slippery slope?
Is it better to use savings to cover our monthly shortfall and then replenish it at year-end?
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amother




Raspberry
 

Post Sun, Jan 02 2022, 8:28 pm
I assume you're paying a much higher interest rate on the credit card debt than you're earning on your savings account, so you're losing money.
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amother




OP
 

Post Sun, Jan 02 2022, 8:32 pm
amother [ Raspberry ] wrote:
I assume you're paying a much higher interest rate on the credit card debt than you're earning on your savings account, so you're losing money.

Yes that’s true but at the end of this year we paid $700 in credit card interest. It’s really minimal. I’m afraid to use up savings, a bonus is never guaranteed. But I hate seeing credit card bills mounting.
We also get some bills reimbursed from work As well as some therapy which is reimbursed by insurance, but there is always a lag. This adds to the difficulty with cash flow.
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amother




Cyclamen
 

Post Sun, Jan 02 2022, 8:38 pm
Personally I would use the savings.

Then put the bonus away and use it to the coming year expenses and what ever is left end of year save.
This way break the cycle for the future. Stop using credit card and savings.

That $700 interest is throwing money away.
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amother




OP
 

Post Sun, Jan 02 2022, 9:10 pm
I’m afraid we will blow through our savings very quickly. We only have 27k accessible. What if there is a surprise expense?
I honestly wish we would’ve been smarter when we first got married. It’s been almost ten years and I don’t think we have a great handle on our finances. we bring in a nice income but have minimal savings
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amother




Raspberry
 

Post Mon, Jan 03 2022, 1:32 pm
If the bonus is $15K net, I don't understand why you're concerned about using up savings of $27K. You can't afford to do so. The same way that you make sure the credit card debt stays under $15K, you can make sure not to use up more than $15K of savings.
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Friedda




 
 
 
 

Post Sun, Jan 16 2022, 6:46 pm
It’s always a difficult situation with bonuses especially when you can’t count it.
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