Setbacks and Windfalls
Last month was pretty crazy for me financially and it has me thinking about setbacks and windfalls. I started March kind of bummed out, because I wasn’t making as much progress paying off my house as I planned. For three months in a row, I had unforeseen expenses come up and reduce the amount I had scheduled to pay. This put me behind a month and had me in a bad mood. Out of nowhere, this all switched around. I got a healthy bonus from work and a much larger tax refund than I had expected. Between these two windfalls, I was able to pay off one third of the remaining loan balance in a single month. The light at the end of the tunnel is nine months closer.
Setbacks
Financial setbacks are pretty common and they don’t have to cause havoc on your finances. Health problems, your car breaking down, getting an unforeseen bill or rent increases are all common setbacks for everyone. Handling a setback is as easy as having an emergency fund or a little extra money in your savings account. You can always replenish these savings from your next paycheck or windfall. If you don’t have any money set aside, setbacks can become pretty expensive. You may have to put the expense on a credit card, pay some late fees or borrow money. If you can’t pay all your bills and handle the setback, it can cause a lot of unnecessary stress in your life.
You can avoid a lot of stress just by saving a little money.
Windfalls
Windfalls can become a financial blessing or they can be quickly squandered and forgotten. How many times has that bonus or tax return disappeared and you have no idea where it went? How many times have you counted on a windfall before it has even arrived?
Taking full advantage of windfalls is one of the quickest ways to get ahead and enjoy your finances. I put both of my last two windfalls entirely towards debt, because I’m so close to the end. Usually, I split up my windfalls, so I can maximize the benefit.
My Windfall Strategy
- 45% – Save & Invest
- 45% – Reduce Debt
- 10% – Pleasure & Perks
Everyone’s financial situation is different and the percentages you choose don’t really matter. The important part is to both get ahead financially and to enjoy your windfall. I used the percentages above when my stock options cashed out and I even paid-it-forward and sent some money to others from my perks fund. My wife and I are still enjoying those perks, long after the rest of the money was distributed to loans and investments. Once my debt is gone, I will repurpose that 45% of any future windfalls towards fixing up the house or upgrading my old F-150.
Count your blessings and pull ahead financially, from every windfall.
The Bottom Line
Setbacks and windfalls are a normal part of life and finances. How you manage each can determine if you leap ahead or get stuck in a rut. Minimize setbacks and maximize windfalls both to meet your financial goals and to prosper.
“To have a comeback, you have to have a setback.” – Mr. T
Hey Brett! Great post and I like how you said everyone has setbacks and windfalls. It’s a normal part of life! It’s not what happens to you, it’s more about how you manage the events. Thanks for the reminder, I’ve had a couple set-back recently and needed to hear this perspective.
Cheers!
Joel
Thanks for following my blog Joel.
I hope your big windfall is right around the corner. For some reason, they seem to go hand-in-hand for me. As soon as I start thinking “Why Me?”, something good happens.
I hope the same for you.
Bret