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Holiday Windfalls: 7 Tips on Using Them

Holiday Windfalls: 7 Tips on Using Them

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    The holidays often come with a windfall or two: a monetary gift from a relative or a bonus from an employer. We don’t necessarily expect these gifts — that’s why they’re called windfalls — so deciding what to do with them can be a little complicated. Perhaps you have a pressing need for cash to pay an important bill. If so, that kind of practical application may make your decision for you. If you don’t have such a need, however, take time to consider your options.

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    1. Put it in your emergency fund

    While this option doesn’t sound particularly fun, it may be a life saver. Approximately 60 percent of Americans don’t have enough to make it through a full month on just their emergency savings — a huge problem if you’ve been watching the job market lately. If you’re in that group, a windfall might be your best opportunity for actually starting an emergency fund. If you’ve got a little bit of money already put away for a rainy day, using even a portion of your holiday gift to pad it can pay off. I’ve got my emergency fund in the savings account with the highest interest rate I could find: I’ve already put a few windfalls in there, and I’ve got the comfort of knowing that they’re actually earning me a little money.

    2. Set aside a few dollars for something fun

    Saving money all the time can be tough. More than a few people fall off the frugality wagon because it’s depressing to save every single cent you can. What’s the point of saving every little bit if you don’t get to enjoy your savings on occasion? I wouldn’t suggest spending all of your money on entertainment, but there’s nothing wrong with setting aside a few dollars of ‘play money.’ Depending on the windfall, using a fraction of your gift towards fun could be the equivalent of a dinner out or a new television — if you can afford it, neither is unreasonable.

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    3. Make an investment

    The stock market might make most investors cringe right now, but that doesn’t actually mean that investment is a bad choice. There are still many conservative investment options that can provide a safe place to keep your money and earn a little interest. Those conservative investments don’t provide the return of riskier choices, of course, but they can still provide a little income. Depending on your long-term financial goals, stocks may not be a horrible idea either — consider consulting a financial planner if you want to invest a significant amount of your windfall.

    4. Share the wealth

    I don’t tithe a certain percentage of my income, although I know people who do — including when they receive windfalls. I do believe, however, that it’s good to support causes you believe in (especially when your own financial situation is comfortable). Many non-profits are struggling this year as donations have dropped. If you have made a charitable contribution in years past but have cut back this year, think about donating even a few dollars of your windfall.

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    5. Pay down debt

    Odds are pretty good that you’re already working on paying down any consumer debt you might have — the balances on your credit cards and accounts. Applying a windfall to those balances can not only help you eliminate your debt faster, but it can also save you money in the long run. If you can wipe out consumer debt, you don’t have to pay interest on it. If your credit card balances are in great shape, the same holds true for your ‘good’ debt: mortgages and school loans are considered good debt because they help you earn and save money in the long run. Still, they’re both forms of debt and the faster you pay them off, the less interest you pay.

    6. Put it towards a bigger goal

    Saving up for a down payment on a house? Or for Junior’s education? If you’ve got a big goal that you’re saving up for, a windfall may help move you along to your goal faster than you might otherwise manage. Especially if you have a little time to save up for a goal, like Junior’s college, interest can turn even a few dollars into a larger amount — there are special investment options created for just such goals, like 529 plans. If you are looking at a shorter-term goal, you can often use that savings as a sort of emergency fund: you won’t want to pull money away from your goal, but you won’t be in too much trouble if you do.

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    7. Mix and match

    No matter how small a windfall is, you can divide it among these options if you choose. Dividing a monetary gift between your goals can give you an opportunity to move forward on all of them — if you feel like you’ve only made progress in one area this year, you have the opportunity to make a little progress on all the rest before the year ends. In some cases, it may be crucial to get ahead on a particular goal: you’ll want to take your finances into account to make your decision. And if you have any other ideas for using a windfall, please share them in the comments.

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    Last Updated on April 8, 2019

    22 Tips for Effective Deadlines

    22 Tips for Effective Deadlines

    Unless you’re infinitely rich or prepared to rack up major debt, you need to budget your income. Setting limits on how much you are willing to spend helps control expenses. But what about your time? Do you budget your time or spend it carelessly?

    Deadlines are the chronological equivalent of a budget. By setting aside a portion of time to complete a task, goal or project in advance you avoid over-spending. Deadlines can be helpful but they can also be a source of frustration if set improperly. Here are some tips for making deadlines work:

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    1. Use Parkinson’s Law – Parkinson’s Law states that tasks expand to fill the time given to them. By setting a strict deadline in advance you can cut off this expansion and focus on what is most important.
    2. Timebox – Set small deadlines of 60-90 minutes to work on a specific task. After the time is up you finish. This cuts procrastinating and forces you to use your time wisely.
    3. 80/20 – The Pareto Principle suggests that 80% of the value is contained in 20% of the input. Apply this rule to projects to focus on that critical 20% first and fill out the other 80% if you still have time.
    4. Project VS Deadline – The more flexible your project, the stricter your deadline. If a task has relatively little flexibility in completion a softer deadline will keep you sane. If the task can grow easily, keep a tight deadline to prevent waste.
    5. Break it Down – Any deadline over one day should be broken down into smaller units. Long deadlines fail to motivate if they aren’t applied to manageable units.
    6. Hofstadter’s Law – Basically this law states that it always takes longer than you think. A rule I’ve heard in software development is to double the time you think you need. Then add six months. Be patient and give yourself ample time for complex projects.
    7. Backwards Planning – Set the deadline first and then decide how you will achieve it. This approach is great when choices are abundant and projects could go on indefinitely.
    8. Prototype – If you are attempting something new, test out smaller versions of a project to help you decide on a final deadline. Write a 10 page e-book before your 300 page novel or try to increase your income by 10% before aiming to double it.
    9. Find the Weak Link – Figure out what could ruin your plans and accomplish it first. Knowing the unknown can help you format your deadlines.
    10. No Robot Deadlines – Robots can work without sleep, relaxation or distractions. You aren’t a robot. Don’t schedule your deadline with the expectation you can work sixteen hour days to complete it. Deathmarches aren’t healthy.
    11. Get Feedback – Get a realistic picture from people working with you. Giving impossible deadlines to contractors or employees will only build resentment.
    12. Continuous Planning – If you use a backwards planning model, you need to constantly be updating plans to fit your deadline. This means making cuts, additions or refinements so the project will fit into the expected timeframe.
    13. Mark Excess Baggage – Identify areas of a task or project that will be ignored if time grows short. What e-mails will you have to delete if it takes too long to empty your inbox? What features will your product lack if you need a rapid finish?
    14. Review – For deadlines over a month long take a weekly review to track your progress. This will help you identify methods you can use to speed up work and help you plan more efficiently for the future.
    15. Find Shortcuts – Almost any task or project has shortcuts you can use to save time. Is there a premade library you can use instead of building your own functions? An autoresponder to answer similar e-mails? An expert you can call to help solve a problem?
    16. Churn then Polish – Set a strict deadline for basic completion and then set a more comfortable deadline to enhance and polish afterwards. Often churning out the basics of a task quickly will require no more polishing afterwards than doing it slowly.
    17. Reminders – Post reminders of your deadlines everywhere. Creating a sense of urgency with your deadlines is necessary to keep them from getting pushed aside by distractions.
    18. Forward Planning – Not mutually exclusive with backwards planning, this involves planning the details of a project out before setting a deadline. Great for achieving clarity about what you are trying to accomplish before making arbitrary time limits.
    19. Set a Timer – Get one that beeps. Somehow the countdown of a timer appears more realistic for a ninety minute timebox than just glancing at your clock.
    20. Write them Down – Any deadline over a few hours needs to be written down. Otherwise it is an inclination not a goal. Having written deadlines makes them more tangible than internal decisions alone.
    21. Cheap/Fast/Good – Ben Casnocha in My Start Up Life mentions that you can have only have two of the three. Pick two of the cheap/fast/good dimensions before starting a project to help you prioritize.
    22. Be Patient – Using a deadline may seem to be the complete opposite of patience. But being patient with inflexible tasks is necessary to focus on their completion. The paradox is that the more patient you are, the more you can focus. The more you can focus the quicker the results will come!

    Featured photo credit: Estée Janssens via unsplash.com

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