Tuesday, October 06, 2009

Bonuses and Recognition

My company's board of directors gave me a nice bonus when they met last week. The best thing: I wasn't expecting a bonus. Yes, I had a couple of very nice wins going into the board meeting: I recently signed two important deals for my company, after months of hard work. However, this is not bonus season and given that my annual bonus was not paid last year - no executive bonuses were paid due to the economic situation - this really came out of the blue. What a nice surprise.

The cash is definitely nice, but what's nicer is the recognition from the company's board. These are all very seasoned and prominent industry executives. The fact that they recognized my performance gives me confidence that my efforts are appreciated - and better yet - that since these key industry players appreciate my work, they may help me further my career plans in the future.

Now to the task at hand. Unexpected bonus plans. What's to be done?

Option A: assume the house deal goes forward, spend the money on house upgrades
Option B: again, assume the house deal is a go, use the money to pay down the mortgage
Option C: buy a nice toy (new home theater?) and bank the rest
Option D: Save for a rainy day
Option E: Blow is all on hats (for the uninitiated, that's a line from the immortal movie "Hotshots" - one of the worst movies ever made).

I am leaning toward option C, but then option A is also in the game. Option B is enticing - especially given my post about the cost of a mortgage last week, but then my bonus after taxes is only going to be approximately two months of mortgage. Still, that's pretty large. I think I got enough hats, so option E is out for now.

Live a little or save? Advice anyone?

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Kim Stiens said...

Live first. You've got cash, you budgeted for your new home well and this is just a little extra something because you literally earned it. Enjoy it! Don't save a penny if you don't want.

Shadox said...


Rob Bennett said...

I would use it to pay down the mortgage.

But first I would come up with a customized reason why I want the mortgage paid off (financing an old-age retirement doesn't cut it). What is it that you will be able to do with your life when your mortgage is paid off that you cannot do now? Start your own business? Sleep better at night? Retire early?

When you have an appealing saving goal in mind, make it as concrete as you can. Take a picture that says to you "this is what things will look like when I get to where I am going." If you want to work at home, take a picture of yourself working at home and make that your inspiration.

Quantify how much closer you are to your goal as a result of the mortgage paydown.

Now you get the mortgage paydown PLUS the fun of seeing how much closer you are to a goal that really matters to you.

It's a mistake to think of saving and fun as opposite. Saving is fun when it is done right.


Shadox said...

Rob - I think you are overselling your case on saving... I have never heard saving called fun. I have heard it called important, "the right thing to do", a necessity, but never "fun". Still, your point is well taken.

For me saving is about security and independence, not about fun.