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Ask Dave

Using the Extra

Victor just worked some overtime and brought home $2,900 with this paycheck. Should he and his wife put some extra money toward their kids' birthdays this month or put the extra toward their debt?

QUESTION: Victor in Texas and his wife just started Dave’s program. He brings home $2,500 every two weeks. However, he just worked some overtime and brought home $2,900 with this paycheck. He is wondering if they should put some extra money toward their kids’ birthdays this month or put the extra toward their debt. Dave tells him the right way to approach this money.

ANSWER: There are two things here. The first is you don’t want to operate from a fixed template month. Your month is fairly template and fairly fixed, but I want you to think of this not as extra money, but in terms of this is how much money you have to work with this month.

What are you trying to do with the money this month? This month, you are trying to do birthdays and get out of debt. It sounds to me like you do some of each of those things. You do a budget for this month; you don’t treat this like it is found money. You just say that you have $2,900 this month and how are you going to spend that $2,900?

In other words, the exact amount doesn’t have to be the extra amount. Some of it could go to birthdays, or you could trim a couple of other categories to go to birthdays and still have some money left over to throw at the debt. It sounds like you should do some of all of that.

Just don’t think that all this extra money has to all go to birthdays or all go to debt. It could all go to anything. You could just raise up something else if you wanted to because you are doing a unique, different budget every month.

But you guys are both in agreement on a couple of things. You agree that you want to get out of debt, and you both agree you should have a birthday party. You just need to sit down and figure out where that’s coming from and how much those things are going to be.

If you guys can determine how much you’re spending on the party, then all you have to figure out is where it’s coming out of in the budget. I would suggest that some of it is from the extra you would have thrown at the debt snowball. You’ll probably reduce some of that and you’ll probably trim into some of the other areas so you can both get there. Sounds like a compromise.