WWMMD: Christmas cash & debt payoff

brij2006 · December 2014

As most of you know, we are on baby step #2 of Dave Ramsey's Total Money Makeover plan. So any extra money that comes in, gets put toward debt.

However, during Christmas we receive a good chunk in cash as Christmas gifts. My H is saying that we should be able to spend our Christmas money as we see fit, because those people aren't giving it to us to pay our debts. I think it should be put toward debt.

My problem with just spending it is that we're talking about around $1,500. That could take out almost 1 of our next student loans up to pay off.

Another option I thought of was letting him spend his cash (about $450) and I will put mine toward debt since that's what I want to do with it. He thinks that if one gets to spend our cash, then both need to so there isn't any resentment.

So what would MM do with it?

If I were to spend it, I would likely buy a new stove or a kitchen table and chairs since ours no longer has chairs because they broke.

als1982 · December 2014

We've been having the same debate in our house too!

I agree with you. Unless the giver expressly says, "here use this to buy ____," it's yours to do with how you wish. And who is he to say the giver wouldn't want you to use it on debt? Especially since becoming debt-free will reap such rewards years down the road.

I will say if you decide not to use it to pay off debt, I do agree with your H. It would breed some serious animosity in our house if he got an extra chunk of money to spend and I didn't.

(Question: if you go for the new stove and/or table and chairs will you use all the money or just your portion?)

Either way you two just need to get on the same page.

Xstatic3333 · December 2014

We also have this debate whenever big, unexpected chunks of money come in! We've been trying to keep to a really tight budget lately, so H often views this sort of thing as "relief" while I would like to save it.

I will say that, in the past, we have split the money down the middle and I have used my half for savings while he has spent his (usually on something special, not just beer and pizza for the week). In our case this has not led to any resentment. I also think that it's very justified to use it on debt if you want it to. Once the gift is in your hands, it's yours to do what you want with. You could always phrase the TY note as "this money has really provided us with security as we start our family" or something similar.

I also think the table and chairs or stove would be a very justified purchase. Either of those, unless you went really big, could also leave you with some leftover to put towards debt.

Basically I think any approach is fine, but I don't agree with your H that using it for debt should be off limits. I also think if you decide to spend it on something your home really needs, that is justifiable even while in debt pay down mode.

Sisugal · December 2014

If you are working on SL debt -, my guess is that you do not have consumer debt at this time.
I would do both - take 1/2 and spend it - put the other 1/2 on the SLs.

It will please your DH (and harmony is important in this process too) and also you can brag/thank the givers that you used the $ to purchase _____.

Next will come any bonuses and an income tax refund (should you get one).
Bonuses - take a small amount (1/4) and spend and apply rest to debt.
Tax refund same thing.

hoffse · December 2014

I would spend it on - at minimum - the kitchen table and chairs. If you don't have kitchen chairs anymore, that's a pretty necessary purchase to me, and this seems like an ideal opportunity... Surely DR doesn't want you to be so aggressive that you can't afford to replace broken items that broke due to use?

That said, I do think that when people give you money it's yours to do what you want with it. I personally would not use it for extra debt payments, but you know I'm not a DR follower either.

If it were entirely up to me I would probably buy the table/chairs and then set aside the rest to open a 529 after you have the baby, unless you have already set money aside for that. Getting seed money in those as early as possible is really important if you plan to help with college expenses. You only have 18 years for the funds to grow, not 30.

vlagrl29 · December 2014

I would spend it and not put it on debt, but that's just me. You can meet your DH halfway by splitting the money in half and he can spend his half they way he wants to and you can put yours on student loans.

cbee817 · December 2014

I would buy a new table and chairs- many memories are made at a kitchen table with little ones.. pick out something nice that your family will love. The balance can go to debt if that makes you feel better, but I would probably open a 529 or savings account for the baby.

dragonstarjk · December 2014

Honestly, I would probably spend it and not put it towards debt. I allow ourselves this little 'treat' when we've been working hard to pay stuff off. It's not money that was expected or budgeted for, so you could have a little breather without interrupting your debt payoff at all.

I also agree that when people give money it's yours to use as you wish, so I think you guys should just be on the same page. Usually when we get money, it's addressed to one of us and that person decides what to do with it. It's never been a problem between us though--probably because usually H just hands it to me

brij2006 · December 2014

My portion is about $1,000, and H's portion is $450. He wants to use his toward buying things for his toy car (has been a no-no since we started TMM a year ago). The stove I'm looking at is $800, and the table and chairs set is $500. We do however, have a dining room table and chairs that we mostly eat at. Right now I just have 2 folding chairs at the table in the kitchen.

We have about $40k left in debt between our student loans and my car. So there's still a ways to go. I just am so afraid of letting off the gazelle intensity, because we are the type that are bad at getting back on board once we've derailed.

Xstatic3333 · December 2014

Hmmm, I missed the divided portions issue. If that $450 was really just given to him, I'd probably let him go ahead and spend it. H and I tend to have that policy with gifts, although usually chose to save mine and he often does. You guys have been working so hard that from what you post here, at least, it seems like you won't let that derail you.

Everyone is different, but I know that for my H having occasional rewards helps him stay motivated. I think gift money is a good place to splurge since it wasn't expected or budgeted for.

CuriousKiddosMama · December 2014

We end up having this discussion every Xmas, tax time, and bonus time (if there is one). We almost always decide to spend some of it, and save/pay off debt with the other. Our only debt now is our mortgage, and we are going to a model home furniture auction on New Year's Day so we have decided any $ gifts can be spent on furniture if we find anything we like. Then we will use most of bonus and tax refund (if any) on the mortgage. Generally we take a % like 10 or 20 to spend on something fun or that we want, and save or pay off debt with the rest.
In your situation I would probably shop Craigslist or facebook for a new table (there are some great deals if you aren't too picky. I bought a table and 4 chairs recently for my craft room for $50, all I had to do was recover the seat of the chairs!) you can find great deals from people who change out their furniture every couple years. So I would do that, let your dh spend 'his' money and either buy the new stove too, or put the rest towards the loan.

Just remember, you are doing really well, and this is a gift! It is okay to spend that money, or put it towards the loan, whichever is best for you.

blondie42107 · December 2014

We receive holiday money as a couple. I understand both points. I think you should hold off and talk about it more.

For people who don't spend much on themselves, etc I feel like this is a good opportunity to use a gift to do those things you would love to do but wouldn't fit your budget.

H's parents gifted us money a while back and MIL said "please do something fun." She knows we're not big spenders.

abrewer5 · December 2014

My H and I split our money, so I got $250 for Christmas, he got $100 and we received $100 in joint money. I'm putting my $250 toward debt, he's saving his $100 and we're putting the joint money in our joint savings.

I personally would split the money and let him do what he wants with his portion and you do what you want with yours. Maybe you could each get $400 to play with and put the rest ($700) towards debt. That way you can get at least one of the things you want and he could get some stuff he wants while still following your plan.

brij2006 · December 2014

Well we ended up doing a mix of things. I ended up with $1,175 in cash, and he ended up with $725. Last month my car was in the shop, and we paid an extra $200 to repair existing damage to the bumper. So we replaced that $200 in our car maintenance account. Then I bought the kitchen table and chairs set I had been swooning over for a while now, for $700. The remaining $275 will go toward debt.

H will get to spend his cash how he see's fit.

It's not exactly how I wanted to use the money, since it definitely could have helped with our snowball. But this way it keeps H happy that he was able to get a bit of wiggle room in our very tight debt payoff budget, and I was able to purchase something I've been wanting to replace for 5 years now.

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