Take a trip to somewhere you’ve always been curious about, but could never justify the expense just to see it. You may not ever have the chance to do something stupid and get away with it again.
I was thinking March or April, that’s if we go at all, but later is fine too. I definitely won’t enjoy a rainy vacation, so I can wait.
I think it’s very important that you treat yourself. And treat your family. Not only as a reward for what you’ve done but as an incentive for next year. I agree with paying down the mortgage, but pay it down in such a way that should trouble strike you could take a payment holiday using your overpayment. Next on the list is college funds for your children. And you should put some funds into that super-secret personal extravagance fund about which your wife pretends not to know.
I’ve been to most places I’d like to visit around the world, except for some of the dodgier ones. For example, I’ve always wanted to visit the favelas in Rio de Janeiro; I’m fascinated by them. My wife, on the other hand, thinks we’d be risking our lives.
Remarkably, my wife agrees with you. Also, somehow I’ve gotten more handsome since yesterday. 
I live with year’s cushion anyway, so whatever I keep liquid from my payout next week will just allow me to extend that a little.
No children, so that’s not a factor.
Yeah. Pretends is right. She knows everything. It’s been many years since I finally came to grips with not having any privacy whatsoever.
Well, I guess you would be worse off, then, by paying down the mortgage, since, as another poster pointed out, if you do that, you won’t have the money as an emergency fund if you should need it.
I still think you should take some of it and do something just fun and extravagant with it!
then you just get a home equity loan.
I am with you. I’m also coming off of almost 6 solid months of killing myself for work, so a little break sounds extra good right now.
I had a one-time huge bonus like this a few years ago. So I’ll give you a few words of advice.
My windfall was much more than enough to pay off the mortgage on my house. So that’s the first thing I did. Some people think that’s not the best thing to do, but it really gave me a great sense of peace. Especially since there was still plenty of money left over.
Be very careful about the tax implications. They withheld about 20% of the total in tax, and that was not nearly enough. I made sure that I put aside a good chunk of the money for what I knew would be a big tax bill the following April, and indeed there was. In fact, I had to pay Alternative Minimum Tax for the first (and hopefully last) time in my life.
There’s your answer then; take a vacation! You can be fiscally conservative with the rest of it, but take a real vacation, someplace you can feel totally relaxed, whatever that means to you!
My controller did a quick analysis for me in the office yesterday and came up with 32% as a straight deduction that would prevent any negative tax issues but, again, I’m seeing my accountant later this week and this will be definitively addressed then.
I have a question since you brought it up. When did the AMT kick in for you, and how did you deal with it?
Not if you’re unemployed - the bank won’t issue you a loan in that situation. Better to apply for a line of credit now while you’re employed.
Of course I don’t know where the OP is or whether that’s feasible.
Personally, I’d try to follow the advice of Michelle Singletary (personal finance columnist for the Washington Post). Make sure you’ve got an emergency fund equal to 3-6 months of living expenses, in some relatively safe stash (i.e. not the stock market). And pay down all debt other than mortgage.
Max out the retirement savings.
Then treat yourself to something with a bit of the money.
About the AMT. It kicked in mainly because I had a huge deduction for state income tax (withheld from the bonus itself), but state income tax is not deductible for AMT purposes. AMT can often be complicated, but in my case it really was simple. Without that deduction, the so-called tentative minimum tax turned out to be higher than my normal income tax, so I had to pay the difference as AMT.
It was just part of the overall income tax bill (I guess around 20% of it), so that’s why I said in my message to be careful to put aside enough to pay for contingencies like this.
I recommend investing in a ball pit room. If there’s a room in your house that you can set aside, buy thousands of balls and install a fun rubbery floor (like that recycled rubber playground material). Optionally with a tall slide down into the pit. Shouldn’t set you back more than a few grand, I wouldn’t think.
Personally I would buy an investment house - its not often that you have that much cash in one place at one time, so I’d set up a pte ltd company, and have it buy a house. All sorts of tax deductions can then be made, particularly if you buy the house in a “holiday-ee” area that you like.
Run the company at a loss for many years, getting tax deductions all the way…
You’ll also be saving for your retirement via the rent you’ll be getting and the capital gains.
It’s feasible, but I don’t need it.
I have at least a year’s cushion to maintain my lifestyle at current levels. Check.
In a savings account, contrary to my accountant’s wishes, plus a little that I’m playing around with in Lending Club. Another check.
No debt other than mortgage. Checkamundo.
Done. Checkarooni.
On the to do list 
Just the thought of those e-coli and staph factories gives me the heebie-jeebies. {shudder}
I’ll mention this to my accountant tomorrow. Thanks for alerting me to this potential horror.
Your scenario screams ‘potential audit’ to me.
Well my laws are different to those in the US but if I was the owner, I could claim a portion of the house dedicated to the office for the business as a tax deduction, I would be able to claim the expenses involved in going to view the house as a tax deduction, need a car to get there? Can claim the sales tax (12.5% of purchase price) as an outright deduction.
So its a pretty good gig…just don’t get greedy about it and you are fine…