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How to Best Use $1,000
What To Do With $1,000?
The purpose of this hub is to simply name a number of things that $1,000 can be used for to help improve your finances and have an even greater impact that spending the $1,000. No matter how hard it is not make that impulse buy, hold off for just awhile and take a look at my other uses for these funds instead.
1. Pay off credit card debt. This seems boring, but paying off debt can leave you much richer very quickly depending on the interest rate that you are paying on your debt. Pay your debts first, and then you will have more cash to spend later.
2. As Dave Ramsey lays out in his Baby Step #1, $1,000 is usually the perfect amount to rebuild or create your emergency fund. An emergency fund should consist of $1000 initially that can be used for any unexpected expenses. It should then be built up to 3 - 6 months of expenses usually ($7,000 - $10,000) as soon as your consumer debts are paid off. A specific fund for emergencies allows you to stay out of debt when life throws a curve ball in your direction.
3. If you've taken care of both #1 and #2, I suggest you add the $1,000 to your retirement IRA or use this amount to start and fund a Roth IRA. I prefer the Roth over a Traditional IRA because of the flexibility it provides in being able to withdraw contributions without a tax penalty, and you are not required to withdraw funds at a certain age like all other retirement accounts require. This allows to you to transfer an entire Roth IRA account to an heir or beneficiary.
4. Invest in your children or grand children's future by purchasing stock of a company through a DRIP. A DRIP is a dividend reinvestment plan. A DRIP is a great way to get your kids excited about investing, and it provides a cheap way to purchase stock and watch your investment grow through dividends.
5. Pay additional principal towards your home mortgage. This goes back to my first point on the importance of being debt-free, and a fully owned home gives you a larger paycheck to use however you want. The quicker the home mortgage is paid off, the less interest you are paying to the bank.
6. Use it to purchase some sort of unique investment that supports one your hobbies. For instance, I enjoy collecting coins and antiques. I would consider the purchase of a nice silver coin a worthwhile investment for both my hobby and the potential for a return on my investment in years to come.
7. Pay off any remaining balance such as that on a car or student loans.
8. Use the $1,000 to make monthly budget adjustments where needed. For instance, if one expense category of your monthly budget consistently goes over, then allocate this amount to the whole year and increase that category by that amount per month.
Will you implement any of these ways to use $1,000?
My Other Top Hubs on Saving Money
- How to Effectively Save Money
Finding ways to make some extra cash on top of your regular income is not as difficult as it seems. Here are 10 ideas that will provide you with a substantial side income when the going gets tough.
- How to Effectively Save Money II
Here is a deeper list of tips to line your pockets with some extra cash each week. These tips are part of my larger project to create 100 money saving tips. These practical tips can easily provide you with an extra $500.
- How to Save Money on Gasoline
Here are 12 new ways to lower your monthly gasoline expense. These tips will make the most of every drop of gas in your tank.
- How to Create a Budget
Now is the time to figure out your budget once and for all. Use these helpful tips to create a budget that you can stick to now.