Mention to your friend that you suddenly received an unexpected $1,000 and I would be willing to bet he could come up with several suggestions for you. Most of those suggestions will likely involve handing the money over to him. My first suggestion is to refrain from telling your friend when you have $1,000 more than you know what to do with. Once that is achieved, it is best to have some ideas in mind just in case this situation presents itself.
Money Magazine has eleven suggestions for people who find they have $1,000 sitting around without a planned destiny.
- Top off your emergency fund. If you don’t have an emergency fund, $1,000 is a great starting point. It is quite easy to open a high-yield online savings account so you can keep your emergency fund close while letting it earn as much as possible.
- Spend five hours with a financial planner. Here Money Magazine assumes you will go to a financial planner who charges $200 per hour. Unless your finances are unusually complicated, skip this suggestion.
- Buy a top-notch stock fund. Here Money Magazine suggest putting your money in actively managed mutual funds. I suggest sticking with low-cost non-managed index mutual funds. Vanguard requires $3,000 to start investing, but the low-cost Schwab Total Stock Market Index Fund (SWTSX) requires only a $100 minimum deposit.
- Upgrade your home appliances. I can see this being a legitimate option if you have problems with your appliances or need to switch to more energy-efficient models.
- Help on a large scale You can use the $1,000 for others’ good. Money Magazine suggestions buying sheep for farmers, offering small business loans through Kiva, and planting trees. Any charitable option is a good choice for an unexpected $1,000.
- Join a gym. If you know you can make your gym membership last, this could be a suggestion that saves money through your improved health. Otherwise, a gym membership could do nothing more than suck your money away.
- Beef up your IRA (if you’re 50 or older). Anyone age 50 or older with the appropriate level of income can invest an additional $1,000 above the standard maximum in a Traditional or Roth IRA.
- Pay down credit card debt. This should probably be towards the top of the list. Paying off expensive credit card debt saves you money in interest fees down the road. $1,000 can go a long way to getting out of debt.
- Update your estate documents. Money Magazine assumes you had your estate documents in order at one point. $1,000 should cover updates to your will, health-care proxy, and power of attorney.
- Start a young investor off right. Money Magazine suggests setting up a diversified portfolio for a child using a combination of Schwab’s low-minimum and low-cost index funds.
- Become a star at work. This is the most unlikely suggestion for spending your own $1,000. Money Magazine suggests taking a class, much like the improv class Smithee is taking, or any other course that might provide you with a competitive edge. Self-development is a good idea for your own money, but I wouldn’t spend $1,000 on an activity that does nothing more than increase my value to a corporation.
What would you do with an unexpected $1,000 right now?
What to do with $1,000 now, Money Magazine, October 12, 2009
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{ 13 comments… read them below or add one }
Invest in supplies for raised bed gardening for next summer.
Buy some insulation for the attic.
Buy a good antenna and DVR to get your cable shows online and view thru TV. Get Netflix.
Buy extra food and household disposibles they go up in price.
Buy a freezer.
Get car tuned up.
Maintaince on your sewer line, furnace and water heater.
Spruce up your home with some paint and small fix its.
Buy a bike.
That is all this early morning brain can come up with.
Great ideas!
Buy a ticket to the Yankees Phillies world series game behind the Phillies dugout!
Pay back the rest of a personal loan and then put the rest toward the new computer that I rather desperately want (while my 5 year old beast still works, it’s looking to die any day now).
Go visit my daughter in Israel – and kick her boy friend’s arse!
These above tips all seemed weird to me aside from the emergency fund..I would not even think of half of these if I came into $1000..self development class? The Gym?
I’d pay off debt. If I didn’t have the debt, I’d probably do the emergency fund thing.
I tend to agree with you. What if your emergency fund is more than full and you have no debt?
We’re getting our 1st time home buyers tax credit Real Soon Now (it’s been 6 or so weeks since we mailed in our form). Since we bought our house and have been budgeting as though we wouldn’t see that money it will essentially be an $8000 bonus.
We’re going to :
1) Pay off some debt ($4500 of loans from family members)
2) Put $1000 into an emergency fund
3) Add insulation to the attic (and replace our soffits?)
4) The rest will go towards my wife’s student loans
Any additional $1000s that may find their way to our house will go towards paying down debts.
My wife and I would take a much needed vacation. :)
Unless the money on a credit card is riding on 0% interest then paying off the credit card debt should def be at the top of the list.
I’d put it in a Roth IRA. I’m a college student living off of her parents and my “income” is $7,000 in scholarships for 2009. That’s enough to make me file, as none of it is deductible since my parents are claiming my tuition, fees, etc. This qualifies me to get a Roth and take advantage of the fact that I only have to pay 10% income tax.
Instead of the Schwab Total Stock Market Index Fund (SWTSX) you could always put it into the Vanguard STAR Fund (VGSTX) which has a minimum investment of $1000.
For me I would put it towards my current top priority: topping off my emergency fund.
I have a two-year old daughter, so I’d probably pretend I never got it and invest it with her college savings in mind. Granted, I’m sure she’s going to get a full-ride somewhere for something (UNC for soccer? Harvard for electrical engineering?), so I’m sure I won’t have to worry about that. But just in case…
If I had credit-card debt, that would be at the top of the list. But my wife and I made it a priority to eliminate our debt, so we’re doing okay there.