Where to Put an Unexpected $5,000, Part 2

CNN Money has 43 suggestions for those who come upon an unexpected $5,000 based on the market right now. I didn’t particularly agree with each suggestion I’ve looked at so far. Let’s see how CNN Money does with the next batch of suggestions.

8. Best reality check: Eight hours with a financial planner
9. Best career moves: Go to conferences on your own dime
10. Best career moves: Go to conferences on your own dime
11. Best career moves: Hire a mentor
12. Best retirement moves at any time: Up your 401(k) contribution
13. Best retirement moves at any time: Open a Roth IRA
14. Best moves near retirement: Pay down your highest-interest credit-card debt
15. Best moves near retirement: Invoke “catch up” provisions

These suggestions are good. Spending time with a professional financial planner, who charges by the hour, not a percentage of assets under management, can be a good way to get some guidance that can be useful beyond the $5,000 is invested. For finding a financial planner, try the National Association for Personal Finance Advisors.

Would you pay to attend an industry conference? Participation in these conferences are usually priced high because the organizers know that corporations are willing to pay the price. I don’t agree that this will always pay off financially, but depending on the conference, the experience could be worth it. I’ve always wanted to attend South by Southwest, but I don’t see how I could justify my company (in financial services) to pay for it.

I am strongly in favor of using found money for education. Whether it pays off financially or not, exercising your brain has benefits that extend beyond just money.

While I think increasing a 401(k) contribution is a good idea, I don’t know if coming upon a lump sum of $5,000 is what should drive the increase. On the other hand, getting a raise or increasing income from outside the day job present the perfect opportunities for increasing the contribution. I recently increased my 401(k) contribution from 16% to 25% of my day job income. I’d like to max out this contribution but I don’t quite have the funds to do so yet.

On the other hand, using the money to invest directly in a Roth IRA is a great idea, and you’ll even have some of the $5,000 left over.

The next suggestion is a duplicate of the first tip. It’s a good idea for those who carry credit card debt. As you approach retirement, you don’t want to be wasting money on interest expenses.

If you’re 50 or older, you have higher maximum contribution limits in 401(k)s and Roth IRAs. Instead of the typical $15,500 limit for 401(k) accounts in 2007, older individuals can contribute an extra $5,000. That’s perfect in this situation. The Roth IRA limit is increased by $1,000 for those 50 and older, from $4,000 to $5,000.

These suggestions are somewhat better than the first bunch, and there are more to come.