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Ten Things to Do With $1,000 (Plus 21 More)

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If you’ve suddenly come upon $1,000 you didn’t have the day before, you may get the urge to celebrate. $1,000 doesn’t open many new opportunities to you these days, but there are a number of options. Kiplinger has published a special with 37 ways to invest $1,000, but I have a few suggestions of my own.

Savings Options

1. Start or increase your emergency fund. Am emergency fund is there to help you cover expenses when some unplanned event interrupts your income stream, and the best emergency fund is tiered.

2. Open a high-yield savings account. Set aside the $1,000 for a future spending goal, like a vacation or a new car. Keeping this money investing as much as possible while still “liquid” will allow you to access the cash when the time is right.

Debt reduction options

3. Send $1,000 directly to your credit card with the highest interest rate. If you have credit card debt, sending an extra payment of $1,000 will save you lots of interest down the road. This isn’t a very exciting option, because it’s hard to “feel” the benefit of saved expenses over time, but it is worthwhile.

4. Pay off your mortgage faster. If you own a home, it’s likely you also have a mortgage. If your lender doesn’t penalize you, consider sending $1,000 as an extra payment. Many people have goals to be debt-free. A mortgage is debt, so any debt reduction plan must consider the mortgage.

5. Reduce your student loan debt. This month, I again increased my monthly payment to my student loan debt. This student loan is currently the only debt I have, and I no longer qualify for a tax reduction for paying student loan interest. It is in my best interest to get rid of this debt as soon as possible. An extra $1,000 can make a significant dent in my student loan, and it might for you, as well.

Investing options

6. Invest in a Roth IRA. If your income doesn’t disqualify you, you can invest up to $5,000 in a Roth IRA. This type of account allows you to take advantage of low tax rates today. The earnings on the money invested will grow tax-free, and you’ll be able to withdraw your earnings without penalty after you’re 59.5 years old.

7. Invest in the total stock market. Whether or not you have investments, the Vanguard Total Stock Market Index (VTSMX) is a good option for long-term investing. This low-cost index fund tracks the stock market index, which is one of the best possible investments over time. Many people try to beat the performance of this index and most fail. In order to qualify for the investment, you will need to invest a minimum of $3,000, so you may need to use your new $1,000 to help save for your initial investment.

8. Invest in your children’s education. If you have children and you want as many educational opportunities available to them as possible, you may want to consider a 529 college savings plan. 529 plans are run by states and offer some tax incentives when the investments are used for education-related expenses.

Charitable giving

9. Give the $1,000 to a cause with importance and meaning to you. Tax deductions should only be considered an ancillary benefit rather than the primary driver for contributing to a non-profit organization. Finding an unexpected $1,000 creates a perfect opportunity for sharing your good fortune with those who need it more than you.

Treat yourself

10. If you’re in a good shape from a financial perspective, don’t neglect yourself and your family. While buying things might not affect your long-term happiness, deprivation of things that make you happy in the short-term can increase long-term frustration.

The above ten options are probably some of the most popular choices for taking advantage of unexpected income. The above is my list. Kiplinger’s list, which I mentioned above, contains 21 suggestions, many for savvier investors. Here is the magazine’s full set of suggestions, although I can’t agree with every tip.

  1. Buy bonds that stay a step ahead of inflation, like TIPS.
  2. Buy mutual funds with low minimums like HDPMX and HABDX.
  3. Buy low-cost individual stocks with good potential, like COT, FXRE, and Q.
  4. Use ETFs to buy the total stock market, such as VIT, BND, and VT.
  5. Subscribe to stock newsletters.
  6. Hire a career coach.
  7. Hire a fee-only financial planner.
  8. Add flood or liability coverage to your homeowner’s insurance policy.
  9. Save for college with a 529 plan.
  10. Add more to your Roth IRA.
  11. Buy devices that allow you to utilize solar energy.
  12. Play golf for three days.
  13. Buy a 42-inch LCD high definition television.
  14. Buy a high definition camcorder.
  15. Buy a new energy-efficient refrigerator.
  16. Buy a new energy-efficient washer.
  17. Travel to New York and buy your tickets far in advance.
  18. Get a portable power generator.
  19. Stock your wine cellar.
  20. Buy a bicycle, freeing you from the cost of gas and earning you exercise.
  21. Help the poor by buying a “well kit.”

What $1,000 Can Still Do, Kiplinger Magazine

Updated January 12, 2018 and originally published September 15, 2008.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 1 comment… read it below or add one }

avatar 1 Anonymous

I’ve actually run into this question. I earned a little more than $1k this summer with an online business, but had to shut it down. Don’t know what to do with it. Ideally, I’d like to reinvest it into a new online business and roll into bigger profits in the future.

But that is easier said than done…

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