Everyone always asks what you would do with a million dollars, and I'm sure you have many answers, but what if you received a nice gift of $5000 from someone? What could you do to make the most of your $5000?
- Awesome Returns - No Risk
Pay off your credit card debt. The average credit card has a rate of 13.9% and if you applied all $5000 to that debt you'll save more than $850 in two and a half years. No matter where you invest your money, the chances of getting 14% is slim - especially after accounting for taxes. Paying off your high interest debt will give you awesome returns.
- Up Your Retirement Contributions - 401(k)
If you haven't already reached the point where your company matches your 401(k) contributions, use the money to take a reduction in pay allowing you to save more for retirement and take advantage of your company's free gift to you - matching contributions.
- Up Your Retirement Contributions - IRA
If you're not already contributing to an IRA and are eligible to, make sure you're putting money away in these awesome vehicles. Traditional IRAs give you a reduction in taxable income (like a 401(k)) but Roth IRAs are more powerful allowing all your money to grow TAX FREE! Contributing to a Roth IRA can significantly increase your retirement savings. Best of all, you can even withdraw money for certain reasons if you really need it.
- Begin to Build Your Wealth
There are many places you can go to get financial advice from a Certified Financial Planner for free, but the catch is they earn their money on commission which may mean they'll be selling things that are good for them, not necessarilly good for you. To get good non-biased advice the rate goes about $150 to $250 an hour and it will take around 8 hours of consultation with a pro to get a good handle on your situation and where you want to go. A good financial planner will help you set realistic goals and alert you to time bombs in your portfolio.
If your company or business cannot afford to send you to the latest and greatest conference in your field, then pay to go on your own. Typical professional conferences run $2,000 and you can use the rest of your money for the airfare, hotel, and other expenses. Make sure to make the most of your money, and update yourself on all the latest and greatest trends and network with colleagues like crazy!
- Sell That Risky Stock!
Have you been holding on to a stock only because you don't want to pay the capital gains tax on it? Maybe you've had a great run with a risky stock and you want to get out, but can't afford the taxes? Use your windfall to pay off the capital gains and restructure your portfolio to account for the levels of risk you want.
More to come! What would YOU do with $5000?