What is the wise thing to do with extra money?

Discussion in 'The Watercooler' started by tinamarie1, Apr 7, 2008.

  1. tinamarie1

    tinamarie1 Member

    We are about to get the last of our tax refund money and I am about to start putting my paycheck in savings for a few months. In the past, we have used extra money to pay off credit cards, only to charge them right back up or get new ones. We have one small car payment of $250 a month, but we owe like 4 years on it. Other than ccards and the car, we really don't have any bills we could apply the money to.(let me rephrase, we have them they are like a $30,000 student loan)..well unless you count utilities and insurance.
    Should I stock up on groceries? Or will my monsters just eat 10xs as much a day?
    I want to help our monthly expenses (because I want to quit working this summer).
    Any suggestions?
  2. LittleDudesMom

    LittleDudesMom Well-Known Member Staff Member


    You will probably get as many different answers as members!

    Personally were I in your position of wanting to take some time off this summer, I would pay off debt first. It is really important to have savings, but more important to not have debt. I pay my bills, pay my credit cards, and then whatever I save after groceries, kid's allowance, etc., I put in my ING savings account. It pays a minimum of twice what conventional savings accounts pay (even though they have gone down a full percent since January) and is currently at 3% (which is better than just about any cd rate you can get right now).

    So in a nutshell, I would pay down some debt which means you wouldn't have as many payments, finance charges or interest on borrowed money this summer.

  3. SRL

    SRL Active Member

    I quit to stay home with my kids 13 years ago and what was the most helpful is that we had no debt except our house payment so I would apply it to credit cards. Before I came home we paid off our car loans, our student loans, didn't carry any balance on our credit cards, and socked half my last year's salary away in savings (which turned out to be a lifesaver).

    We took a 60% cut in salary when I went home and we wouldn't have been able to make it unless we had most of my husband's salary available for current expenses instead of paying off past debts.

    What I did do when I came home was majorly change the way I shop. I did far more stocking up on items when they are on sale or adjusting what I planned to serve based on sales. I was going to post about it anyway so I'll do that on another thread. The other day I found boneless, skinnless chicken breasts for $1/pound and I stocked up!
  4. Big Bad Kitty

    Big Bad Kitty lolcat

    Send the extra money to

    1234 BIG BAD LANE

  5. tinamarie1

    tinamarie1 Member

    bbk...i was wondering who would put that one first you or miss starbie. lol
  6. gcvmom

    gcvmom Here we go again!

    Well, if I were only responding to the title of your post, I'd say, SEND IT TO ME!!!

    Ha, ha!

    I agree with others -- work on paying off the debt first.
  7. tinamarie1

    tinamarie1 Member

    Well, heres the thing, its not like I will have a ton of extra money, we are talking maybe $3,000-$4,000. We owe $11k on the truck. We just paid off our credit cards in November and charged them all back up all over again..i know, duh Tina! husband says we should cancel them and pay them off. I have always said that they are in case of emergencies, although pizza and clothes hardly qualify. Since I don't have much willpower where that is concerned, I just was wondering if anyone had any other suggestions.
  8. meowbunny

    meowbunny New Member

    Pay off the credit cards. Cancel all but one and put it where it isn't handy. Truly save it for emergencies. Shred any new offers that come in the mail IMMEDIATELY!

    Even $3-4,000 can add up to a lot, depending on the interest (and how much it will go up when the introductory offer is gone). Ask any financial adviser, the first thing they tell you is to get rid of credit card debt, even small amounts. If you're not going to do that, you may as well give it to BBK, it will have about the same effect for you -- a quick gratification with nothing real behind it.
  9. Abbey

    Abbey Spork Queen

  10. busywend

    busywend Well-Known Member

    Figure out where you are paying the highest interest first. If your car loan is at 20% and you have 3% on your credit card.....

    Pay off where you are giving away money. Literally - giving it away. Might as well send to BBK or better yet - MOI!
  11. flutterbee

    flutterbee Guest

    You're going to gain some interest in a savings account, but not much. And certainly nowhere near enough to offset the interest being charged on your credit cards and/or car loan. Probably your credit cards have the higher interest rate. And if you're making only minimum payments on your credit cards it can take years - literally - to pay them off. So, that's where I would apply it first.
  12. Hound dog

    Hound dog Nana's are Beautiful


    BBk you beat me to it!!! (thanks, I really needed that belly laugh)

    Tina, all I can tell you is what husband did last year. It really impressed me as it isn't something husband usually does, or would even consider. AND it helped us tons the rest of the year.

    husband paid all of the monthly bills that could be paid ahead, like the phone cable trash car insurance, for the full year. You wouldn't believe what a huge help that was.

    That is one of the reasons I was so disappointed when we found out we wouldn't be getting it this year. We were planning to do it again.

    Oh, and if you stil don't know what to do with it.... I'll share with BBK.

    555 Poverty Lane
    Bankrupt Oh 00000

  13. totoro

    totoro Mom? What's a GFG?

    I agree... about sending it to the board members!!! JK
    We just rolled our debt over to the lowest % accounts. Paid off as much as we could... So it was all in the lowest as possible. I agree it is important to keep 1 CC, for emergencies, credit checks, future purchases etc.

    I also have done the pay bills ahead of time, especially when we travel... I will pay a month extra on phone, cable, heat etc.
    It is really nice to have the break from bills...
    I also always keep some cash in the house in a safe... whatever you can spare, it is supposed to be enough to live on for a month!!! But come on... I try to keep 500$ to 1000$ as an emergency stash... so if I had to leave or something horrible happened or if a repair man came to the house and needed cash... I have to use it all of the time... so it is not always there, but I try.
  14. Fran

    Fran Former desparate mom

    Maybe I'm an alarmist but I think you always need a secret "stash" for emergencies.
    I know that the text book way is to pay off high interest debt and reduce monthly payments but I still think that a portion should be squirreled away and almost forgotten. I define emergencies too. I'm sure everyone has their own idea's but for me it's medical emergencies, car emergencies and funerals. If you add 10.00 more a month, it grows without you even looking at it.
    Maybe a balance of paying things off and saving for an emergency is a good way to go.
  15. Mikey

    Mikey Psycho Gorilla Dad

    tinamarie, you're going to get a lot of different answers, so I'll throw in my two cents.

    If you have a lot of different debts, I'd look to pay at least one of them off. After years of playing the "shift the CC debt to a lower rate" game, that the minimum payment on multiple cards is still extremely high. Eliminating just one such source of debt can dramatically free up some of your cash flow.

    Additionally, I'm a big believer in credit unions. While the best rate I can get for one of the "rewards cards" is 13.5%, my credit union is offering 2.9 on transfers (without fees), and then a constant rate of 8.9.

    My personal plan is to carry two cards: one platinum/signature card with a high limit (for real emergencies), and then a card with my credit union with a very low limit for daily expenses. The only reason I do that is that I've become addicted to the convenience of plastic, and hate writing checks. I even hate the extra time it takes to type in my PIN for debit cards. On my new card, the limit will be what I KNOW I can pay off at the end of the month.

    But, to get there, I need to start eliminating the many sources of debt I have, each with their own high minimum payment. So, If I were you, I'd try to whack one source of debt, then shut it down. That may not be the best thing for you, but that's what I'd do, and you asked :) .

  16. Big Bad Kitty

    Big Bad Kitty lolcat

    Tina Darlin, I'm glad you have a sense of humor, and that you know I was only kidding.

    See, I've NEVER had extra money, so I would not know the first thing to do with it... ;)
  17. Star*

    Star* call 911........call 911

    Tina -

    So thoughtful of you to think of ME when you had extra money.

    My thought actually was to consolidate your loans and have one payment with low monthly interest and then invest the bulk of your money in a high yield savings account that would draw automatically for monthly payments to your consolidated loan. IRA's are good depending on whom you use. If you are concerned find a good financial advisor. I don't know that I would invest in any stocks right now - but Bonds are good all the time.

    As far as your car - Call the lender and ask if you made a cash payoff today what deal they would give.

    As far as your house? You can pay off a 30 year mortgage in 15 years simply by adding $100.00 a month to your principal payment.

    But you can send it to me if you WANT to - lol. Or the orphans in kittyville. ~I handle THAT account.

    And weren't you on the healthy living board for loosing a little weight young lady? What is all this talk about buying food?

    Hows your Hubby doing? Is he still saluting officers?
  18. tinamarie1

    tinamarie1 Member

    Star...nope not me on the losing weight board. I wish it were though.
    Hubby saluting officers? Im confused? He is an officer...is that what you mean?
    We don't own our house, we rent. Its crazy where we live, you cannot find a house that is affordable to buy, but you can find one that is very nice to rent that you can afford.
    I feel like we are throwing away money every month on rent when we could have that money going into escrow if we owned, but lenders are very hesitant to deal with people like me who have filed bankruptcy in the past (5 years ago).

    You all give great advice, keep it coming!
  19. donna723

    donna723 Well-Known Member

    I've never had the problem of what to do with "extra money" so I won't be any help at all! Never had any!

    To me, "extra money" means I'd maybe throw a few more things into my cart at the Wal Mart.
  20. Star*

    Star* call 911........call 911

    Salute was code for military man - in case you know who is monitoring us...lol.

    If you have never owend a home check into Fanny Mae foundation. Google it - I'm not sure if you have to have good credit or not...but, it's worth a try. There is another one Something Mac - for first time home buyers.

    Actually IF you are thinkin in the future of buying a home - the more money you have in savings the better....but seriously consolidate your credit cards - and make ONE payment a month or pay them off. Always good idea to call and ask if you pay them off today - would they give you a break.