What Would You Do With $1,000?
If you suddenly had $1,000, what would you do with it? Would you save most of it, spend it on a new bike, or buy a plane ticket to Paris? That's the question I put to three personal finance bloggers, all of whom have very different approaches to spending and saving. Over the next few days, I'll be posting their answers to that question, and their responses to each other's choices.
Then it's your turn. In the first edition of the Alpha Consumer Challenge, the question is: What would you do with $1,000 that dropped unexpectedly into your hands? To participate, just post your answer below. I'll pick the three choices that are the most creative, savvy, and also realistic (of course, there is a lot of subjectivity in those criteria), and then we'll pick the best one in a vote. The winner will get his or her name and photo posted on the blog and also receive a copy of Curtis Arnold's How You Can Profit From Credit Cards.
First blogger up: J.D. Roth from Get Rich Slowly:
Before I took charge of my money, I would have spent the $1,000 wholly on stuff for myself: bike gear, comic books, videogames, a vacation. I probably would have spent more than $1,000, actually, incurring more debt.
While I was digging out of debt, I would have used 10% ($100) to indulge myself in the same way, but I would have applied most of it to paying my bills.
It's strange, but now that I'm out of debt and can afford to spend money on myself, I find I don't want to. I'd rather save. Before, I spent money on myself because I felt like I couldn't afford the things I wanted. Now that I know I can have the things I want, I don't buy them.
For the past few months, I've been putting all of my spare cash into a high-yield savings account. That's what I plan to do with my economic stimulus rebate, and that's what I'd do with a $1,000 windfall.
I'd rather save for bigger goals than just a new bicycle. I'm saving for a new car. I'm toying with the idea of paying off the mortgage early. I'd love to visit London again. I won't be able to do those things if I spend my windfalls on the smaller things now.
That's what J.D. would do with the money—what about you?
Tags: money | personal finance
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Reader Comments
Debt Free
As I am a founding director of a global networking system I have been taught and now teach 2 simple success principles. 1. Tithe to charity and 2. Pay yourself first.
With $1000, even today, I would give 10% to charity, 10% to an IRA (or invest in a part time business), and the rest towards "handling" life. If a 20 year old would put $100 per month away in a compounding interest entity, by the time he/she was 60, there could be well over $1 million in the account. This is what I have done and will continue to do and teach others to do.
As a grad student, I get paid significantly less during the summer than during the academic year (don't ask me why that is -- I have just learned to accept it). Unfortunately, summer is also the time when I like to visit college friends who are scattered around the country, since the weather is nice and they are usually less involved with their own grad programs. Even though it might do better going toward my student loans, an unexpected $1000 would likely go into my travel fund. What can I say -- I miss my friends!
What I would likely do...
is splurge a little, then use the rest as if it were just extra regular income, with an emphasis toward savings.
I think it would be important to use this windfall for a small luxury. Karma has given me something out of the ordinary and I should use it for something fun and cool and possibly not the smartest thing to do. I would use the $100/day rule before picking this item. If I wanted to get something for $300, I would have to wait 3 days then I could buy it. I would limit this to up to 1/2 of the money.
Then, whatever is left, I would do whatever I would be doing with extra money in my paycheck. If I was paying down debt, i.e. in the Ramsey baby steps, I would use it for that. If I was saving for a particular goal , like a house or school, then it would go there. Or to retirement.
Key for me would be to use some of it for a pure want to celebrate my fortune and perhaps the item will remind me of that, and then also to use some of it practically to make my financial life better.
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