Got Spare CASH?

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Here's what you should really do with it !

If you had a tax refund, a gift of money from your parents, or maybe just a little money left over at the end of the month, what would you do with your “spare” cash? If you are like most people, your first impulse may be to hit the department store and shop until the cash runs out. While that may be a great way to put a smile on your face, it may not be the “best” thing to do. Here’s a more responsible sequence in which to use that extra cash and enable you to have more money in your pocket later.

• Pay Off Credit Card Debt First
Handing over a card to pay for your purchases doesn’t hurt…until the bill comes at the end of the month and you’re reminded of the debt. The problem is that credit cards typically have high interest rates. If you put off paying your bill, you may find yourself getting one item for the price of two or three. So use your spare cash to pay off those bills or debts. Remember, more cash out now means less interest payments and heartache later. Also, consider using a debit card which takes money directly from your bank account and stops you from buying if the money isn’t in your account.

• Tackle Student Loans and Mortgages
Once you’ve paid off your credit card debt, tackle student loans and mortgages. Though the interest isn’t as high as credit cards, it’s still worth your while to pay them off as soon as possible. Double your monthly payment and you will reduce the principal and reduce interest.

• Save, Save, Save
If you’ve paid off all your loans including that ten bucks you borrowed from your co-worker, then you should probably pay your bank a visit. It’s a good idea to save at least one-third of your extra cash. It earns interest, and you’ll sleep better knowing you’ve got some cash stashed away in the event of an emergency.

• Invest Wisely
Interest earned from putting your money in the bank is all very well; however, the interest rate is low. Consult a financial advisor advice on stocks or other investment options. Don’t put all your money into any one investment (remember how eggs in the same basket tend to get broken), and always bank some money beforehand—that way, if anything goes wrong, you’ll still have some cash on hand.

By spending and saving wisely, you’ll make the most of any cash you have, and you’ll get more cash later. This is one instance where it pays to have delayed gratification.

by Elizabeth Chayne