“Dolla-bills, ya’ll!” – Sorry about that gangsta-rap intro, but I’m really excited! I just received the refunded balance for my previous mortgage escrow account. Just slightly over $1,000!
As many of you know, I just completed a mortgage refinance about a month and a half ago. When you switch between the lenders, your old lender refunds any money that you had left over in their escrow account.
So in anticipation of this small windfall, I thought it might be fun to ask the question of what to do with $1000?
Ideas for What to Do With $1000:
Okay, $1,000 is not exactly enough to buy a cool car or fancy house, so we can’t get too carried away with our ideas. But for some people, this is the equivalent to an extra paycheck, and arguably a significant amount of cash.
So what to do with an $1,000?? Well, we COULD:
1. Totally blow it all! Between Home Depot, Guitar Center, Best Buy, and Banana Republic, I could destroy $1,000!
2. Start a new home improvement project. There is no end in sight to the list of things Mrs. MMD wants to do to spruce up the house. $1,000 would get us started on at least one or two of these projects.
3. Payoff some credit card debt. Fortunately, I have only one credit card with debt, and it happens to be a 0% interest card. So if I paid off this debt, it would be like getting a 0% return. But paying off debt does feel good!
4. Payoff some mortgage principal. Makes sense, right? Since the money came from my former escrow account, it seems plausible that it should go towards my new house payments. Since my new mortgage rate is 3.75%, then I’d essentially be getting a 3.75% return.
5. Payoff some auto loan principal. Similar to the mortgage, I could payoff some of the balance on my 2.25% auto loan which would essentially be like getting a 2.25% return.
6. Invest in my Roth IRA. Lucky for me, I have already setup an automated withdrawal plan to fully fund my account. But if you didn’t already have this, it would be a really good option!
7. Let someone else invest the money for me. I’ve been hearing a lot of good things about Betterment and have been considering signing up. In case you haven’t heard of this, Betterment is an investment service where you specify what your goals are and they do all the investing for you. In addition to doing all your dirty work, the fees are extremely low (0.35%) and they are even offering a $25 signup bonus if you start off with an initial deposit of $250 or more.
8. Buy another set of dividend stocks! For example, I could buy several shares of AT&T (Ticker: T) at around $30 per share and receive an annual dividend yield of 5.69% (or $57). However, this would also be really risky since you could end up losing your principal investment. On AT&T, analyst predictions see the stock going anywhere from down 16% to up 13%.
9. Take a mini-vacation. We’ve already got a family vacation planned this summer, but who says you can’t take two? $1,000 would make for a nice second get-away.
10. Take a mom & dad vacation. How about just me and wife getting away somewhere for a day or two? Is anyone available to watch the kids?
11. Go to the casino and bet it all on black. By far the dumbest option on this list, but I’ve always wanted to try it!
12. Put the money in my kids’ 529 college savings. In ten years, I’m afraid to think of how much college will cost for my kids. I keep reminding myself that the more I can put away now, the less student loans they’ll have in the future.
13. Put the money in my kids’ mutual funds. Outside of college, they will someday want a car and place to live while they are at college. $1,000 now could be $2,000 by the time they are ready for it. If you’re looking for a cheap place to start investing for your kids, let me suggest the Vanguard Star Fund. It has a minimum opening fee of just $1,000.
14. Donate the money. I was doing fine without it before, and I probably would continue to do so. There are a lot of other people who need $1,000 more than I do.
15. Buy a cute puppy! Wait, what!? How did that one get in there? – Sorry that was daughter’s suggestion.
Readers: Have you ever asked yourself what to do with $1000? Are you going to blow it, or put it toward something responsible? Anyone getting the puppy?
Related Posts:
1) Another Expense Reduced – Refinancing Your Auto Loan
2) Which is Better – Paying Off Your Mortgage or Investing the Money? – Part 1
3) 10 Tips for Saving More Money
Photo Credit: Simon Davison, on Flickr
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I already have a “puppy” and considering he doesn’t like other dogs I wouldn’t be able to buy another one.
With all “extra” monthly disposable income and any additional windfalls we’ve set up a method that works well for us:
xx% goes to spending
xx% goes to giving
xx% goes to the goal we’re working toward at that time.
It has helped us a lot because we don’t blow it all on spending but we also are able to have some fun with it!
WorkSaveLive recently posted..Recipe: Slow Cooked Beef Barbecue
Our Beagle doesn’t take kindly to other dogs either. That’s a great system to have in place for your finances. I’m glad to hear that fun is also budgeted in there as well!
Easy answer…throw it into my asset allocation and invest per my IPS (Investment Policy Statement). Love those refunds!
Too easy!! You’re not going to take me up on the trip to Home Depot?
I would either pay off the car loan principle or the mortgage principle. Well, I would right now – but if I had $1000 in my hand, I’d probably blow it.
Daisy @ Add Vodka recently posted..No Spend Days: What’s The Point?
LOL – That’s great! It’s really hard to be responsible when 4 digits get added to your bottom line!
For me I’d have to put it towards the huge tax bill I have to pay this month. Boy am I gonna get kicked in the ass for not managing my money better last year.
Modest Money recently posted..Modesty Reflected In Your Clothing
Ouch! Payments to the government are the worst kind of debt! How bad is it?
I personally like the puppy idea, but…I think it would be more responsible to make an extra payment on your mortgage. Not fun or exciting, just responsible.
DeniseGabbard@WriteandGetPaid recently posted..Monday Motivation: Successful Writer with Dogged Determination
Denise – Thanks for visiting! I think my wife is on my daughter’s team with the puppy. Personally, I’m leaning towards the new set of dividend stocks. It’s a little bit of a roll of the dice, but I think it has the best odds of paying off in the long run.
I will the following things if I get $1000
1. buy a gift for my wife
2. give some money to my mom
3. pay off some small debts
4. Buy some good stock with the remaining 80%
All good choices! I especially like that the first two are about giving.
I will squirrel it away to my retirement portfolio.
Shilpan recently posted..It’s the Economy, stupid!
Sadly, this is also what I’ll probably really end up doing. It stinks being responsible.
Whenever we get the month of mortgage payments from refinancing, we make a double payment the next month to make up for the increased mortgage size. It’s not like it’s really free money. And if it’s just escrow money, it will still need to go towards taxes and insurance later.
Nicoleandmaggie recently posted..What would you do if you didn’t have (to have) a job?
Hi and welcome to the site! I agree that it is not really free money. From the mortgage it came and back to the mortgage it will eventually go!
You’re absolutely right! You could really blow $1000 at any of those stores! So really I need $4000??
What a generous gift idea for your grandparents! It would be worth it just for Grandma to fly!
I might actually take your daughter’s advice. I really want a dog!!!! And, we’d almost have to have $1000 fall into our laps for me to think it were a sign that me and Fido were meant to be…
Michelle recently posted..A New Bike
Can you really put a price on puppy love? You might just have to work it into the budget!
I’d like to think that I would have sense enough to invest it, but I’m almost sure that I would just lose my mind and blow it.
First of all, you’re going to HAVE to write an update post and let us know what you do with it! Next, what would I do? Hmmm… I’d probably save it or pay down some big expense. I’m way too practical to have fun with windfall money.
Elizabeth @ Broke Professionals recently posted..Give Yourself Financial Hope
Thanks! I’ll have to remember to do that.
That would make the most sense! Not even just a little fun?
I’d vote for the mom & dad vacation, and then save the rest for your kids’ college. $500 can get you a really nice little getaway at a bed & breakfast and a couple of romantic dinners, and the other $500 can go to the kiddos.
Well Heeled Blog recently posted..Are You an Abstainer or a Moderator?
I’d love to take the mom and dad vacation! Unfortunately we have no takers on watching the kids for more than one day
we’ll go in 11 years after they move out.
Guitar center huh?! I like your style
But I would probably go for mix of putting some towards your mortgage, some into future savings (like IRA or 529 plan) and then maybe a small vacation/staycation. That’s pretty much what I did with my tax refund; putting most of it towards debt, some into savings and a little spending money.
Carrie Smith recently posted..6 Business Lessons to Learn from Facebook’s Instagram Deal
Thanks! Yes, Guitar Center fuels my other big hobby. But on the money, the responsible side of me will probably do some combination of the things you’ve suggested.
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With an unexpected 1000 dollars in hand, 60% goes to my savings, 20% splurge on blouse, 10% buy extra delicious food that I don’t usually get for my family and 10% stays in my purse, just in case
Welcome to the site Karin. Not a bad way to divide it up!
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