Six Wise Ways to Spend a Raise

Here's a piece from Kiplinger's listing their six wise ways to spend a raise I've touched on this topic before in Six Great Ways to Spend a Raise, but I like what Kiplinger's has to say a bit better. Their list:

1. Pay off high-interest debt.

2. Build an emergency fund.

3. Add to your retirement savings.

4. Contribute to a flexible-spending account.

5. Add the extra money to your mortgage payments.

6. Use the money to beef up your kids' college fund.

My thoughts on each of these:

1. Great idea. Doing this can earn you a 20% guaranteed return.

2. If you don't have one, you need to get an emergency fund now.

3. Contribute enough to get the full company match (if you have a 401k that offers this benefit). Doing so can provide you with a 100% return on your money. If you don't have a matching 401k, go with a Roth IRA.

4. Good idea. Not a home-run like the first three, but still a worthy suggestion.

5. I like this idea -- even if my readers hate it. ;-)

6. College is going to cost you a bundle, so there's no better time to start saving for it than now.