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.
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