Tuesday, March 11, 2008

What should I do with an extra $2,000?

I just got word from a fellowship program, and I'll be getting an extra infusion of cash this summer. I'd forgotten about the program entirely since I thought the possibility of receiving it was remote. Somehow, I always manage to look good on paper even though my accomplishments aren't particularly significant.

Based on my projections, I should be able to handle transitional expenses, fully fund a Roth for the first year immediately, keep a $10,000 liquid reserve, and still have grocery money until I get my first paycheck using only my current savings. I don't have any debt to put this toward paying off. (Yep, a full scholarship with stipend, generous parents, summer jobs, and frugal habits add up. I know I'm lucky and have had it very, very easy.) All the obvious bases are covered so this is genuinely extra money.

It's a nice problem to have, but I really don't know what I should do with this money. My first impulse is to give part of it to charity, but I don't think I'll donate with the entire sum. I could use it to increase my first year of contributions to a 403b, invest in index funds or ETF's in taxable account, put it in savings toward a down payment on a house, or buy a several year supply of really good dark chocolate. The most appealing option at the moment is to set up a 529 plan for future children or hypothetical nieces or nephews and pass this good fortune along to another generation, but I haven't thought eveything through yet and am open to any suggestions.


Anonymous said...

Congratulations! Extra money? Why, I can take it off your hands. Just kidding. I can always find extra money a home in my budget/life

If it were me. . . I'd use it to invest extra in the 403b or save it to invest. Investing in a taxable account is an option too, but that is not what I'd do.

I can't muster up a charitable spirit like I should, but charity is a great option for part of it, as is a 529...

Or you could go on a shopping spree to stimulate the economy (kidding).

Anonymous said...

Saving/investing is a good idea, but along the charity lines, you could save it to use for your classroom and school supplies for the kids.

Since you're unsure of what the classroom conditions will be, it might be nice to have some extra set aside for this purpose, and to help out any kids that may not have some of the school supply basics (notebooks, binders, paper, pens, pencils, etc)

A said...

You'd be amazed at what kind of money you're going to spend in your classroom. There's a lot that you'll need the school won't provided.

I'd set it aside from that, I've got to dig out my receipts for tax purposes but I'm pretty sure I spent about that amount this year.

One thing to think about, I didn't see a paycheck until Sept. 15th and I had been working since August 1st. Some extra money would have made those times easier.

Keep it in savings, throw what you have extra into the Roth for 09 or into your 403b.

Marilyn said...

I'd stick it in an online savings account and earmark it as "The trip of a lifetime fund"

"Future Millionaire" said...

I wouldn't make any immediate money moves. I'd stick it in savings and wait for a little while.