Published on March 24, 2021
Have some extra savings?
Having some unexpected extra cash is a pretty nice feeling.
With stimulus checks, performance bonuses, and tax refunds circulating across the country, there’s a sudden increase in savings account balances.
Our goal is to help you achieve the life you desire, which means something different to everyone. No matter what your goals or desire are, we want to help you reach them, so here’s a few things to consider while contemplating the best use of your “extra” funds.
Increase your money’s impact
It’s common to want something safe, like a savings account, after the uncertainty of the past year. But if those extra dollars are needed immediately to catch up on payments, you could put them to work for you and actually increase their impact. Money that sits in a checking or savings account tends to get used for things you don’t really need, like extra trips for specialty coffees or kitchen gadgets that are seldomly used. Before you know it, the money is gone and you didn’t really put it to good financial use.
Here are a few things to consider:
Make your dollars go further
If you’re planning a family vacation later this year, use your check to purchase airline tickets now, while the prices are lower. You’ll get more bang for your buck for something you were going to purchase anyway. With the money you’re saving on tickets, perhaps you can build a few “extras” into your vacation budget like a fancy meal or two or another fun activity.
Save on interest
Put some of that money toward the principal on your mortgage. Every little bit helps when you’re paying a 15- or 30-year mortgage. The same holds true for your car. Make an extra car payment this month while you have the extra cash. Remember, you’re paying interest on all your loans, so reducing the principal on a mortgage or auto loan can really save you some money. For more on how interest rates can affect your payments, check out this blog.
Invest in yourself
Put a little more into your retirement account or consider investing some of that money. You will typically earn more than a standard savings rate. Plus, that money is now out of your account (free from temptation) and working for you.
Start, or add, to your emergency fund
It’s nice to be prepared. While you have some extra money, set some aside to take care of yourself in case of an emergency. Many experts agree that a good starting point is $1,000. After that, you can adjust that sum to fit your particular lifestyle.
Increase the value of your home
Use some of that extra money to get started on home improvements. If it’s something small, like a coat of paint or new sink, you’re all set. If you’re considering major home improvements, you can get started now with your additional savings and then finish it up with the help of a home equity loan or line of credit. Here’s a good place to start. If you’re going to be working from home more now, a new home office would certainly come in handy. Transform an extra bedroom, section off some space in the basement, or tear down some walls and start from scratch. Keep in mind that improvements like this will add to the overall value of your home.
Get rid of your credit card balances
If you’re caught in that monthly cycle of paying interest on your credit cards, considered paying them off now that you have the extra funds to do so. You will be amazed at how good you’ll feel (and how much you’ll save) once those cards are paid off and you’re debt free.
Increase your down payment
If you’ve been thinking about a major purchase such as a boat or an RV, or even a new home, you can use your extra savings to make a larger down payment than you originally planned, which will help you structure a monthly payment that fits your budget.
Use your economic stimulus check to stimulate your local economy
- Purchase some gift cards to your favorite local restaurant, hair salon, or movie theatre. Your local businesses need you now more than ever.
- Make a donation to your favorite charity. Now is the perfect time to use some of those extra funds to make your community a better place to live and work. You can partner with the Community Choice Foundation to help raise $100,000 for their scholarship program which awards $100,000 in scholarships each year. Also, keep in mind that food banks like Gleaners and Forgotten Harvest need your donations now more than ever.
- Use some of that money to give extra big tips to delivery people, restaurant workers, or the service that shovels your snow or cuts your grass. These industries were hit extra hard in 2020, and your generosity could make a world of difference.
Have some fun
After the past 12 months, we could all use a little fun. Embark on an adventure or splurge on something you’ve always wanted. Plan a trip. Upgrade the entertainment system. Take a class.
You’ve earned it.
If you’re considering investing some of your funds, Community Choice has a team of experts who can help you get started. Click here for more information.
For information on our Home Equity Loan or Line of Credit, click here.
If you were economically impacted by the shutdowns of the past year, there are options and we’re here to help. Please give us a call at 877. 243.2528.