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10 Things You Can Do With Extra Money to Improve Your Financial Situation

Whenever you obtain extra money, it is an opportunity to take your finances to another level. Instead of racing out to spend it frivolously, I encourage you to consider how you can put that money to use in a way that propels your financial situation forward.

  1. Pay off a debt  When you pay off a debt, it will instantly increase your monthly cash flow. This is something we call “monthly margin” around here at I Was Broke. Now I’m Not. Plus, what other financial decision is more rewarding than making a debt leave your life?
  2. Buy yourself out of a membership/subscription  Things like cell phone contracts, gym memberships, satellite tv subscriptions, etc. Many people keep an unwanted subscription around simply because they don’t have the money to buy out the few months ‘cancellation fee’ required to cease service. This allows you to gain monthly margin and makes an annoying expense begin to fade in your rear view mirror!
  3. Build savings  Increasing your financial reserves/cushion/margin – something we call “reserves margin” around here at I Was Broke. Now I’m Not. – is never a poor decision! This positions you to accommodate unexpected financial challenges or pursue an opportunity.
  4. Invest for retirement  $1,000 extra today will be worth $3,300 in 10 years, $10,893 in 20 years, $35,950 in 30 years and $118,648 in 40 years. Get #FiredUp!
  5. Invest for college  $100/month will be worth $8,167 in 5 years, $23,004 in 10 years, and $75,786 in 18 years. Excellent decision!
  6. Obtain more education/certifications  Knowledge is power and can equal a substantial increase in your income and your value to the business you conduct.
  7. Purchase a(nother) home  Real estate is one of the time-tested ways for people to build wealth. Plus it can produce additional income using a service like VRBO, Homeaway, or AirbNb
  8. Become a private investor  There are lots of ways to become a private investor. You could start a small business. Maybe acquiring a minority stake in a larger existing business is more your style. Angel investing has been very popular over the past decade. Hard money lending is another way to put your extra money to work. Perhaps being a silent partner in a franchise could be more suitable for you.
  9. Vacation  A great leader once shared this formula with me: Change of pace + Change of place = Change of perspective | I’ve found it to be true. There is something about “getting away from it all” that helps you achieve clarity on your next steps.
  10. Give it away  There’s something powerful about giving money away. One friend told me that he “gives because it keeps him from becoming greedy.” When I give money away, it makes me want to make better money decisions so I can give even more. It connects to the “perspective” part of the equation I shared in #9.

No matter what decision you make, choose to put the extra money to work for you. Your future self is depending on you!

3 Financial Steps You Can Take RIGHT NOW To Help Launch 2016

“You never have to recover from a great start.”

This is a great quote that can apply to your financial journey for 2016! While we’re still a couple of weeks away from the new year, you can take steps right now to launch into 2016 with a financial fury!

5 Financial Steps You Can Take RIGHT NOW

  1. Open a 529 College Savings Plan for each of your children (or grandchildren)  One of the greatest blessings a child can receive is a college education free from the burden of student loans! Plus there are usually tax incentives for investments into your state’s plan!
  2. Open an online Savings Account (and start saving for Christmas 2016!) I am a big fan of online savings banks, and have held my savings there for years.
  3. Increase contributions to the retirement account (401k, 403b, 457, TSP, SEP-IRA, IRA, Roth-IRA, TFSA, RSP)  Even a 1% increase can completely change the trajectory of your financial future!

These three steps could be completed in less than 30 minutes. Why not do it now?