what to do with an extra 1k a month...

Discussion in 'Community Discussion' started by glocke12, Nov 9, 2010.

  1. glocke12 macrumors 6502a

    glocke12

    Joined:
    Jan 7, 2008
    #1
    So Ive picked up some part time work to help pay some bills. After all is said and done, Ill have about an extra $1,000.00 USD a month left over. Looking for suggestions on what to do with it.

    Are there any good mutual funds out there that I should be looking at?
     
  2. wvuwhat macrumors 65816

    wvuwhat

    Joined:
    Sep 26, 2007
    #2
    I was in the same situation about 2 years ago. I chose to invest in Ford and it worked out...REALLY WELL.
     
  3. glocke12 thread starter macrumors 6502a

    glocke12

    Joined:
    Jan 7, 2008
    #3
    so you just bought ford stock through etrade or something?
     
  4. zhenya macrumors 603

    zhenya

    Joined:
    Jan 6, 2005
    #4
    If you don't have 3, preferably 6 months salary in readily available savings, I would put it there - perhaps in an online account that earns better (although currently still pitiful) interest than your local bank likely does. It also makes it somewhat more inaccessible that way.
     
  5. briguy21 macrumors newbie

    Joined:
    Aug 29, 2009
    #5
    Save the Money

    If you still have debt and the 1K is left after you make all your payments then put it towards the debt and payoff the debt, then you have even more money monthly.

    Investing a great idea, however I would not put it into stocks. Put it into something less risky.

    These are just my thoughts.

    Brian Robinson
     
  6. ucfgrad93 macrumors P6

    ucfgrad93

    Joined:
    Aug 17, 2007
    Location:
    Colorado
    #6
    I follow Dave Ramsey's advice.

    1. Put away $1000 in an emergency fund.
    2. Pay off debt, with the exception of house.
    3. Set aside 3-6 months in living expenses.
    4. Invest 15% of income into retirement accounts.
    5. Save for children's college.
    6. Pay off house.
    7. Build wealth and give

    http://www.daveramsey.com/new/baby-steps/
     
  7. Rolvag macrumors regular

    Rolvag

    Joined:
    Apr 2, 2010
    #7
    As a Financial Advisor I will go one step further.

    I reconmend you do these steps in the following order;

    1. Put away 4-6 Months of Living Expenses as a Emergency Fund, place this investement in a Bank account or a Very Conservative investment such as a American Funds Mutual Fund Gov Bond.

    2. Pay off all your debt except your house.

    3. If you are young and healthy look into a Whole Life Insurance Policy. This is especially true if you are married and / or have children.

    4. Max out a IRA.

    5. Place the balance of the $1,000 after the Life Insurance and IRA, into a Mutual Fund, Stocks, or other investment. What kind cannot be truely answered here becuase I do not know your age and your risk profile among other things.

    6. Saving for childrens College; Thats a whole discussion in itself, but I would place this under #5.

    7. Build Wealth, but again, thats #5...

    My 2 cents....
     
  8. Btrthnezr3 macrumors 6502a

    Btrthnezr3

    Joined:
    Aug 5, 2010
    Location:
    Texas
    #8
    Wow, I feel like I'm getting somewhere in my financial life.

    I am a teacher, so I make squat but...

    I've got 1 done, almost finished with 2 and will be on with 3 before 2011. Yeah! That makes me feel good.

    Give me a few more years and I'll be creeping up on 5 and 6. :D
     
  9. kmaute macrumors 6502

    kmaute

    Joined:
    Oct 5, 2008
    Location:
    USA
    #9
    Highly recommend against Whole Life insurance. No offense Rolvag, but do you happen to sell whole life? No one seems to recommend it unless they're trying to sell it. If you have dependents, buy 10x your income in term insurance. Do your investing separate from your life insurance - they have horrible rates of return.

    Follow the Dave Ramsey baby steps as stated, they'll lead you to prosperity. Pick up a copy of his Total Money Makeover and maybe, if you're feeling adventurous - The Millionare Next Door by Thomas Stanley. Good stuff.
     
  10. eawmp1 macrumors 601

    eawmp1

    Joined:
    Feb 19, 2008
    Location:
    FL
    #10
    Avoid whole life like the plague. The only person who benefits is the broker. Take out as much term life insurance you can to get to get your kids through college and you spouse financially secure. Let it lapse when the above is completed. As about $2-3 million should only cost $1500/year assuming low risk), invest in age-adjusted 529 plans for your kids for college.
     
  11. fivepoint macrumors 65816

    fivepoint

    Joined:
    Sep 28, 2007
    Location:
    IOWA
    #11
    I don't know about your 'Whole Life' suggestion, Term makes sense for most people from what I've read. I have term. That being said, Whole Life does force you to save for the future... and for those among us who can't be trusted to save on their own, this is a really good idea.

    The one thing I REALLY think you nailed though is saving for your emergency fund. In the list posted here attributed to Dave Ramsey, I'd say the order is way out of whack. If you pay off your student loans, credit cards, etc. BEFORE you save several months worth of income, you're making a big mistake. One small change in revenue or expense could RUIN you. Saving 3-6 months of salary is an ESSENTIAL first step.
     
  12. kmaute macrumors 6502

    kmaute

    Joined:
    Oct 5, 2008
    Location:
    USA
    #12
    Dave Ramsey teaches that personal finance is 80% behavior, 20% head knowledge. He believes that a little bit of panic and stress forces a person to push harder and sacrifice more than if they're sitting on a pile of money. I'd agree with you, but in practice, I have seen far more results with a strong drive "gazelle intensity" than going along. Dave Ramsey also recommends only doing so if you're financial situation is stable. Obviously, if you're on unemployment or facing foreclosure - the TMO doesn't apply. People constantly disagree with him on this matter but his results speak for themselves. Read the TMO for more info.
     
  13. fivepoint macrumors 65816

    fivepoint

    Joined:
    Sep 28, 2007
    Location:
    IOWA
    #13
    It makes sense to a certain level... I think for many people he's right on the money with his 'snowball' approach to paying off debt as opposed to paying off the highest rate first. However, I still think that in this instance, for most people, in this economic climate, he's still wrong regarding saving 3-6 months salary before paying off student bills, etc. Even if your situation is 'stable' companies are laying off, markets are changing, there's massive unemployment and many economists think its going to get worse before it gets better.

    Just seems like a more safe approach. If the worst happens, you're insulated. If nothing happens, you're just a few months (maybe a year or so) behind where you would have been otherwise.
     
  14. fivepoint macrumors 65816

    fivepoint

    Joined:
    Sep 28, 2007
    Location:
    IOWA
    #14
    Glocke12, it might help if you gave us a few more specifics regarding your financial situation. Specifically how much and what kind of debt you have.
     
  15. dmr727 macrumors G3

    dmr727

    Joined:
    Dec 29, 2007
    Location:
    Southern California
    #15
    I can't believe you're asking this.

    Hookers and blow, of course!
     
  16. grapes911 Moderator emeritus

    grapes911

    Joined:
    Jul 28, 2003
    Location:
    Citizens Bank Park
    #16
    Check out a Roth IRA. You can only put so much money in it per year, but it generally is a really good way to save for retirement.

    The OP said an extra 1k a month. Hookers and blow are already factored into my normal monthly expenses.
     
  17. Statik macrumors member

    Joined:
    Aug 22, 2004
    #17
    First off, take anything you find on the internet with a grain of salt. Too many get rich schemes and bad advice out there.

    Get yourself a proper financial adviser. They will ask you all sorts of questions you never thought of yourself. With my bank before they allow you to make any investments they have a process in place where they interview you to determine how much risk tolerance you have. They asked me about my age, financial security, personal risk aversion, income fluctuations, short and long term goals for the money and any other financial commitments to help me decide on what was best for me.

    Once you've done that, set up automatic contributions that come out as soon as possible after you have the money in your account. This lets you take advantage of dollar cost averaging, but more importantly, you get used to living without that money and are not tempted to spend it on a new toy.
     
  18. glocke12 thread starter macrumors 6502a

    glocke12

    Joined:
    Jan 7, 2008
    #18
    thanks for all the advice,I appreciate it, but I asked for mutual funds for a reason.

    1) I already have 4 months of income saved up

    2) Aside from a new vehicle that I just bought the other week for a low interest rate, and my mortgage I have no debt.

    3) Not married, no kids, dont need term life insurance.

    4) Based on prior experiences with financial advisors, Ive come to the conclusion that unless you have tens of thousands or hundreds of thousands to invest they arent worth the time or money.


    Hookers, blow, ganja, internet porn, et.al are all factored in. The 1k is free and clear extra money that I am looking to invest in a mutual fund that realizes decent gains over the medium/long term time frame (5 years or more).
     
  19. ucfgrad93 macrumors P6

    ucfgrad93

    Joined:
    Aug 17, 2007
    Location:
    Colorado
    #19
    In that case, I'd recommend a good index fund or ETF. I have invested in an ETF that track the S&P500. It's symbol is SPY.
     
  20. kmaute macrumors 6502

    kmaute

    Joined:
    Oct 5, 2008
    Location:
    USA
    #20
    In that case, pay off the car. A new vehicle is the biggest purchase that an average person makes that literally plummets in value. Regardless of the interest rate, pay it off as quickly as possible. Then, start investing 15% of your income and dumping the rest on the mortgage.
     
  21. senseless macrumors 68000

    senseless

    Joined:
    Apr 23, 2008
    Location:
    Pennsylvania, USA
    #21
    The big mutual fund companies like Vanguard and Fidelity offer low cost, all in one target retirement funds that cover all the bases. They adjust as you age and require no thought.
     
  22. fivepoint macrumors 65816

    fivepoint

    Joined:
    Sep 28, 2007
    Location:
    IOWA
    #22
    If your employer has a 401k matching program, do that first. If not, do a Roth IRA. No point in paying extra taxes unless you have to!

    Also, how about some other ideas like some real estate? You could buy a rental property with that amount of money per month to go towards a mortgage. Steady income is good!
     
  23. pimentoLoaf, Nov 10, 2010
    Last edited: Nov 10, 2010

    pimentoLoaf macrumors 68000

    pimentoLoaf

    Joined:
    Dec 30, 2001
    Location:
    The SimCity Deli
    #23
    Spend lavish amounts of game-gold in a MMOG. :D

    Seriously, get a CD that renews every six months or so, and then add in those extra month's thousands you have left over at each renewal. I did that recently when one of mine matured, though mine are for a 3 year maturity.
     
  24. miles01110 macrumors Core

    miles01110

    Joined:
    Jul 24, 2006
    Location:
    The Ivory Tower (I'm not coming down)
    #24
    SPY is an awful index fund. Unless you like 5-year roller coasters.

    http://www.google.com/finance?client=ob&q=AMEX:SPY
     
  25. kmaute macrumors 6502

    kmaute

    Joined:
    Oct 5, 2008
    Location:
    USA
    #25
    CD = Certificate of Depression. It's almost as bad as buying a new car. Read the Millionaire Next Door by Stanley. If you can clear an extra grand a month, you can be ridiculously wealthy if you control your spending, get out of debt, and then invest heavily.
     

Share This Page