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Buying the Good Stuff

November 5th, 2006 at 08:44 pm

I received an email today with a great question. Here it is ďHey Jeremie Iíve been reading your blog for about 2 months now and I have a question. I just ran into a pretty large amount of money. Well to me itís big money. My grandmother gave me $2,500 and I am trying to decide what to use it for. I donít have any debt, Iíve already maxed out my IRA for this year, and I have six months savings already built up. What should I do?Ē

First, I would like to congratulate you on your successful savings habits. It seems you are on the right on track to a very early retirement. I would love to be in your position right now! There are a few recommendations that I would do based on the information you sent me.

Do you own a home?
Yes- See if you need to purchase anything around the house that might need to be replaced. Small home improvements are always a great investment too.
No- Open a separate savings account for your home. Try to save around 20% of the down payment. I know it seems high but thatís just a target. Use a high interest online savings account.

Are you currently married?
Yes- Consider taking a small vacation with your wife. Itís always nice just taking a quick getaway before the holiday season.
No- Save for a ring so you donít have to go in a huge amount of debt when you decide to pop the question. Itís always good to have some sort of down payment on the ring.

Do you have kids?
Yes- Start saving for their education. As you know even a little can go a long way with compound interest. ďCompound interest is the most powerful force in the universe.Ē - Albert Einstein
No- Put more money into your online savings account and save it for the holidays or an extra rainy day fund.

You can also invest some into something that will create passive income. These are just a few suggestions I would consider doing.

6 Responses to “Buying the Good Stuff”

  1. Broken Arrow Says:

    If he doesn't have an emergency fund, this amount would be a great start. I'm tempted to say that that's the way to go. Otherwise, it wouldn't hurt to roll it into a CD until he can decide what to do. Taxable investments wouldn't hurt either.

  2. Ima saver Says:

    I would open a mutual fund.

  3. JRBeaudry Says:

    He already has the emergency fund set up. I like non taxed items before taxed. Repairs on the house(if he owns one) is the best bet, and it makes everyone happy

  4. PRICEPLUS Says:

    Emergency fund first. The look at ETFs and Mutual Funds.Smile

  5. amelia earhart Says:

    You could invest part of these funds to generate additional income and thus bring you additional benefits.

  6. essays Says:

    in this product it is necessary to understand precisely differently can nothing will turn out

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