Where to Put an Unexpected $5,000, Part 2

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Last updated on July 23, 2019 Comments: 2

CNN Money has 43 suggestions for those who come upon an unexpected $5,000 based on the market right now. I didn’t particularly agree with each suggestion I’ve looked at so far. Let’s see how CNN Money does with the next batch of suggestions.

8. Best reality check: Eight hours with a financial planner
9. Best career moves: Go to conferences on your own dime
10. Best career moves: Go to conferences on your own dime
11. Best career moves: Hire a mentor
12. Best retirement moves at any time: Up your 401(k) contribution
13. Best retirement moves at any time: Open a Roth IRA
14. Best moves near retirement: Pay down your highest-interest credit-card debt
15. Best moves near retirement: Invoke “catch up” provisions

These suggestions are good. Spending time with a professional financial planner, who charges by the hour, not a percentage of assets under management, can be a good way to get some guidance that can be useful beyond the $5,000 is invested. For finding a financial planner, try the National Association for Personal Finance Advisors.

Would you pay to attend an industry conference? Participation in these conferences are usually priced high because the organizers know that corporations are willing to pay the price. I don’t agree that this will always pay off financially, but depending on the conference, the experience could be worth it. I’ve always wanted to attend South by Southwest, but I don’t see how I could justify my company (in financial services) to pay for it.

I am strongly in favor of using found money for education. Whether it pays off financially or not, exercising your brain has benefits that extend beyond just money.

While I think increasing a 401(k) contribution is a good idea, I don’t know if coming upon a lump sum of $5,000 is what should drive the increase. On the other hand, getting a raise or increasing income from outside the day job present the perfect opportunities for increasing the contribution. I recently increased my 401(k) contribution from 16% to 25% of my day job income. I’d like to max out this contribution but I don’t quite have the funds to do so yet.

On the other hand, using the money to invest directly in a Roth IRA is a great idea, and you’ll even have some of the $5,000 left over.

The next suggestion is a duplicate of the first tip. It’s a good idea for those who carry credit card debt. As you approach retirement, you don’t want to be wasting money on interest expenses.

If you’re 50 or older, you have higher maximum contribution limits in 401(k)s and Roth IRAs. Instead of the typical $15,500 limit for 401(k) accounts in 2007, older individuals can contribute an extra $5,000. That’s perfect in this situation. The Roth IRA limit is increased by $1,000 for those 50 and older, from $4,000 to $5,000.

These suggestions are somewhat better than the first bunch, and there are more to come.

Article comments

Anonymous says:

I’ve paid to attend conferences on my own in the past. And it’s usually hit or miss. Half the time they were worth it but I find you can spend all the money on conferences and still not learn anything if you don’t apply it. That’s the important part is following through after the conference.

South by Southwest is well worth the price! I didn’t pay to go this year (found some freelance work so I got in for free) but I had to work one of the days. But the tech, film and music festival combined make it a worthwhile experience. You can learn a lot from teh tech portion. And the film portion is incredible … there was a movie on the history of the Helvetica font.

If I had an unexpected $5,000, I’d put it towards more classes that would help me further myself – economics classes, business, psychology (trying to get a grip on the binge-eating) and art classes.

Anonymous says:

Having a mentor would be great, but I feel that mentors should be free. For me, teaching is a reward in itself.