Tuesday, January 25, 2011

Stretch That Extra Dough

Have you noticed a little extra dough in your paycheck lately? I really haven't, since I'm (mostly) self-employed, but we have seen a slight upswing in my husband's pay stubs.

The money comes from the tax compromise bill passed by Congress and signed by President Obama last month. For most middle-class Americans, the extra money adds up to about $100 a month.

Doesn't seem like a lot? It's not, but if you manage it carefully you can make an impact on your long-term financial survival, says Brent Neiser of the National Endowment for Financial Education.

The nonprofit organization suggests these six tips for using that extra money:

1. Build up an emergency fund. Tuck that extra money away into savings. Even a modest amount—as little as $500—can help soften the blow of typical unexpected expenses. If you already have an emergency fund, give yourself an extra boost toward reaching that three-to-six-month-living-expenses recommendation. If you have yet to establish a plan, learn how you can maximize your savings.

2. Pay down credit card debt. Is high-interest credit card debt weighing you down? Use your extra money each month to make higher payments toward that alarming balance. First, attack the card with the highest interest rate. If you can pay off the card in full, that’s even better. For more tips on dealing with debt, click here.

3. Avoid the holiday shopping hangover in 2011. Use the money to establish a holiday savings account for your gift purchases this year. After all, this is an expense that you know you will have, so set aside a little each month starting now. Be sure to put this money in an account separate from your other savings.

4. Be good to your car and your home. Use your additional money to help out with costly, but necessary, maintenance and repairs to your home or vehicle. Replace that leaky roof or buy new tires for your car.

5. Invest in a retirement plan. Enhance your future now by using your money to invest in a tax-deferred retirement plan. If you have an Individual Retirement Account (IRA), boost your contribution amount. (Be sure you understand your annual contribution limits.) If you don’t have a retirement account, learn more about them here.

6. Treat yourself. If you have all of the above covered, then it’s OK to reward yourself, but do so responsibly. Put your extra money toward a vacation or a flat-screen television. Just be sure to maintain your fiscally-savvy ways by finding the best deal, and click here for tips on making a major purchase.


  1. These six tips which are given by the non profit organizations for using that extra money are seems to be very beneficial. Therefore we can use those beneficial tips.

  2. Glad you find them useful! Thanks for visiting.

  3. In our household it comes to about $6 a month! I wonder what we're doing wrong...