What to do with $1000

by Tom Tousignant

in Blog, Financial Safety, Mortgages, Wealth Building

Money Magazine’s cover story answers the question, “What to do with $1,000?”.   They give a list of 11 different things you could do with an extra $1,000. All the answers they gave have some merit, but I feel the bigger point was missed.  If you wait until you have an extra $1,000 to decide what to do with it, you will probably make the wrong choice.

I believe there are financial priorities that can apply to most everyone.  They are:

  1. Emergency Cash
  2. Eliminate short term, non tax deductible debt
  3. Protect what you have and what you hope to someday have
  4. Save for long term goals (education, retirement, etc)
  5. Pay off your house.

By having a preplanned priority for your money, you will always be ready when money comes to do the most important thing with it.  As I studied finances, and thought about priorities for money, I decided that there are in fact, near-universal priorities.  For example, cash in the bank (#1) is more important than paying off your house (#5).  Paying off credit card debt is more important that saving for future college education expenses.

When creating a mortgage plan, or deciding what to do with an extra $1,000, having these priorities figured out ahead of time allow you to make better financial decisions.

If you make better financial decisions, you will have  a better chance at succeeding financially.  Decide ahead of time what the priorities are for your money to make better decisions.

Check out the presentation here to get more details on my financial priorities system.

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