Pay off bills!

I'd invest it in my company.

I don't know about Outback Steakhouse and Crackerbarrel being all that busy - I guess it depends where you live and what choices you have for dining out.

I get nervous with investing in stock so I would probably play it safe and either apply it towards my mortgage/debt or use it towards home improvements.

kimba00,

Pay amounts owing on store-issued "credit" cards first, for most of them usually charge 25 - 28% interest on balances owing past the first payment date. At annual rate, and since you must pay monthly, it's more than that.

Regular "credit" cards' rate of interest usually runs 15 - 18%, so pay balances owing on them in second place.

So, after dealing with such of those bills as you may have, if the balance owing on your mortgage is more than $10,000., I suggest using the $10,000. to pay down the mortgage.

Up here in Canada, interest on mortgage is not deductible, so that's another reason for financial advisors usually to advise people to pay them off as quickly as possible - after the "credit" card debt.

Here in Canada, if I borrow to buy an auto, unless I am required to use it as part of my business responsibility (which does not include driving to work), the interest is not deductible - but many people borrow to buy a car.

If someone borrows to invest (apart from tax-deferred retirement account deposits), interest on the loan is deductible.

But many people save money (more or less) regularly, then invest the cash.

It would make more sense for them to pay cash for the car and borrow to invest.

Yet - you need some funds on hand in case of emergecy, so if you lack about three months' income quickly available now, I'd suggest that you use some of the $10,000. for that.

Maybe invested in T-bills, easily cashable.

When you have some more savings built up, if you use them to buy a stock certificate or a bond, next time you want to borrow money to buy that car, if you let the credit union/bank have that as collateral to help cover your loan, the rate of interest that they charge will almost always be quite a bit lower than if you use only the car as collateral. If you default, it's a lot harder to repossess and sell the car than the bond/T-bill/stock certificate - they just make a call to a stockbroker for that, then deiver the certificate.

As for investments - I like stock in a quality company.

You've heard people refer to Warren Buffett, the second richest man in the U.S., as a smart money manager.

Had you been around in 1965 and invested $12. to buy a share of stock in Berkshire Hathaway, the company that he runs, you could sell it now for $87,363.

Some advisors around here say that you'd have had to pay no incometax since 1965, as he has paid no dividends on that stock.

They're wrong - Berkshire paid 10 cents in 1967, and you'd have had some tax to pay then.

None since.

Much better than bank guaranteed certificates, bonds, etc.

For several reasons.

Have a great week - what's left of it.

ole joyful

P.S. The reason that I put quotation marks around the "credit" in "credit" card is - that they're really a "debt" card.

The moment before you used one of them, you had no debt.

The moment after you use it, you have a debt.

That must be paid.

Maybe you'll pay it at the end of the month, maybe not - but you got the goods now.

You pay ...

... later.

If you pay in full each month (as about half of card holders do), the credit card people don't like you much, for they make no money from you.

They do make money with regard to your account, though, for they charge the store set-up, rent on eqpt., base fees for the account, some of them monthly, and they only pay them 96 - 98 cents for each dollar of billing that the store sends to them.

o j

There's a deli near me. They're always busy and sandwiches sell for $5 to $6. I know for a fact the boss owns the property outright so there's no rent. I asked him how many sandwiches he sells. He told me 1,000 a week. Let's see, that's at least $5000 a week, and all he has to pay for is the food delivery service, taxes, man and the cost of counter help. The business is not for sale and I'm in no position to buy in. Just an example of how a real-life small business runs.

jannie,

With regard to the property that the guy running the deli owns ...

... he owes "rent" to ...

... himself.

Suppose he were going to allow you to operate the business there. Would he turn the title to the property over to you as a gift?

Maybe - if you were his daughter.

Otherwise, hardly.

The property has value ... let's $70,000.

If he were to rent it out to someone else for whatever purpose, he'd want some compensation - but he'd also have to maintain the proerty, insure it - and worry about what kind of damage might happen to it.

Not only that, but replace the building when it got old and moth-eaten.

However - were he to sell the property ...

... no more insurance, maintenance, worry about damage, replacement of deteriorated building (including saving up over a number of years to pay for it - or else paying interest on a mortgage when he did it).

He could take the money and lend it to the bank, for an agreed rate of interest - let's say 5%. That's $3,500. a year, almost $300. per month. If he were resident in Canada, it would be taxed at top marginal rate.

He could invest it in the stock market - at let's say 3% annual dividend. Which is taxed each year (if it were a Canadian stock and he a Canadian resident, at a much lower tax rate than on interest that he earned).

Let's say that he sells the stock later, and makes about 5% average annual return on that invested amount.

He doesn't have to talk to the income tax people ...

... until later, when he sells the asset.

I think that income is taxed at a lower rate in the U.S.: it is in Canada.

He has a double advantage - he not only defers the tax - he (probably) pays at a lower rate.

The fact remains, that in the current circumstance, he "owes" compensation to himself with regard to the use of his property.

If he invested it elsewhere, it would provide him with income.

Hope you and yours have a happy weekend.

ole joyful

There are also other costs jannie. Workers comp which is usually mandated by the state, liability isurance, advertising, cleaning costs, property taxes, utilites, taxes for self-employed is 25%, plus the cost for the employees, a good accountant and bookkeeping, wasted food which doesn't get sold, paper products, depreciation of his equiptment and replacement and repairs. Just off the top of my head. There are numerous other costs that I don't know about since it's been years since I did food service.

How a real business runs? A bit more complex.

Gloria

And let's not forget that the sandwich guy isn't able to just buy "loss leaders" at the corner grocery store. His goods are likely costing him more than at the grocery store. His phone bill is at the business rate, so it's probably three times what you're paying at home and likely requires at least two lines so double that. The electric and all other utilities are also going to be at commercial rates. Oh, and don't forget the food handling permits and the inspections related thereto.

He can't go to Target and buy a $7 toaster to toast the bread for the sandwiches either, since most food regulations require special "commercial" appliances, right down to a toaster, coffeemaker or microwave oven. There's also assessments, taxes, insurance and don't overlook the myriad of insurance policies since some idiot will sue if the coffee is too hot or they want to make a fast buck from some finger-licking good chili! And you'll be shut down if the coffee is too cold. An accountant and attorney are generally going to be on retainer to deal with the regulatory powers. To say nothing of the people with the "customer is always right" attitude trying to get a free meal by complaining.

There's also advertising and of course every community group around will be hitting him up for a donation along with every school, sports team and politician within 20 miles.

Don't get me wrong, there's generally good markup on foodstuffs, especially fast food items, but it should be noted that there's a lot of associated costs that are often ignored so the $5k/wk is not making him comparable to Bill Gates by any means.

Jannie, I was going to include a few things the sandwich guy has to pay for also. I see gloria and a few others noticed more hidden costs, too. Let's see, there's garbage collection, electricity, heating & airconditioning, employee benefits (vacation, sick time, workmans comp, health & dental) insurance, accountant, advertising and legal fees.

My husband owns a small business. His employees never know the amount of the bid they are working on. One time years ago they found out that a job was bid at several thousand dollars and they quickly figured their wages. They figured that every cent over that went directly into my husband's pocket. I'm sure it caused resentment, and all because, like children they don't think about insurance, heating, gas & electricity, etc. etc. etc.

I don't know much about being self-employed, but I do have several friends who are. All of them tell me it's not worth it. A female friend owns a restaurant. It's pretty and popular, but she looks like she's seventy years old, and I know she's only 52! I would rather work for someone else any day and know I always have the option to quit.

jannie,

If you were sewing shirts or underwear a few years ago, thinking that you had a choice as to whether to work or whether to quit, so were all set ...

... you would have been mistaken.

Even though you and your fellow workers had been paid at a low rate, the owner couldn't produce shirts here at a price below that of shirt-makers in Mexico, Singapore, India or China.

Wal Mart and others like them exercised their option of buying shiploads of shirts made in those low-wage, lousy workplace places.

So your employer would have exercised his option several years ago of closing his factory ... putting you on permanent layoff.

Question for the cheapie stores: when all of the jobs have been relocated offshore ... where are local buckos to build the bucks to buy the boodle?

ole joyful

Good point, joyful-man.
....and....when there is unemployment--our cities aren't getting money for their schools, etc.

I say, follow the baby boomers--what will they be buying? RV's maybe? Stuff for the grandkids? Maybe a place in the sun? They certainly won't be keeping their $600,000 homes in Michigan.

Back in the 70's there was so much unemployment where I came from--having much to do with foreign cars. I thought back then that leisure kind of activity investments would be a good idea...bikes, tennis shoes, videos, etc.

Too bad I was so broke.

I would hope to take a vacation , because I have never had one, but of course i am a responsible working single female with kids so i would pay bills, put some in savings and make repairs to home and car.I am pretty cheap so it would cover alot of ground , then i would still have that vacation to dream about.

flowergazer,

I'm sad that you have to deal with the bind that you're in.

Often single males have a couple of advantages over situations like yours: their work is paid better.

While many have worked and fought for years to even that playing field somewhat, the results haven't been enough to blow trumpets about.

And, in general, they don't have kids to look after.

I hope that you and your kids can manage a vacation some time soon. I hope it's before they hit the teens, for many of them are distinctly unenthused about a vacation with the parent(s). Wouldn't cherish it as the precious gift that, given the circumstances, it would be.

Good wishes to you and your loved ones.

ole joyful

If I was given $10,000, to start with I'd have submarine sandwiches delivered here from that guys shop. Sells that many sandwiches he must be making them pretty good.

I would pay off the Credit Cards and hide them in the yard under 1000000 cubic feet of dirt.

And if there is some money left, I would buy some more art. Probably from Elle Pace and Conni Togel.

How art-ful of you, Brad.

ole joyful

A couple small CDs for the kids to compound over time(one is 2 mo. the other is just dreamed of yet) and pay some bills. Maybe book a cheapie cruise for fun.

I was curious how this thread would develop. Lot of responses were to automatically spend it. Granted it was baited from the subject of what would you buy, but few indicated that they wouldn't spend it immediately.

To me, ten grand is a lot, but in the big picture, $10,000 certainly isn't a fortune these days. Won't buy much of a new car. Would cover the roof replacement and street assessment, but no leftovers. My cousin spent more than that on a well and septic system. What I see for clothing costs of a lot of people, well. Let's see, from looking over in the appliance forums a washer, dryer and stove can run you $10,000. A friend wouldn't be able to send one of his kids to school for one year for that.

I pay off my CCs monthly. Won't allow them to run up. I do need a roof on the house but I've been squirreling away some coins for 10 or 15 years or so knowing it was coming so I wouldn't spend it on that.

I was expecting to see some weatherproofing or replace inefficient appliances or something like that mentioned too. It was interesting thread! And I'm not criticizing peoples' choices - to each their own.

What would I buy with $10k? Doubt I would. Put it in the bank until I needed it for something. Try to increase it or at least get a higher value by getting a better deal down the road. Fortunately I live a simple life and enjoy simple pleasures. Money doesn't buy me happiness. It's a tool to provide some security. So in a way it would be buying me some security and peace of mind.

cynic, Man,that must be the life to not "need" it for something. I live pretty simple also, my luxery and yours to I see from your post, is that I own a computer. But to not "need" it right now? Sometimes I think this world makes sure we "need" it. I also don't have a credit card balance but that is just because I know I can't afford to have one! Even living a "simple" life..things breakdown, need repair, you have to eat, pay for things like Christmas, birthdays, a family picnic, gas in the car..etc...The list is endless. Please tell me how you can not "need" it because I am trying to get there myself, I just don't think it will ever happen. I guess I can attribute some of it to being part of the "middle class", does that even exist anymore! LOL! Oh well, my own fault for not going to college. It's the price you pay for not getting an education and boy does this world let you know that! Other than a mortgage(on a "starter" home) and one vehicle, the only other outstanding loan I have is for new windows that I had to get to replace the original 1950's ones. And thats it. Thats not alot in todays world of debt but I'll tell you what, I still would need $10,000!

10 grand, eh? 100 grand would be more interesting!

Well, I guess I would give half to a favorite charity of ours, the DH and I would vacation on the rest.

Like cynic, we live simply and have very little debt (house paid off, CCs paid in full every month). I DO have a car payment, but since the financing is at 0%, I have no desire to pay that off quickly!

Things are good here right now. I'd stash it, like I do with most of my bonuses, someplace where it could work for me. 401K is already maxed, Roth is already maxed, kid's college funds are on track, mortgage rate is only 4.5%, so it would go into my taxable brokerage account. I'd probably just use it to rebalance my portfolio - 20% bonds, 20% intl stock, 60% US stock.

The money that I didn't spend 15 years ago has tripled since I put it to work. I'm sure that I could buy some fun toys with it, but keeping it where it is helps me sleep better, gives me a greater sense of freedom, and will let me retire that much earlier.

In the mean time, my vacations will typically involve camping, my car will keep getting older, my wife will have to keep preparing almost all of our meals, and I'll keep bugging people on sites like this for more ways to cut my cost of living.

Mark Barbien,

Your car's getting older.

Your wife's getting older.

But don't go gettting ideas - you're getting older, too.

Should you choose to trade her in for a new model - you might be getting more than you bargained for.

Some of those new models are rather expensive. And seem to like to run arund a lot: high maintenance. Can you keep up to such a pace?

And are rather hard on gas - can you handle the cost?

Not only that - those new models often draw admiring glances from other "owners". Sometimes more than that.

Sometimes (usually??) it's a good idea to be thankful for what one has.

And leave it at that.

Sometimes contributes to fewer heart attacks.

I hope that you and yours have a dleightul week.

ole joyful

A $10,000 windfall would be fun! I would have a hard time deciding what to do with it. I don't have debt except for car and mortgage, so those two would compete for it. If they both lost, it would provide a wonderful vacation !

I'd pay off one-third of my student loans.

Sigh.

My dh and i would probably put it into an IRA or Money Marketing account and watch it grow.

Home improvements.
They just never end.
I'd go through the $10k in a weekend.

I would find out who the biggest slum lord in town was, use the money as a down payment on the house next door to his and rent it to a bunch of lowlives with 10 hound dogs.

I've been on a pretty tight debt payoff budget for a while, so I'd need a bit of a splurge with a windfall like this. Shoes. Definitely shoes. I miss shoe shopping.

The other $9500 or so would be put to more responsible use - credit cards and the like.

And then it would be back to the frugal ways until my student loans were paid off (only 25 years to go!).

I've been in this position--only it was $25,000.

I bought a computer, paid the taxes on the windfall, put some in a SEP account and invested the rest at the bank in CD's). And now, only a few years later, I STILL have $25,000 in those accounts. I did borrow some of it from myself last spring to buy my FJ Cruiser, but I replaced what I borrowed, so I STILL have that nice nest egg.

Any 'found' money that comes my way goes immediately into savings. Actually, in all the years I've been winning money, that computer I mentioned above, is the only thing I've ever bought with any of my winnings--the rest, in the neighborhood of $50,000 are sitting in the bank, collecting interest, waiting for me to need the money when DH retires in a few years.

10k is really not a lot of $$$$...I would take another family vacation like we did this spring, 7 day cruise in carribean, after paying for the airfare,cruise, associated expenses on cruise, excursions,car service to and fro airport, you'd have a few hundred left