I’m giving away tons of cash! Enter to win: Here’s how
Bust out the floaties. This summer, you could be swimming in a sea of cash.
In celebration of the first day of summer, I’m holding a very special Summer Solstice Giveaway to make the long days even sunnier.
What do you win? MONEY. The grand prize is $2,000, while the runner-up will score $1,000 and the second runner-up will get $500. Not bad, right? I’m also giving out 10 $100 Amazon gift cards and 15 $25 Fandango gift cards. I’m starting to feel like Oprah.
Here’s how to enter: Between now and June 30, check out my Facebook page to enter, and sign up for my newsletter. It’s that easy! For extra entries, you can do simple stuff like tell me what you would do with the prize money, follow me on Twitter or Pinterest and refer your friends to the giveaway. Terms and conditions apply.
Already thinking about what you’re going to do with that cash money once you win? I feel you. I know it can be tempting to spend it on a fun night out your squad — or on a spontaneous beach vacay, because YOLO — but when you get a major windfall, you should use that money wisely.
Here’s what I would do with that money if I won, and what you should consider doing, too!
1. Grow your emergency fund
OK, I know an emergency fund is far from fun, but you really need one. If you’ve been slacking this year, a windfall like this would be the perfect opportunity to boost that fund while still giving your budget some breathing room.
You should have enough in your emergency fund to cover four to seven months of expenses in case you get sick, lose your job or some other unexpected event happens. The money in your emergency fund should be easily accessible (meaning no, your 401(k) should not double as this fund) and, ideally, earning interest. Shop around for a high-yield savings account, and get the most bang for your buck.
2. Pay down credit card debt
ICYMI, the Federal Reserve raised interest rates last week. While this affects everything from mortgage rates to the economy, it could also affect that shiny piece of plastic tucked away in your wallet.
Many variable-rate credit cards are tied to the Fed’s federal funds rate, so since that was raised, you’ll probably see a spike in your credit card’s annual percentage rate. Bummer, I know, but on the bright side, this will be a problem only if you carry a balance on a variable-rate card. If you have credit card debt on that, pay that down — stat. Use that prize money as an easy out.
Side note: If you tend to carry a balance from month to month, at least shop around for a low-interest credit card.
3. Knock out your student loan debt
Summertime sadness can take form in stifling student loan debt. If you have a fat emergency fund and no credit card debt, use the prize money to start wiping out that student loan debt a little faster. This windfall can allow you to start making larger payments to cut down on your principal faster.
Being saddled with student loan debt is no fun. The faster you pay that off, the better you’ll feel.
4. Invest it
No credit card debt or student loans? You’re in a sweet situation. Invest that prize money, and watch it grow.
You can dial up your 401(k) contributions (and take advantage of that employer match), or invest outside of your 401(k). Consider opening a Roth IRA, which is v. cool because while you’ll be contributing after-tax dollars to the fund, that money can be withdrawn tax-free later. So if you’re anticipating having a higher tax burden in the future, which can come with a bigger paycheck (duh, let’s all hope for more money for our future selves), this could be a good option for you.
Diversifying your retirement accounts is smart, so go for it!
5. Save for a specific goal
Let’s say you’re already in fierce financial shape, and you really want to use this prize money for a treat-yo-self type of expense. Instead of impulsively spending that cash on the first shiny thing you see, put it in a savings account (separate from your emergency fund), take your time and really think about what purchase you want to make.
Spending too quickly is like a prescription for buyer’s remorse, so do your research, weigh the pros and cons of the purchase and understand the benefits that come with saving that you would be giving up (like compound interest and peace of mind). No regrets, right?