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Starting an investment program

One way of achieving your finanacial dream is to use windfalls such as gifts, tax refunds and garage sale earnings to increase y

One way of achieving your finanacial dream is to use windfalls such as gifts, tax refunds and garage sale earnings to increase y

July 05, 2002|by LYNN F. LITTLE

If you want more money to travel, pay for education for you or your children, and have adequate funds to enjoy retirement, now is the time (no matter how old you are) to start an investment program by saving those dollars that seem to slip away each day.

One way of achieving your financial dream is to use windfalls such as gifts, tax refunds and garage sale earnings to increase your investments. Here are several tips on using windfalls to make financial progress.

  • If you are getting a tax refund every year, change your withholding exemptions so less tax is withheld from each paycheck. Put extra money into an automatic savings plan.

  • Invest in yourself. Upgrade your work skills by taking classes.

  • Pay off your credit cards or car loan. Put what you were paying each month into a savings plan or mutual fund instead.

  • If you need better transportation, use a windfall to make the largest possible down payment on a vehicle.

  • Consolidate all your loans into a single home equity loan. Apply your windfall to the amount financed. When you've paid off the home equity loan, keep saving. Cut up your credit cards and live on your paycheck.

  • Review your home mortgage. There are three ways you can save over the life of your mortgage.

    1. You can apply any windfall to your principal, which could save months of mortgage payments in the future;

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2. You can refinance the loan at a lower interest rate and add your windfall to the equity, which can lower your payments and save thousands of dollars;

3. Or you can refinance as a 15-year mortgage.

On a $100,000 fixed-rate loan at 8 percent interest, you will pay $90,000 less over the life of the loan than you would with a 30-year mortgage.

  • Establish an emergency fund by putting your windfall in a money market mutual fund.

  • Sign up for a class to learn about smart ways to manage money.

  • Take your windfall and work out a total budgeting/debt reduction plan.

  • Check out the American Savings Education Council Web site at www.asec.org/toolshm.htm. Use their interactive Ballpark Estimate to calculate what you might need for retirement. Then start your retirement plan right away.



  • Now is the time to start an investment program. If you would like more information on finding ways to save money for investing, send a self-addressed stamped (37c) business size envelope to Maryland Cooperative Extension - Washington County Office, 7303 Sharpsburg Pike, Boonsboro, MD 21713. Mark the envelope, "Savings."

    Lynn F. Little is a family and consumer sciences educator with the Maryland Cooperative Extension, Washington County.

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