Sensible Money Savers
If $1000 fell into your lap tomorrow, what would be the most sensible thing to do with it?
Here are our suggestions:
1. Pay off your credit card
If you’ve got $1000 to spare, and you’ve racked up debts on your credit cards, what are you waiting for? Pay that thing off quick-sticks before your original purchases double, or even triple in price.
2. Prepay some bills
Considering using the $1000 to prepay some bills. While it may sound a little odd, utility companies often offer decent discounts for paying bills well in advance. For example, a five per cent discount for paying two weeks early would otherwise take about 15 months or more to earn equivalent interest in the bank. Bank interest would also be subject to income tax and by pre-paying, you avoid expensive penalty fees for late payment.
3. Don’t earn much?
If you’re a low-income earner and have a spouse (or de facto), you are eligible to get a spouse super contribution offset of 18% if you make a contribution on their behalf to a complying super fund or retirement savings account. If you contributed $1000, this could offer a direct income tax saving of $180.
4. Peer into the future
For longer-term investors, especially higher-income earners, suggests giving Investment Life Bonds a thought. Withdrawals are free of capital gains tax after 10 years, they are a particularly good way for parents to save for their young child’s education.
5. Boost your retirement savings
It might be a way off yet, but an after-tax contribution of $1000 to your super could net you a government co-contribution of up to $500. Your income level will play a part in the kind of benefit you’ll receive.
6. Stop wasting energy dollars
Mr Miller also recommends organising an energy audit of your home, to find out “where you can make changes today that will drop your energy bills today, tomorrow and long into the future”. Good idea.
7. Get yourself a coffee machine
It might be a bit of a luxury purchase, but if you’re a three-plus-cups-a-day kind of person, and won’t consider instant as an option, then a coffee machine might be worth the investment. Pod machines will drop the cost of a cup of coffee from around $4 to under $1, so even if you’re only on two cups a day you’re going to easily save $2k a year.