3 smart things you can do with $1,000 right now

If you have some extra cash on hand and you're thinking that spending it on a large-screen TV or a visit to some blackjack tables is probably not the smartest thing to do with it, you're right. It's true that a TV set can provide myriad hours of entertainment, but many of us have more pressing needs and better ways to spend extra money. Below are three good ideas.

Pay off debt

Are you carrying any high-interest rate debt? If so, it's quite imperative to pay that off as soon as possible. Carrying hefty credit card debt is the opposite of investing: You might hope to get ahead by an annual average of 10% in the stock market, but if you're paying 25% annually on credit card debt, what you owe can grow much faster than your stock investments. Being deep in debt can also wreck havoc in your life in other ways, such as making it hard to get a mortgage to buy a home.

High-interest rate debt can spiral out of control rather quickly and can be very hard to pay off. According to the folks at NerdWallet, the average household with credit card debt owes around $16,000 -- and pays an average of $1,292 in interest alone each year. If you carry a balance of $16,000 with a 25% annual interest rate and a minimum payment of 4%, it will take you 19 years to pay off that debt, and in the process, you'll pay a total of more than $33,000. Whether you owe $2,000 or $25,000, applying $1,000 to reducing your debt can make a big difference in your financial health. If your interest rate is 25%, you can avoid paying $250 in interest!

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Start an emergency fund

Do you have an emergency fund? Don't think of it as something optional -- you may not expect to lose your job anytime soon, but lots of people who are laid off didn't see it coming, either. A costly medical issue can derail you financially, too.

Consider that according to a 2016 survey by the folks at Bankrate, a whopping 66 million Americans have no money saved for an emergency expense. It's not just a problem for the poor: About 23% of those earning $75,000 or more had less than three months' worth of living expenses saved. If you're still not concerned, note that per a 2015 Pew Charitable Trusts report, more than 60% of Americans experienced a several-thousand-dollar financial shock in the previous year. Would you be able to handle that?

If you don't have an emergency fund, or at least an emergency plan, then you might end up wiping out a critical retirement account or charging many thousands of dollars on a credit card, leading to costly debt. Worse, you might lose your home. The best way to protect yourself is to have an emergency fund available -- enough to cover around six months' worth of expenses, give or take a few months. How should you determine exactly how much to sock away? Well, focus on the monthly expenses you have to pay in order to stay in your home and survive. Thus, sock away three to six months' worth of rent or mortgage payments, along with the costs of utilities, food, transportation, and anything else you really can't do without. Include loan repayments, too, such as for any credit card debt or car loans, etc.

Emergency fund money shouldn't be in the stock market or other places where it's vulnerable to volatility. It needs to be in more stable places such as money market accounts or bank accounts -- where it probably won't grow in value by much, but it won't shrink much, either. If you have $1,000 on hand, it could serve you well if it's parked in an emergency fund. (Remember, too, that even if you never need to tap the fund, it's still serving you well by keeping you protected from financial disasters.)

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Invest in stocks

Finally, a great thing to do with $1,000 if you're not carrying high-interest rate debt and have a flush emergency fund is to invest it in stocks. It would have to be long-term money, of course, that you don't expect to need within five, if not 10 years. You can become a savvy investor by doing a lot of reading about investing and then carefully selecting stocks in which to invest, after researching them diligently. That can take a lot of time, and you'll inevitably make mistakes along the way, but it can be well worth it. Below, for example, are the long-term returns of some well-known stocks. (They're just examples of what stocks can do for you -- none is guaranteed to perform similarly in the coming years. Some may do better -- or worse.)


10-Year Avg. Annual Return

20-Year Avg. Annual Return



















Data source: Yahoo! Finance.

There's a simpler path, though, and it's a smart and profitable one: investing in index funds. Index funds are mutual funds or exchange-traded funds (ETFs) that are based on various indexes of stocks or other securities. Index funds based on much of the stock market, for example, have a long history of outperforming stock mutual funds managed by Wall Street pros. According to Standard & Poor's, as of the end of June 2016, fully 87% of all domestic stock mutual funds underperformed the S&P 1500 Composite Index over the past 10 years. And 85% of large-cap stock funds underperformed the S&P 500.

A handy low-cost broad-market index fund is the SPDR S&P 500 ETF, which distributes your assets across 80% of the U.S. stock market. The Vanguard Total Stock Market ETF or the Vanguard Total World Stock ETF will, respectively, have you invested in the entire U.S. market, or just about all of the world's stock market. There are index funds for bonds and real estate, too, such as the VanguardTotal Bond Market Index Fund and the Vanguard REIT Index Fund.

If you have some extra money on hand -- be it $500, $1,000, or $5,000 -- you'd do well to put it to good use, strengthening your financial health. You can do so by paying down debt, funding an emergency fund, or investing long-term dollars in the stock market.

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Dog-sitting, babysitting, or house-sitting

These jobs are always in high demand, and the best part: you can name your price and create your own schedule! Post an ad on craigslist, or use your friends' and family's connections to get your name out there. 

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Rent out your space 

List your apartment on Airbnb or another rental site, and make some easy cash by staying at a friends and renting out your place for the weekend.

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Share your space

Just as you can rent out your full apartment or house, you can also post a free room (or even just your couch!) on sites like Craigslist or Airbnb. This way you can split your living expenses -- and maybe even make a new friend!

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Sell your body parts

Now here's a weird one: Donate your hair, breast milk, or even plasma for a profit. According to Grifols, if you're healthy and weigh above 110 pounds, you can earn up to $200 a month donating your plasma to life-saving medicine. 

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Sign up to participate in medical tests and clinical trials. 

Universities constantly need volunteers to test new medicines and treatments -- and because the pool of willing participants is limited, there is typically a large compensation for being a guinea pig. 

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Participate in a focus group

Companies and organizations will pay you to join a focus group. These can be conducted in person, online, or via phone. You will most likely be reimbursed in cash or gift cards -- plus, you often get to test out fun new products! 

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Take online surveys

Similar to focus groups, you can get paid to give your time and insights on an online questionairre. Plus, you can do this from the comfort of your couch. 

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Bank on your sperm

Although we don't necessarily recommend this option, there is a very high demand for healthy sperm donors. Keep in mind some of the obvious drawbacks, but sperm donation is non-invasive and highly compensated. 

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Crowdfund your dreams

Crowdfunding allows you to raise monetary contributions from a large group of people who want to support your venture. Post your project or idea on a crowdfund site, like GoFundMe.com, and see the cash pile up.

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Become a tutor

If you're qualified, post an ad online or on a community board to tutor children on their school courses or for the upcoming SATs.

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Get a part-time job

Capitalize your free time (on the weekends or after work hours) by working a part-time job. A bartender, waiter, or Uber driver are all great options for an additional source of income -- and great tips! 

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Resell tickets

Take this suggestion at your own risk: If you're staying within legal limits, buy tickets low and sell high as an effective way to source additional money. (Just make sure to check your state and local laws first!)

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You can sell anything on the internet these days... including your companionship! Get paid to go on a platonic outing for a few hours and enjoy your afternoon with a new friend. 

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Rent out your parking spot

Make sure to check with your landlord first, but if you have the option to park your own car further away, lend or share your parking space or driveway for the hour, day, or even month! 

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Keep a coin jar 

This one takes patience before a big pay out, but keep a spare jar or drawer for loose change that you usually toss anyway. It will keep it all in one place -- and those quarters do add up! 

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Make something to sell 

If you have a knack for arts & crafts, create jewelry or other handmade gifts to sell on sites filled with other thrifty vendors like Etsy

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Sell items online

This effective strategy requires low effort with a high return. Post photos of your used or non-used items on sites like eBay or Craigslist, and let the bidding begin! 

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Have a yard sale

Sell clutter you've been meaning to get rid of right in your front yard. This simple tactic is convenient, and guarantees a wad of cash right to your pocket.  

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Return past purchases

This tip may seem obvious, but is often overlooked: Take your recently-purchased items that are laying around back to the store for either store credit or a full refund. 

Recycle scrap metal and cans

Collect cans and scrap metal out your own garbage, basement, and street and bring to your local recycler to exchange your findings for money.  

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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's Board of Directors. LinkedIn is owned by Microsoft. Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, owns shares of Boeing, Costco Wholesale, Microsoft, and Starbucks. The Motley Fool owns shares of and recommends Costco Wholesale, PepsiCo, and Starbucks. The Motley Fool recommends Chevron. The Motley Fool has a disclosure policy.

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