Well, it's that time of the year again, that weird week between Christmas and New Year's Day, comprised of a mix of working from home and recovering from the post-feast tryptophan induced coma we have come to know and love as part of the Christmas routine.
If you have been asking yourself,. "What is one of the best ways to spend your time waiting for the year to end?", then you really need to keep reading!
Our answer should come as no surprise to you, it's shopping! The American way. And what better way to do it than by spending someone else's money!
It's no secret that the gift purchasing process can be a stressful one. We put enormous pressure on ourselves to pick the perfect present for our loved ones and in the case of some people we love, that can be a monumental pain in the butt!
If you are anything like me, then you probably are one of those people that is hard to shop for and, as a result, find yourself on the receiving end of lots of cash and gift cards.
In fact, there are few things you can truly count on in today's world, but one thing I know for sure is that when my birthday or Christmas comes I will get that $100 from grandma.
So the big question is what should you do with it?
Some might say that the responsible thing to do would be to put it in the bank and save it for a rainy day. Others might choose to use the cash to pay down outstanding credit card debt, or maybe get caught up on bills. But sometimes you just have to spend it!
This year has been difficult on everyone and a little bit of retail therapy can go a long way. Due to the fact that many brick and mortar businesses have shuttered or are temporarily closed because of COVID-19, online shopping has become extremely popular and sales have grown exponentially all year.
Let's take a look at some of the most popular ways to spend your cash and see if you can decide on what do with your Christmas cash windfall!
This has to be one of the most boring ways to use the money, but definitely the most responsible (if you don't have any outstanding debt). According to recently released data, the vast majority of Americans have little money in the bank, and some don't have any savings at all. The truth is that having a rainy day fund can be very useful and may end up saving the day if you ever have any unforeseen expenses pop up.
Despite the fact that you can't get much in the way of interest from savings accounts in today's market, it can still be comforting to know you have a nest egg during times of extreme economic uncertainty.
There are still plenty of ways to make your money work for you without taking on too much risk. Many of the large banks like Chase and Bank Of America have investment options for the everyday customer, like mutual funds and the ability to purchase bonds and treasury bills, all of which that can be attractive options for you, especially if you don't have a lot of invest.
Despite record low interest rates, you still have the option of using a CD, or Certificate Of Deposit, where you put the money in an account at your bank and leave it to accrue interest over a predetermined period of time. The only caveat here is that there are stiff penalties for early withdrawal, so if you decide to consider this option make sure you won't need to touch the money during the period of time it will be off limits (terms like 1, 3, and 5 years are common).
Depending on how much money you are working with you can always invest in the stock market. however this is the riskiest type of investment you can make and there is the possibility you could lose all of your money if things don't go the way you plan.
Keep in mind that there are apps you can download on your phone that help you make small investments in the market, which you can track in realtime. RobinHood is an example of one of them because it allows you to start with as little as $1 and is a great way to get a feel as to whether or not you like these types of investments.
If you decide to go this route and are unfamiliar with the ramifications of buying and selling in the equities market you should definitely consult a professional. Keep in mind that there are special taxes related to the sale of these type of assets, called Capital Gains taxes, and can be as high as 40% depending on how long you own them.
Pay Off Debt
Another responsible, and less fun option, would be to pay down any debt like credit card debt or loans that you may have outstanding. This could be a great time to pay extra money towards your mortgage if you are a homeowner, or make a few extra months payments on your car loan. If you are a student or still carrying debilitating loans from college this can be a great opportunity to make a deal and get them off your plate.
Now for the fun option. Spend it!!
One of the positive aspects of the COVID-19 pandemic is that it has paved the way for door-busting sales and incredible deals, depending on what you are looking to buy.
Given the fact that there is still much uncertainty regarding the timeline for a return to normalcy, there are certain types of products that are more useful and can be used to alleviate some of the stress and boredom caused by extended lockdowns and the enormous amount of time we have to spend at home.
Some of the most popular items people are buying to enhance their quality of life at home include new 4k TV's (or 8K if you have an enormous budget), a new computer or tablet for work or pleasure, or one of the latest model smartphones. Anything that helps you feel connected with the outside world can be a major enhancement to pandemic life.