# Is there something I should be doing with my tiny amount of money? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [July 18, 2013, 2:47pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845 "2013-07-18T14:47:49Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 4:08pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/21 "2013-07-18T16:08:25Z")
This was much easier when we had two incomes. ☹ We could just fire and forget all of this stuff. Ratchet up the retirement percentages to high and have vacation money every summer without even trying. Now we are literally watching ever penny. I hate this. Lots of… issues… come to the surface, related to my upbringing. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [July 18, 2013, 4:10pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/22 "2013-07-18T16:10:37Z")
$3000 is a pretty small amount. I think you’d want at least half that immediately available in case of an emergency. If you can build up more you should consider adding that to your retirement plan or some other longer term investment. Since you have a child (or more than one, not sure), you might want to invest in a college fund. By the time your kids are grown average annual college tuition is expected to be a number that will cause a blip on your next EKG. ---
**Author:** ![Yllaria](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/yllaria/32/3452_2.png) [@Yllaria](https://boards.straightdope.com/u/Yllaria)\ **Post date:** [July 18, 2013, 4:11pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/23 "2013-07-18T16:11:55Z")
I think you need to use a calculator that shows you the true benefit of compound interest. There’s one[here](http://investor.gov/tools/calculators/compound-interest-calculator). If you put your $3,000 into a savings or 401k at 1.5% interest and added $40/month, at the end of twenty years you’d have $15,139.93 . Play around with the calculator and see how different plans would work out. And remember that anything you put into a 401k or IRA saves you the current tax you’d have had to pay on that amount. Good on you for doing the planning now. ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 4:14pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/24 "2013-07-18T16:14:12Z")
> [@TriPolar](#): > > $3000 is a pretty small amount. I think you’d want at least half that immediately available in case of an emergency. If you can build up more you should consider adding that to your retirement plan or some other longer term investment. Since you have a child (or more than one, not sure), you might want to invest in a college fund. By the time your kids are grown average annual college tuition is expected to be a number that will cause a blip on your next EKG. Four kids. Our kids are getting scholarships or going to crappy cheap schools. We did start college savings accounts, but when my wife quit we turned that off. Anyway it was basically symbolic. Even with two incomes there will be no way for us to pay for them. ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 4:15pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/25 "2013-07-18T16:15:56Z")
> [@Yllaria](#): > > I think you need to use a calculator that shows you the true benefit of compound interest. There’s one[here](http://investor.gov/tools/calculators/compound-interest-calculator). Did you not see that I already did the calculation above? On the retirement contributions, though, not on the $3000 itself. One thing I’m not sure about is what kind of interest rate to put in. Is 1.5% about average for retirement accounts? ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [July 18, 2013, 4:26pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/26 "2013-07-18T16:26:30Z")
> [@Frylock](#): > > Four kids. > > Our kids are getting scholarships or going to crappy cheap schools. That’s what I thought too. I didn’t even think they’d get accepted at good schools. I could have bought a couple of extra houses for what I ended up paying for. It’s worth it to plan an investment that will be liquid when your kids are at college age. ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 4:34pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/27 "2013-07-18T16:34:43Z")
> [@TriPolar](#): > > That’s what I thought too. I didn’t even think they’d get accepted at good schools. I could have bought a couple of extra houses for what I ended up paying for. It’s worth it to plan an investment that will be liquid when your kids are at college age. I… basically will not pay for their college. I’ll have a kind of a lump of cash set aside for them, and we’ll work together on what best to do with it. But as far as paying for school itself, they’re going to be on their own. Grants, loans and scholarships. And if that won’t work for them, they’ll do something else for a while and go to school later if ever. I don’t honestly expect this to be a dire situation for them–I will be advising them to max out student loans assuming Income Based Repayment is still in place at the time. It’s how my parents did it (minus the lump of cash) and by gosh if it worked for me it will work for my kids. (I mean if I got rich I’d do more, because family helps family, but I do not see paying for their college education as a responsibility of mine.) ---
**Author:** ![Tracijo67](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@Tracijo67](https://boards.straightdope.com/u/Tracijo67)\ **Post date:** [July 18, 2013, 5:09pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/28 "2013-07-18T17:09:42Z")
> [@jsgoddess](#): > > Gus Gusterson is right. Once you have a cushion and if you have debt, extra money should go toward the debt. Yes, except my caveat would be that if you have revolving credit debt, you use available cash to pay that down/off instead of keeping it in a savings account. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [July 18, 2013, 5:32pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/29 "2013-07-18T17:32:15Z")
Step 1: Don’t read any of the other replies in this thread. In fact, it may be best to ask a mod to close it. Step 2: Educate yourself about personal finances and investing. A good place to start is [www.motleyfool.com](http://www.motleyfool.com). ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 5:39pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/30 "2013-07-18T17:39:11Z")
Rand, do you have specific objections about specific things people said here? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [July 18, 2013, 5:50pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/31 "2013-07-18T17:50:07Z")
> [@Rand\_Rover](#): > > Step 1: Don’t read any of the other replies in this thread. In fact, it may be best to ask a mod to close it. > > Step 2: Educate yourself about personal finances and investing. A good place to start is [www.motleyfool.com](http://www.motleyfool.com). I think that’s remarkably unhelpful. How is pointing someone at a website better advice than the specific advice and information previously given? ---
**Author:** ![Grrr](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/grrr/32/146_2.png) [@Grrr](https://boards.straightdope.com/u/Grrr)\ **Post date:** [July 18, 2013, 6:07pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/32 "2013-07-18T18:07:38Z")
> [@Rand\_Rover](#): > > Step 1: Don’t read any of the other replies in this thread. In fact, it may be best to ask a mod to close it. > > Step 2: Educate yourself about personal finances and investing. A good place to start is [www.motleyfool.com](http://www.motleyfool.com). LOL. [Have a beer on me](http://www.theperfectlyhappyman.com/uploads/stone-arrogant-bastard-ale.jpg), **Rand** ---
**Author:** ![Tracijo67](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@Tracijo67](https://boards.straightdope.com/u/Tracijo67)\ **Post date:** [July 18, 2013, 6:13pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/33 "2013-07-18T18:13:56Z")
> [@Frylock](#): > > Rand, do you have specific objections about specific things people said here? Probably not so much objection as acknowledgement that we are not investment/finance experts and have only varying degrees of informed opinions. And that this is the kind of thing that you truly would be better off educating yourself about. You can incorporate the particulars of your own unique circumstances into the things you learn. Or, he’s making a snarky reference to what he considers even more useless advise than ours? 😃 ---
**Author:** ![SpoilerVirgin](https://avatars.discourse-cdn.com/v4/letter/s/4491bb/32.png) [@SpoilerVirgin](https://boards.straightdope.com/u/SpoilerVirgin)\ **Post date:** [July 18, 2013, 6:51pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/34 "2013-07-18T18:51:51Z")
I agree with **Rand Rover** to a certain extent. Earlier today I wrote a long post about compound interest and investing, but having read through everyone’s posts and your responses, I deleted it because I didn’t think it was particularly relevant to your situation. The bottom line is that at this point you do not need investment advice, but some personal finance advice might be useful. You might want to take a look at Elizabeth Warren’s books (_All Your Worth_, _The Two-Income Trap_) to get some good information about budgeting and saving. I will recommend a basic approach to saving that is endorsed by most personal finance advisors: First, save up a 6-8 month emergency fund that will cover your expenses in case you are unable to work. This fund can also cover emergency expenses in case your car, your house, or your body breaks down. Second, contribute to your 401k plan up to the match. Third, pay down your consumer debt. Fourth, contribute to a Roth IRA up to the limit. Once you are able to take care all of these, you can think about adding additional 401k savings or an individual investment account. As far as your emergency fund, it should be in a liquid savings account. The interest isn’t much, but your money will be safe and available to you. If you have at least a 20-year horizon until retirement, the 401k money should probably be in stock index funds, if they are available through your plan. Once you get beyond these first steps, investment advice will be of more use to you. ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 7:05pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/35 "2013-07-18T19:05:36Z")
Okay thanks for the comments everyone. Basically I think we need to go on starvation rations for a few months to get this credit card debt paid off in three to four months. (At our current rate of payment it would take over two years, but if we paid our entire margin each month, plus our erstwhile “blow money,” plus maybe a hundred out of our $500 grocery budget after switching to even more supercheap foods, plus one large lump payment out of our current “emergency fund,” we can pay it off by the end of the year.) Then rebuild the emergency fund and ratchet the retirement account back up. My wife, by the way, has like three different retirement accounts from past jobs and we’re trying to figure out what to do with them. What’s just a safe standard thing to do here? ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 7:07pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/36 "2013-07-18T19:07:36Z")
Interest rate on the card is 8% by the way, so it’s not like we’re sitting on a huge 25% debt like you might be thinking. Still, it’ll be nice to get rid of the thing. It’s been there for ages… ---
**Author:** ![FeAudrey](https://avatars.discourse-cdn.com/v4/letter/f/7feea3/32.png) [@FeAudrey](https://boards.straightdope.com/u/FeAudrey)\ **Post date:** [July 18, 2013, 8:59pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/37 "2013-07-18T20:59:46Z")
> [@Frylock](#): > > … our $500 grocery budget … That’s less than half of what food stamps would be for a family of six. You’ll see “four and a half dollars a day” quoted, but that’s the average – SNAP is a means-tested benefit. The full ride allocation (varies a bit by state) is around seven dollars a day for an adult, a bit less for a kid (but they get WIC or school lunches and breakfasts, worth more than the difference). Even if you only qualified for a buck a day, it can be worth the trouble to apply, because being on the food stamp rolls qualifies you for other benefits. There are limits on assets as well as income. That $3000 you mentioned in your OP? That’s not “savings”, it’s “the ability to pay”. Your best move may be to put most of it to paying off the credit card balance, freeing yourself from that payment. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [July 18, 2013, 9:20pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/38 "2013-07-18T21:20:58Z")
> [@Frylock](#): > > My wife, by the way, has like three different retirement accounts from past jobs and we’re trying to figure out what to do with them. What’s just a safe standard thing to do here? I like to have all of my retirement accounts consolidated, so I’ve moved all of my previous 401(k) accounts into the same IRA account at Vanguard and invested the money in index funds and [target date funds](http://en.wikipedia.org/wiki/Target_date_fund). ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [July 18, 2013, 9:35pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/39 "2013-07-18T21:35:41Z")
> [@FeAudrey](#): > > That’s less than half of what food stamps would be for a family of six. > > You’ll see “four and a half dollars a day” quoted, but that’s the average – SNAP is a means-tested benefit. The full ride allocation (varies a bit by state) is around seven dollars a day for an adult, a bit less for a kid (but they get WIC or school lunches and breakfasts, worth more than the difference). > > Even if you only qualified for a buck a day, it can be worth the trouble to apply, because being on the food stamp rolls qualifies you for other benefits. > > There are limits on assets as well as income. That $3000 you mentioned in your OP? That’s not “savings”, it’s “the ability to pay”. Your best move may be to put most of it to paying off the credit card balance, freeing yourself from that payment. We don’t qualify for food stamps, we do qualify for WIC. Food stamps are almost insanely impossible to get, it seems to me. I mean you have to be absolutely destitute, basically. (Maybe that’s a good thing.) ---
**Author:** ![EmilyG](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/emilyg/32/364_2.png) [@EmilyG](https://boards.straightdope.com/u/EmilyG)\ **Post date:** [July 18, 2013, 10:40pm UTC](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845/40 "2013-07-18T22:40:26Z")
$3000 is a tiny amount of money? 😕 You could always do what I did when I had that amount: buy a bass clarinet. :rolleyes: [Previous page](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845.md?page=1) [Next page](https://boards.straightdope.com/t/is-there-something-i-should-be-doing-with-my-tiny-amount-of-money/663845.md?page=3)