15 of the Smartest Things You Can Do With $500 Right Now

By Todd Campbell Markets Fool.com

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If you have an extra $500 in savings, and you're wondering how to spend it wisely, you might want to consider these 15 ideas.

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1. Invest in an index ETF

Investing in the stock market can be confusing, and if the thousands of investment options are keeping you from getting started, then it might make the most sense to focus on the S&P 500 index. The index includes the biggest and most profitable companies in America, and many of those companies reward investors with dividends. Historically, dividend-paying stocks have outperformed non-dividend-paying stocks, so this could be a savvy move. Wondering how to buy the S&P 500? Consider Vanguard's S&P 500 ETF (NYSEMKT: VOO). It has an absolutely rock-bottom expense ratio of 0.05%, and that means more money in your account, and less money in your broker's wallet.

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2. Pay down credit cards

According to creditcards.com, the average interest rate charged on a credit card is 15.07%, and even if your rate is lower than that, a decision by the Federal Reserve to increase rates up to three times this year means that your rate could be heading higher. Rather than pay more money to your credit card company, consider using your extra money to pay off some of your debt. If you lower your balance by $500, you'll save $75 in your first year, at today's interest rates.

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3. Make an extra payment on a mortgage

Sure, $500 may not seem like a lot when you owe $100,000 or more on a home, but you'd be surprised how much you can save in total interest over the life of your mortgage by paying an extra $500 toward it every year.

According to mortgagecalculator.org, increasing your monthly payment by $41.67 per month will turn a $100,000 30-year mortgage into a 25.8-year mortgage, and it will save you $13,697 in interest payments over the loan period, assuming a 4.5% interest rate.

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4. Start an IRA

IRAs are one of the best investment tools out there, because contributing to one can save you money at tax time. A traditional IRA, for example, allows you to take a tax deduction in the amount of your contribution. So if you're in a 25% marginal income tax bracket, the tax savings are meaningful on a $500 contribution.

If you don't pay taxes, or you think your tax rate may be higher in retirement than it is now, then a Roth IRA might be a better choice. You don't get the tax break up front, but money can be withdrawn from a Roth IRA in retirement tax free, including gains, as long as you follow the rules.

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5. Consolidate some debt

If you have a lot of expensive debt on one credit card, and a lot of room on another credit card, it may make sense to pay a fee to transfer some of that debt to a card that has a better rate.

Most credit card companies charge between 3% to 4% to transfer balances, so paying a $500 fee could allow you to transfer as much as almost $17,000. Assuming the national average interest rate of 15% on your expensive credit card, and a 0% transfer offer that's good for 12 months on your other card, you could save over $2,000 in one year, after fees.

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6. Buy life insurance

No one wants to think about their own mortality, but if you have a family that depends on your income to pay day-to-day expenses, then buying a term life insurance policy could be smart.Term life insurance prices vary, but a healthy person in his or her 30s can reasonably expect to buy a $500,000 policy for about $500, or less, per year.Usually, your beneficiary won't have to pay taxes when he or she receives life insurance, so owning a term policy like this can provide significant peace of mind.

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7. Fix your car

The average cost of a new car is at a record high that's north of $30,000, and with interest rates climbing, financing a new car is getting even more expensive. Rather than trading in your old car and taking on hundreds of dollars in monthly payments, a better option may be finding a reliable mechanic. Most mechanics can thoroughly inspect your car in an hour, or less, and afterward they can give you an honest opinion about how long your vehicle might last. If your car only requires regular maintenance items, such as brakes or tie rods, paying for those repairs could be smarter than paying thousands of dollars per year in new monthly payments.

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8. Get a health screening

If you're unhealthy, you can't work, and if you can't work, you run the risk of losing out on income. Oftentimes, preventative health screening can catch health problems before they become chronic and costly.

For example, your health insurance may not cover the cost of lab work, such as cholesterol screening, but people with risk factors, such as high blood pressure and a family history of stroke, can get a work-up for less than $500. Those lab results can help doctors make recommendations that could delay or prevent heart disease, allowing you to live longer, and avoid costly hospitalizations and surgery.

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9. Get a certificate

The average American worker got a 2.9% income bump in the past year, according to Glassdoor, and if you got less than that, or you'd like to get an even bigger raise, then you might want to invest in some additional training that you can mention to your supervisor during your next review.

Community colleges and universities offer certificate programs across a variety of industries and job functions, so if you're unsure what certification to seek out, ask your human resources department or manager for suggestions. You might even discover that your employer is willing to split the cost of training with you.

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10. Plant a garden

A family of four can easily spend more than $150 per week on groceries, according to the USDA, and if you buy a lot of fresh food, then that bill could head north of $200 per week.

Instead of paying out that much every week, consider investing in a garden that can provide you with fruits and vegetables to eat year round. One tip: Starter plants grown at a local nursery cost more than seeds, but if they've been grown nearby, they have a better chance of surviving in your climate and soil. Also, depending on your diet (and your town's zoning restrictions), consider building a pen to house hens for eggs, too.

One caveat: If you don't have a green thumb, it's best to leave the gardening to the professionals.

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11. Weatherize your home

If you live in an older home, you could be wasting a lot of money on home heating and cooling every year. Rather than watch your bills increase, it could make sense to take action and get rid of some drafts. While$500 isn't going to buy you new windows throughout your home, it can help you add attic insulation and seal windows and doors. If you don't manage your home's temperature with a programmable thermostat, buying one can reduce unnecessary costs of heating and cooling your home when you're at work or asleep.

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12. Get your system cleaned

Speaking of heating and cooling costs, if you're neglecting your heating or cooling system's annual maintenance, you could be using more fuel and electricity than you should be, and that can be costly. Even worse, forgoing regular maintenance on these systems can lead to their early failure, and if that happens, you could face costs in the thousands of dollars for repairs or replacement. Given that risk,spending a few hundred dollars to get your systems in tip-top shape can be money well spent.

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13. Take a trip

Up for a change? Now might be the perfect time to travel to another part of the country and consider a career change. Incomes differ greatly depending on where you live, and so can living expenses. Changing jobs can net an average 4.5% pay increase, according to ADP, and if that pay increase is for a job in a low-cost state, that's even better.

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14. Join a gym

Sticking with a gym membership isn't easy, but people who go regularly to gym may discover it's not just good for their physical health. Researchers published a study in the Journal of Labor in 2012 showing that employees who exercise regularly earn 9% more than their peers. Based on today's average income, getting that kind of a bump up in earnings should more than cover the cost of joining a gym. Memberships at value-oriented gyms can be as cheap as $10 per month, and memberships atslightly more upscale gyms can still cost less than $500 per year.

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15. Start networking

People who find jobs through their career network get hired 55% faster, according to Jobvite, and mentoring and guidance provided by a network can significantly improve your chances of getting offered jobs before they're advertised. While some networking opportunities are easier to spot than others, many industries have groups that meet regularly, and joining a club focusing on your favorite hobby can open doors, too. If you're a college graduate, a great place to begin searching for networking events is by making a call to your school's alumni office. Often, you'll find plenty of alumni outings nearby, and while you'll spend some money on clothes, dinners, and outings, it could help you land your dream job.

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