What to Do With the Extra Money You Earn From Eureka

Ok, you just cashed out from Eureka and you have some extra money lying around...now what?

First off, good on you for looking for alternative things to do with your hard-earned cash! Most people already know what they want to do with the extra cash they make:spend it!

While that's the easiest (and typically most enjoyable) option, if you want to grow your wealth, there are some other important things to consider before spending your cash willy-nilly.

1. Pay Off High-Interest Debt

This isn't the most exciting option around, but if you have any high-interest debt weighing you down, it's best to get rid of it as soon as possible.

If you're not sure what classifies as "high-interest," anything with an annual interest rate above 5% should be a top priority to pay off. Typically, credit cards are the most common sources of high-interest debt for most people.

While it may seem pointless putting an extra $10 toward a large debt, you might be surprised at how much of a difference even a small amount of extra money can make in your debt payoff plan.

For example, let's say you have $1,000 in credit card debt at an annual interest rate of 20%. If you pay off the debt $100/month at a time, it'll take you about a year to pay off and you'll end up paying around $103 in interest.

On the flip side, if you pay $110/month instead -- just an extra $10/month -- it'll take you 2 months less to pay off your debt and you'll save $10 in interest payments. Not too shabby!

If you have multiple high-interest loans to pay off, there are two popular strategies you can follow:

Debt Snowball

This strategy involves paying off the smallest debt first, without worrying about interest rates.

For example, if you have two credit cards -- credit card A and credit card B -- and credit card A has a $1,000 balance while credit card B has a $5,000 balance, you'd put all your extra money into paying off credit card A first, while making the minimum payment on credit card B.

The idea behind this method is that paying off the smallest debt first is easier and more motivating.

Debt Avalanche

This strategy involves paying off the highest interest rate debt first.

For example, continuing from the above, if credit card A's interest rate was 15% and credit card B's interest rate was 20%, you'd put all your extra money into credit card B first, while making the minimum payment on credit card A.

This strategy follows a more mathematical approach; it's typically faster and will help you save more money on interest payments in the long run.

2. Build Your Emergency Fund

This option is, again, not that exciting, but it can be a real lifesaver (and money saver).

An emergency fund is a sum of money set aside strictly for emergencies like job loss, medical bills, car repairs, vet bills, and similar.

Things like last minute birthday gifts, on the other hand, should not be funded with your emergency money.

In other words:

If it's not absolutely essential or life-threatening, you shouldn't use your emergency fund for it. That way, when a real emergency does arise, you'll already have the cash on hand to cover it without needing to resort to credit cards or other high-interest loans.

To start your emergency fund, make it a goal to save up $500-$1,000. This isn't a lot, but it will cover small emergencies. Over time, expand your fund to be able to cover 3-6 months worth of essential living expenses. That way, you're covered for bigger emergencies like job loss.

For storage, try to keep your emergency fund separate from your regular savings account so that you don't accidentally dip into it -- but make sure it's still easily accessible. A high-interest online savings account can be a good choice for this.

3. Set Cash Aside for Irregular Expenses

In addition to setting money aside for emergencies, you should also consistently set money aside each month for irregular expenses like:

Gift-giving (e.g. birthday gifts, Christmas, etc.)Hair cutsNew clothesQuarterly or yearly subscriptions; and more

These expenses aren't exactly emergencies, but they are things that you'll most likely need money for throughout the year. By making it a habit to set aside a small amount each month for them, you won't have to worry about taking on debt to fund them when they do come around.

Similar to your emergency fund, it's a good idea to keep the money you save for irregular expenses separate from your main savings account.

4. Invest In Your Favorite Stocks

You might only be cashing out $10 from Eureka, but that doesn't mean you can't use that money to invest in big companies like Apple, Google, Tesla, or Disney!

With Robinhood, you can buy fractional shares of stocks, meaning you can invest in almost any company you want with as little as $1.

5. Fund Another Side Hustle/Business

If you want to reinvest your extra cash but you're not interested in trading stocks, why not fund another side hustle or business endeavor?

$10 might not seem like enough to reinvest into anything worthwhile, but you'd be surprised. Take that money to a thrift shop or garage sale and you could end up turning it into $100 or more if you have a good eye for underpriced goods.

For example, take a look at this Reddit thread of people sharing super profitable $1 flips. One user found an old "Teaching With Calvin and Hobbes" textbook for $0.50 and flipped it for $1,100!

Finding extremely profitable flips like this isn't a common occurrence, but turning your $10 into $15-$20, and then repeating the process over and over, is definitely a possibility.

6. Donate It

If you're feeling generous and you don't need the cash urgently, why not donate it to a cause that you support? This is a great way to use your extra money to make a difference in the world, and it'll make you feel good, too.

As a small bonus, any charitable donations you make throughout the year are tax deductible.

7. Treat Yourself

If you're debt free, already have an emergency fund and savings in place, and you're consistently investing a portion of your income, don't hesitate to use your extra money to treat yourself every once in a while! You've earned it.

Don't have anything you want right at this moment? Set the money aside for a future vacation, a new gadget, or some other big purchase. This is a great way to get used to setting (and hitting) large financial goals.

Final Thoughts

While a bit of "extra" money here and there might not seem very significant, over time, it adds up! Be sure to use it productively and you'll not only create a better financial future for yourself, you'll also build some great habits while you're at it.