5 Things You Could Do With $8000

With only three months left in the program that pays first-time homebuyers an $8000 tax credit, those hoping to take advantage of the offer will need to act quickly. November 30^th is when the program is scheduled to expire and, even though some lawmakers are pushing for an extension, this is money that you might be leaving on the table starting December 1^st. The money is part of the economic stimulus package and is reserved for first time homebuyers, which in this case can be defined as anyone who has not owned a home for the past three years and meets income requirements to qualify.

Most people can probably think of a lot of things to spend the $8000 on, but here are five ideas that you could consider if you’re a first-time buyer thinking of entering the housing market:

- Pay Down Debt: Purchasing a home when you’re in a position to do so can be a very wise financial decision. If you’re receiving $8000 as an incentive to make that wise decision, why not use that money to improve your financial circumstances? Most Americans carry a debt balance that they would love to reduce but it’s difficult to do when most of each paycheck is already reserved for other needs within your budget. An $8000 windfall could put a big dent in credit card debt or pay off a car or student loan and put you in a stronger cash flow position moving forward.

- Start A Business: With unemployment continuing to increase and many employees seeing their pay or hours reduced, the idea of starting a business to generate primary or supplemental income is appealing to many people right now. The average startup costs for a small business are between $10,000 and $15,000, so your tax credit could go a long way in funding your own small business and allowing your inner-entrepreneur to see what it can do!

- Purchase Health Insurance: If you are among the millions of Americans not currently covered in a health insurance plan, this money could be used to fund good health insurance for close to a year for many families. The government may or may not come up with a solution to insure those currently without the protection of insurance, but you’d sleep better at night in your new home knowing your family was covered in the event of a major medical expense.

- Upgrade Your New Home: Many of the homes being purchased today are at deep discounts compared to normal market prices, but the homes are usually also in need of some TLC. Your $8000 could be used to upgrade flooring, paint, appliances, or other areas that could make your house feel more like home to you. Doing at least some of the work on your own will stretch those dollars even further.

Start an Emergency Fund: In a poor economy, it’s a great idea to have some cash in a safe place to guard against a future job loss or some other financial hardship. This money should be kept in an FDIC insured, interest-bearing account. A good rule of thumb is that you should have 3-6 months worth of living expenses in an emergency fund.