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Smart Buying

Great Ideas for $500 or Less

A little bit of money can go a long way. We recently suggested smart ways to invest or spend $1,000. But not everyone has a spare grand sitting around. Here are a dozen ideas for what to do with $0 to $500.

When a little bit of money is all you've got, you want to make sure you get the biggest bang for those bucks. We recently featured 47 creative ideas of what to do with $1,000, but we know that not everyone has a spare grand sitting around. So we came up with a dozen great ways to spend or invest less than $500. There's something here for everyone -- we even tossed in a couple of smart ideas that you can do for free.

And even if you're short on cash, don't overlook our $1,000 ideas completely. Some of them, such as paying down credit card debt, starting a college fund and sprucing up your front yard, are moves you can pull off on varying budgets, proving that you don't have to be rolling in the dough to make smart choices -- or have some fun -- with your money.

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When you've got $0

Give yourself a raise. If you're itching to try one our other great ideas for your spare cash, but you have no spare cash, simply boost your take-home pay. No, you don't have to muster the courage to ask your boss for a raise. Rather, you should take a look at your W-4 form that you filled out with your human resources department on your first day of work. On this piece of paper, you told the government how much money to withhold from your paycheck for taxes. It all comes down to how many "allowances" you claim. The more allowances you claim on your W-4, the less income tax will be withheld. If you claim zero allowances, you will have the most tax taken out.

Most of us give Uncle Sam too much money, which is why we get tax refunds in April. But that's like giving the government an interest-free loan. Instead, get your money as you earn it throughout the year by filing a new W-4 with your employer. Try our easy withholding calculator to get an idea of how many allowances you should be claiming. Then, get more ideas of ways you can give yourself a raise and tips for breaking away from living paycheck to paycheck.

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Another way to give yourself a raise is to spend less throughout the month to free up more cash in your budget. Check out our Ultimate Savings Guide for 89 specific ideas of how to save on just about everything, from insurance to cable TV to energy bills.

Check up on your credit. Do you know what your credit history is saying about you? The information on this document can influence your ability to buy a home, take out a car loan, get a low rate on your credit card, secure insurance coverage or even land a job. It also can help you find out if you've been a victim of identity theft. You used to have to pay to check your reports from the three major credit bureaus -- Equifax, Experian and TransUnion. But thanks to a new law you can do it for free once a year through AnnualCreditReport.com. You can pull all three reports at once or spread out your requests over 12 months. Either way, it's a wise financial move that won't cost you a dime. In as little as five minutes, you can have your report in hand to check for errors and look for other ways to improve your credit. That's time well spent.


When you've got $100

Prepare for an emergency. As recent disasters have demonstrated, there may come a time when you have to leave your home quickly. Creating a grab-and-go survival kit with food, water and supplies to last at least three days will help hold you over until your situation stabilizes. You can buy a basic, pre-made 72-hour kit for two people at The Red Cross Shop for $55. Use your remaining $45 to add personalized items to your kit, such as a spare set of house and car keys, medications and special items for babies, pets and elderly members of the family. Learn more about how to craft a common-sense emergency plan for your family.

Bring your home movies into the 21st century. Whether you want to edit and e-mail movies or simply preserve your precious memories for posterity, going digital makes a lot of sense for your home movies on VHS tapes. And pulling it off is cheaper than you might think. Most new computers already come with a DVD burner. (Or you can add one for about $50.) Then, you'll need a device that can convert your VCR or camcorder's analog signals to digital and some editing software. Several manufacturers bundle the hardware and software together for about $100, including ADS's DVD XPress and Pinnacle's Studio 500-USB. You simply connect your VCR or camcorder to the converter box, which you then connect to your PC through a USB jack. Then you can upload your home movies to your computer, edit them, add music and effects, and then save them on a DVD. For half the price, you can go with AverMedia's DVD EZMaker ($50), named a "best buy" by PCWorld magazine. But the device relies on your computer to do the analog-to-digital conversion, so you'll need a fairly new PC to handle the job.

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When you've got $200

Become a millionaire. You don't need mega bucks to retire rich. The important thing is to get started saving because even small amounts will grow over time. For example, if a 27-year-old invested just $200 every month, she'd have more than $1 million saved by the time she turned 65, assuming an annual 10% return on her investments. And if she stashes that cash in a tax-sheltered Roth IRA, every dime of that million is hers -- she won't owe a cent to Uncle Sam. See how your your own regular small investments can pay off big over time, and learn more about the benefits of Roth IRAs.

When investing on a regular basis, consider a traditional mutual fund for your Roth IRA. A great place to start is one that tracks a general market index, such as T. Rowe Price's Spectrum 500 Index (PREIX). Sign up for its automatic investing program, and you can get around its usual $1,000 required minimum investment.

If your $200 windfall is a one-time event -- not monthly -- you can stash it in an exchange-traded fund which also mirrors the performance of a market index, but trades like a stock. You'll need a broker and you'll pay commissions each time to buy or sell an ETF, which is why this approach doesn't make much sense for someone with little cash who plans to invest every month. But for an occasional windfall, they're a cheap and easy way to start down your road to wealth. Learn more ways to invest with $500 or less.

Cut your computer cords. Ah, to be free. By installing a wireless network, you can read e-mail while fixing dinner in the kitchen, buy airline tickets from your living room couch or prep tomorrow's presentation while keeping an eye on the kids in the backyard. If you already have a cable or DSL connection, all you'll need is a wireless router (about $50 to $80) to connect to your modem, as well as a wireless networking card for your laptop. Most newer laptops already come with a built-in networking capabilities, but if you're working with an older laptop, you can get a card for about $30. You can buy a kit that comes with a wireless router and one access point for about $80 to $100 from leading manufacturers such as Netgear and Linksys. And once your network is up and running, take these necessary -- and free -- steps to protect it from predators.

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When you've got $300

Get a secured credit card. It's a modern twist on the classic chicken-or-the-egg conundrum: You can't get credit until you have a history of repaying credit. So when you're just starting out, you can get around that rule and build a credit history from scratch with a secured credit card. These cards allow you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don't pay on time, it can dip into your account to cover the bill. Many issuers let you get started with a deposit of as little as $300. You build a history just as fast with a secured card as with a regular one, and after one year of making on-time payments, you can graduate to an unsecured card. You'll want to shop around for the lowest fees and interest rates on secured cards. Avoid those that charge application or processing fees. And make sure the issuer reports to the three major credit bureaus -- some smaller banks may not.

Get fit. How about an investment in your health? Working out can help you burn fat, lose weight, build muscle and even lower your stress. But you don't need a pricey gym membership or expensive home equipment to get the body you want. All you need is comfortable workout clothes ($50 to $100) and a few low-cost basics that satisfy the three pillars of a well-rounded workout: cardiovascular exercise, strength training and flexibility training.

For cardiovascular, consider any activity and gear that gets your heart pumping, such as a jump rope, trampoline, punching bag or aerobics video. You could even take up a sport such as basketball, tennis or racquetball. But one must-have item is a good pair of shoes ($50 to $100). Check out the American Academy of Podiatric Sports Medicine's lists of recommended shoes for running, walking, aerobics, basketball and other sports.

For strength training, start with a set of hand weights, suggests James Griffing, personal trainer and author of fitness database ExRx.net. You can buy dumbbells individually or in a set from sports shops and other retailers. Lifting lighter weights at more repetitions is good for toning muscle. Lifting heavier weights at fewer reps is better for bulking up and building strength. At Target, for example, we found a 32-pound hand weight set for toning ($50) or a heavy-duty 115-pound set for bulking up ($20).

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And last is flexibility training. The American College of Sports Medicine recommends a stretching routine two to three times a week. You can check out a Pilates or yoga video from the library to find one you like before buying. Or, simply get a book that illustrates different stretches. Then, protect your back with a good-quality exercise or yoga mat that doesn't slip ($20). Add an exercise band ($10) for resistance training, advises Gregory Florez, a spokesperson for the American Council on Exercise and CEO of FitAdvisor.com.


When you've got $400

Appraise your home equity. How's this for a tradeoff: Spend about $400 to have your home appraised, and save thousands dollars a year on private mortgage insurance (PMI).

To protect themselves in case you default on your loan, lenders usually require PMI if you put less than 20% down when you buy a house. Annual premiums cost 0.5% to 1% of the loan amount, so you could end up paying $1,500 to $3,000 a year on a $300,000 mortgage -- a hefty fee that gets you absolutely nothing in return. (Get the Lowdown on No-Down Home Loans.) But lenders must drop PMI when your equity in your home exceeds 22%. This is typically based on building equity through regular monthly payments, which could take a long time. But with the run up in home values over the past few years, you may be able to drop PMI based on your home's increased value.

Suppose you buy a $330,000 home, put down $30,000 and take out a $300,000 mortgage. You start out with 9% equity. But if your house increases in value to $400,000, your equity stake grows to $100,000, or 25% of the home's new value -- not counting any payments you have made. Lenders generally are willing to drop PMI if your equity reaches at last 25% of the house's value between two and five years after you take out the mortgage, or 20% after five years. To get the benefit, you'll have to provide your lender with a home appraisal proving that the property's value has increased. Warning: The lender can deny your request if you have made any late payments. Find an appraiser in your area through the American Society of Appraisers or the Appraisal Institute. --Kimberly Lankford

Start saving for the short term. We talk a lot about saving for a rainy day or with a long-term outlook. But using a little extra cash to plan ahead for more immediate needs could help you avoid the money crunch for big expenses that you actually expect to come up throughout the year, such as holiday gifts, insurance premiums, car and home repairs and vacations. By taking the money out of your regular checking account and setting it aside, you'll avoid spending it on a whim and resorting to your credit card in a pinch. But you don't want the cash lying around the house tempting you to spend it -- nor do you want it in a basic bank savings account yielding next to nothing. Instead, set up several mini savings accounts with an online high-yield account, such as ING Direct, Emigrant Direct or HSBC Direct. All three link to your main checking account so you can make transfers online, and they currently pay between 4.25% and 4.8% on your deposits.

You can title the accounts whatever you want to make your goals clear and keep your focus. You can make a one-time transfer online or arrange to have the money automatically transferred each month. Even making small regular deposits can add up big: $33 a month will net you $400 in one-year's time. So, when you're ready to play Santa or get new tires on the car, you'll have a jump-start on the costs.


When you've got $500

Travel on a whim. Waiting to the last minute to book a vacation could cost you a pretty penny. But do it right and you could make a fabulous getaway on $500 or less. Start by visiting Web sites that specialize in last-minute travel deals, such as Site59.com, which offers airfare/hotel packages on a week or two of notice. We recently found a four-night trip from New York City to Orlando, Fla., on one week's notice for only $340 per person -- and that included plane tickets and a hotel. You can even snag a stellar deal on last-minute cruises at SkyAuction.com or Moments-Notice.com. We recently found a four-night western Caribbean cruise departing from Miami on Carnival Cruise lines for $342 per person, including all taxes and fees. The sailing date was only nine days away. Bon voyage!

Get professional financial advice. The services of financial planners used to be reserved only for the wealthy set. But more firms are starting to offer fee-based advice, where you pay $100 to $150 per hour to meet with a financial adviser and set up a plan for the future, even if you aren't ready -- or can't afford -- to become a regular client. The Alliance of Cambridge Advisors, the Garrett Planning Network and several other firms have pre-screened planners throughout the country who can offer one-time fee-based advice and affordable rates, which can help you craft a specific personalized plan for you to get your finances on track. What $500 won't buy, however, is someone to manage your investments regularly, do complex estate planning or make sure you follow through on the planner's recommendations. See Make a Financial Match Online for more adviser resources on the Web.