The state of Alaska has given a payment, known as the permanent fund dividend to eligible Alaskan residents every year since 1976. The amount of this payment, however, varies from year to year and is based off of previous oil prices. The smallest permanent fund dividend was paid in 1984 in the amount of $331.29 and the largest dividend was paid in 2008 when a one-time energy allowance of $1200 was added to the dividend making the total amount $3,269. The amount of the 2010 permanent fund dividend was announced on September 21st to be $1281. This amount will begin to be paid to all Alaskan residents who are eligible beginning with direct deposit services on October 7th.
Alaskans celebrate this time of year, often by flooding the local economy with the money from the permanent fund dividend payments. Many spend this money on bills, while others spend it on luxuries. But what are some smart ways you can spend you permanent fund dividend this year?
Pay of credit cards and debt
This is one of the more obvious ways to spend your permanent fund dividend. If you’re like most Americans, you probably have some debt to your name, whether its a car loan, medical bills, or just credit cards gone awry! It’s really easy to let your debt keep sliding and piling up, but it’s not good to do so! Most debt accumulates interest as it ages, making the amount you owe increasingly higher, the longer it takes you to pay it off. By knocking out your credit card bills or debt, or even just chipping a large chunk of it away with your permanent fund dividend, you’ll reduce the interest rates and monthly payments, giving yourself more free money each month. These debts can hurt your credit score too, so if you’re looking to buy a home or take out any kind of loan in the next few years, this is even more important.
Car repairs and maintenance
Does your car need a tune up? An oil change? New winter tires? New brakes? Now is the time to get it done, while you have the money. Your car may be an essential part of your life, providing transportation to and from work, or meeting other necessary transportation needs. Make sure your car is ready for the winter with good winter tires, and effective brakes.
Pay ahead on your monthly bills
If you’ve lived in Alaska for a while, you’re probably more than well aware that the winter months are much more expensive to live than the summer months. The cost to heat your home go up, and things are more likely to go wrong in the colder months, such as a heater needing replaced, or pipes needing to be thawed. You can make the burden of these expenses a little less on yourself by paying your mortgage, rent, car payment or utilities. This will help free up a little monthly money to use for emergencies during the winter months.
Is your hot water heater needing replaced? Is the carpet shred to the point its unbearable? Consider using your permanent fund dividend to make some much needed repairs. Perhaps consider using part of your permanent fund dividend to weatherize your house, saving yourself even more money on your heating bills. However, if you have other debts or financial concerns, make sure not to go overboard and only stick with the repairs that are needed, rather than just cosmetic improvements.
Clothing and other necessities
Do your kids need new shoes or winter boots? Are you in dire need of a new coat? Get these things taken care of but be sure not to go overboard. Shopping sales, clearance racks and using coupons can help stretch your permanent fund dividend even further. If you want to save even more money, checking out thrift stores like the Salvation Army or Value Village may cut costs even further, and many times items in these thrift stores and in good condition.
If you have no pressing financial concerns, such as the ones outlined above, consider investing your permanent fund dividend into a savings account or savings bond. This will earn you money and increase in value over time.
Remember, it can be easy to forget what needs to be taken care of when you have a large sum of money at your disposal at once, however, ensuring you sort out priorities before getting your permanent fund dividend may help you avoid impulsive spending you may regret later.