It doesn’t happen often, but when Tim Stultz comes across a little extra money, he doesn’t bother thinking about the future.

And if an unexpected $1,000 happened to fall into his wallet, it wouldn’t be long before it would be back in circulation.

“I’d definitely spend it,” the 35-year-old lifelong Lawrence resident says. “That wouldn’t even see the bank. I’d go to Costco and get a couple cases of baby back ribs, five 30 packs and invite 20 of my closest friends over. We’d fire up the smoker and have a little barbecue.

“I’m definitely a consumer. It would be spent quickly.”

Such sentiments may have become commonplace across the country — the U.S. personal savings rate lingers at lows not seen since the 1930s — but financial planners in Lawrence and elsewhere are working hard to convince people to put a little more thought into their financial futures.

A person ending up with an “extra” $1,000 — be it through a tax refund, graduation gift or otherwise unexpected windfall — should stop to consider where the money would make the biggest difference, they say.

Among their suggestions:

• Paying off high-interest debt.


In the past decade, the number of payday loans has grown, calling for the need to limit what they consider predatory lending practices.

Struggling to pay 20 percent to 29 percent interest on credit card debt can take months and be a strain on anyone’s personal budget, says Chris Burk, a certified credit counselor for Housing and Credit Counseling Inc., which has offices in Lawrence, Topeka, Manhattan and Emporia.

Someone with an “extra” $1,000 should look at cutting credit debt first, he says.

“Those higher interest rates, knock them down,” he says. “You can save money by paying down those balances. You can save money in the long run by paying off the balance in full, or faster.”

• Build a cash reserve.

Once someone’s paid off the credit debt, don’t stop there, says Peggy Johnson, a senior financial planner for American Express Financial Advisors in Lawrence.

After paying $100 a month to erase a credit card balance, decide to set that same amount aside each month to build a cash reserve — enough to cover three months of living expenses, she says. The money would come in handy in case of a layoff, medical emergency or other unforeseen problem.

“It’s for everything: all the way from the mortgage payment, utility bills, rent, groceries, gas for the car, going out to eat — everything,” Johnson says. “If you were paying $100 a month on the debt that’s now paid off, you’re already used to that money going out. Just put it into your cash reserve — checking, savings, money market, whatever — until you get it to the level it should be.

“Then you can start the fun stuff: saving for retirement and educational goals. That’s the fun stuff. But this is the important stuff: Everything falls apart if you don’t have a reserve. The glue of all financial planning is you have to have a good cash reserve.”

• Consider entering the market.

Stephen Edmonds, senior vice president for Morgan Stanley in Lawrence, said that people ready to get into the market would do well to consider index funds, which cover a wide variety of companies to ensure a diversified portfolio.

Some unmanaged funds carry relatively low fees — some that he recommends cost $2.30 for $1,000 invested, plus commissions — and allow people to spread their risk across a wide area.

Spreading $1,000 among four sectors — large cap, mid cap, small cap and international — could give an investor ownership in 2,000 companies.

“My theme would be to diversify, and to do it in the lowest-cost way possible,” says Edmonds, who has been advising clients on investments for 35 years. “And then be realistic and patient. Don’t try to hit a home run right off the bat. But that’s a good, conservative way to invest your money.”