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Alaska Life

PFD direct deposits drop this week. Here are smart ways to spend your $1,100

  • Author: Donna Freedman
  • Updated: October 3, 2017
  • Published October 2, 2017

The Alaska Permanent Fund dividend direct deposits — $1,100 per person — drop this Thursday. That's about $672 million worth of kick-in-the-pants to the state economy.

Of course, not everyone gets all $1,100. Some Alaskans will have some (or all) of their PFDs garnished due to unpaid child support or other monies owed. Even so, that often translates to extra money floating around Alaska.

Or not. People responding to a Facebook request for info cited other ways to use the PFD: taking care of bills (including student loans), paying down credit cards, plumping up a child's college fund.

It's a safe bet that a whole lot of PFD dollars will be used in other ways. Those who live in Anchorage, Fairbanks or Juneau could get five round-trip tickets to Seattle, thanks to airfare sales announced by Alaska Airlines, Delta and Ravn Alaska. Prices are also swell for in-state travel, according to travel columnist Scott McMurren. (See his article, "Here are the best PFD deals on airfare.")

Take a look at the ads in the Friday and Sunday editions of Alaska Dispatch News and you'll find PFD-specific sales for those who hunt, fish, do their own home repairs or want to freshen up the place a bit. Need a new chainsaw, mattress, generator, retractable ratchet straps, pivot-lock ladder hunting stand, sofa and loveseat, drill set, or skinning and deboning knives? Area stores are begging for the chance to hook you up. Buy local and save shipping costs — and, maybe, some local jobs.

A more lasting benefit

Keep this in mind, too: As tempting as it is to buy that gorgeous new dining table or hop on a plane to Hawaii, the PFD is an excellent chance to improve your life in more lasting ways.

It's not an all-or-nothing scenario. Personal finance writer — and former Alaska journalist — Liz Weston (AskLizWeston.com) suggests using 10 percent of any windfall on something you really want and using the rest on a more enduring goal. You'd keep a Benjamin for yourself and use the rest in ways that will benefit you for the coming year, or maybe for always. A few ideas:

• Start an emergency fund. Having even $1,000 in a fund dedicated to the oh-shoot moments (car repair, medical co-pay) is great for your peace of mind.

• Pay down credit card balances. Ideally, you'd slay the debt dragon for good. If not, throw the $1,000 (or as much of it as you can spare) at the balance with the highest interest rate.

• Save for retirement. As they say, the best time to start a retirement plan is 25 years ago. The second-best time is today. If your employer doesn't have a plan, start a Roth IRA or create some other plan yourself; Google "retirement planning basics" to find out more. (Bonus: You may be eligible for a tax credit of up to 50 percent of the amount you save, thanks to the Saver's Tax Credit.)

• Start a college plan for your kid(s). The UA College Savings Plan might be a good fit; if not, Google "college savings plans" and start educating yourself. In 2017, college students graduated with an average debt of $27,857. Letting your child(ren) have a loan-free education is a gift that truly keeps on giving.

• Keep up on upkeep. Get the car serviced, and check the tires, too. Have your furnace inspected, because it's cheaper to prevent a problem than to fix it (especially if the system conks out 2 a.m. on a weekend). Deferred maintenance isn't just about autos and appliances, however. Get a general physical exam; if you have insurance, it's covered. No insurance? The Anchorage Neighborhood Health Center offers services (including dental care) on a sliding scale basis. And if you haven't had your eyes examined lately, look for new-patient specials online or through Good Deals magazine, those Valpak envelopes or the pages of Alaska Dispatch News.

• Buy a transit pass. Been buying a dozen People Mover passes per year? That comes to $720 per year. An annual pass is $660. Congratulations: You just added $60 to your yearly budget. (Note: The annual pass is half-price to some groups, including seniors, veterans, the disabled and those on Medicare.)

• Join a warehouse club. If you're feeding a houseful, the money you save on staples will more than cover the annual membership fee. Note: Do this only if you are a disciplined spender. Otherwise, you may go in for dried beans and milk and walk out with five pounds of gummy bears and a trampoline. Not that there's anything wrong with chewy sweets or bouncy items. Mix it up, though. Enjoy a treat (or more than one), while keeping an eye on the long game.

That week in Hawaii sounds great. You know what else sounds great? A debt-free college education, a secure retirement or even just a furnace that works.

Donna Freedman, a former Anchorage Daily News reporter and reviewer, blogs about money and midlife at DonnaFreedman.com.

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