What's the best use for this money? Its only a small amount but can make a big difference to me
First and foremost, it's about changing habits.  It seems like you've learned a painful lesson with the car financing.  That's a good start.  I'd work on developing the habit of making a budget every month before you spend a penny. As for this money, I would pay off the Apple loan and put the rest in savings.  Then pay off the entire credit card balance the month before the rate increases. The point of putting the money in savings is not about making the small amount of interest.  You need to get in the habit of having money in an emergency fund and paying for unexpected emergencies out of that, not just throwing it on a credit card.  Ideally, budget over the next few months to pay off the credit card out of your income, not out of savings. Its very silly of you to have house savings while you have these debts.  Your total (listed) debt is 1657, with a savings of 2000, and a tax refund of 985.   I'd be done with the Apple loan and CC tomorrow.  Does that accomplish the goal of making a significant difference in your debt?  Yes it does. This will leave you with 1328.  I'd keep 500 or so in an emergency fund, and put the rest to the car.  Although 828 will not help much with the car it would probably knock a month off.   Next work like crazy to pay off the car.  Get a second job or work overtime. Then save a emergency fund of 3 to 6 months of expenses as if you already owned the house.  I would tend to go on the high side as I suspect you are single. Only then does it makes sense to save for a down payment.   Although it is an American institution, the book The Millionaire Next Door might be helpful for you.  Your most powerful wealth building tool is your income.  When one handicaps that tool with payments and exorbitant lifestyle choices you greatly reduce your ability to become wealthy. These amounts are so small, you should just knock them out.
"The fundamental concept of the time value of money is that money now is worth more than the same amount of money later, because of what you can do with money between now and later. If I gave you a choice between $1000 right now and $1000 in six months, if you had any sense whatsoever you would ask for the money now. That's because, in the six months, you could use the thousand dollars in ways that would improve your net worth between now and six months from now; paying down debt, making investments in your home or business, saving for retirement by investing in interest-bearing instruments like stocks, bonds, mutual funds, etc. There's absolutely no advantage and every disadvantage to waiting 6 months to receive the same amount of money that you could get now. However, if I gave you a choice between $1000 now and $1100 in six months, that might be a harder question; you will get more money later, so the question becomes, how much can you improve your net worth in six months given $1000 now? If it's more than $100, you still want the money now, but if nothing you can do will make more than $100, or if there is a high element of risk to what you can do that will make $100 that might in fact cause you to lose money, then you might take the increased, guaranteed money later. There are two fundamental formulas used to calculate the time value of money; the ""future value"" and the ""present value"" formulas. They're basically the same formula, rearranged to solve for different values. The future value formula answers the question, ""how much money will I have if I invest a certain amount now, at a given rate of return, for a specified time""?. The formula is FV = PV * (1+R)N, where FV is the future value (how much you'll have later), PV is the present value (how much you'll have now), R is the periodic rate of return (the percentage that your money will grow in each unit period of time, say a month or a year), and N is the number of unit periods of time in the overall time span. Now, you asked what ""compounding"" is. The theory is very simple; if you put an amount of money (the ""principal"") into an investment that pays you a rate of return (interest), and don't touch the account (in effect reinvesting the interest you earn in the account back into the same account), then after the first period during which interest is calculated and paid, you'll earn interest on not just the original principal, but the amount of interest already earned. This allows your future value to grow faster than if you were paid ""simple interest"", where interest is only ever paid on the principal (for instance, if you withdrew the amount of interest you earned each time it was paid). That's accounted for in the future value formula using the exponent term; if you're earning 8% a year on your investment, then after 1 year you'll have 108% of your original investment, then after two years you'll have 1.082 = 116.64% (instead of just 116% which you'd get with simple interest). That .64% advantage to compounding doesn't sound like much of an advantage, but stay tuned; after ten years you'll have 215.89% (instead of 180%) of your original investment, after 20 you'll have 466.10% (instead of 260%) and after 30 your money will have grown by over 1000% as opposed to a measly 340% you'd get with simple interest. The present value formula is based on the same fundamental formula, but it's ""solved"" for the PV term and assumes you'll know the FV amount. The present value formula answers questions like ""how much money would I have to invest now in order to have X dollars at a specific future time?"". That formula is PV = FV / (1+R)N where all the terms mean the same thing, except that R in this form is typically called the ""discount rate"", because its purpose here is to lower (discount) a future amount of money to show what it's worth to you now. Now, the discount rate (or yield rate) used in these calculations isn't always the actual yield rate that the investment promises or has been shown to have over time. Investors will calculate the discount rate for a stock or other investment based on the risks they see in the company's financial numbers or in the market as a whole. The models used by professional investors to quantify risk are rather complex (the people who come up with them for the big investment banks are called ""quants"", and the typical quant graduates with an advanced math degree and is hired out of college with a six-figure salary), but it's typically enough for the average investor to understand that there is an inherent risk in any investment, and the longer the time period, the higher the chance that something bad will happen that reduces the return on your investment. This is why the 30-year Treasury note carries a higher interest rate than the 10-year T-note, which carries higher interest than the 6-month, 1-year and 5-year T-bills. In most cases, you as an individual investor (or even an institutional investor like a hedge fund manager for an investment bank) cannot control the rate of return on an investment. The actual yield is determined by the market as a whole, in the form of people buying and selling the investments at a price that, coupled with the investment's payouts, determines the yield. The risk/return numbers are instead used to make a ""buy/don't buy"" decision on a particular investment. If the amount of risk you foresee in an investment would require you to be earning 10% to justify it, but in fact the investment only pays 6%, then don't buy it. If however, you'd be willing to accept 4% on the same investment given your perceived level of risk, then you should buy." "Yeah, I'll take the challenge...:) How trustworthy these are and what are their sources of income? These are in fact two separate questions, but the answers are related. How trustworthy? As trustworthy as they're clear about their own sources of income. If you cannot find any clue as to why, what for and how they're paying you - you probably should walk away. What's too good to be true usually is indeed too good to be true. For those of the sites that I know of their sources of income, it is usually advertisements and surveys. To get paid, you have to watch advertisements and/or answer surveys. I know of some sites who are legit, and pay people (not money, but gift cards, airline miles, etc) for participating in surveys. My own HMO (Kaiser in California) in fact pays (small amounts) to members who participate in enough surveys, so its legit. Are these sites worthwhile to consider for extra income? Not something you could live off, but definitely can get you enough gift cards for your weekly trip to Starbucks. What do I need to consider tax wise? Usually the amounts are very low, and are not paid in cash. While it is income, I doubt the IRS will chase you if you don't report the $20 Amazon gift card you got from there. It should, strictly speaking, be reported (probably as hobby income) on your tax return. Most people don't bother dealing with such small amounts though. In some cases (like the HMO I mentioned), its basically a rebate of the money paid (you pay your copays, deductibles etc. Since the surveys are only for members, you basically get your money back, not additional income). This is in fact similar to credit card rebates. Is there a best practice for handling the income? If we're talking about significant amounts (more than $20-30 a year), then you need to keep track of the income and related expenses, and report it as any other business income on your taxes, Schedule C. Is there a good test to determine what is and isn't a scam? As I said - if it looks too good to be true - it most likely is. If you're required to provide your personal/financial information without any explanation as to why, what it will be used for, and why and what for you're going to be paid - I'd walk away. Otherwise, you can also check Internet reviews, BBB ratings, FTC information and the relevant state agencies and consumer watchdogs (for example: http://www.scamadviser.com) whether they've heard of that particular site, and what is the information they have on it. A very good sign for a scam is contact information. Do they have a phone number to call to? Is it in your own country? If its not in your own country - definitely go away (for example the original link that was in the question pointed to a service whose phone number is in the UK, but listed address is in Los Angeles, CA. A clear sign of a scam). If they do have a phone number - try it, talk to them, call several times and see how many different people you're going to talk to. If its always the same person - run and hide. Do they have an address? If not - walk away. If they do - look it up. Is it a PMB/POB? A ""virtual"" office? Or do they have a proper office set up, which you can see on the map and in the listings as their office? And of course your guts. If your guts tell you its a scam - it very likely is." There are a couple of reasons that a person might choose to use insurance even if they could handle the financial loss if something went wrong. They know their risk better than the insurance company. While it might seem odd at first glance that an individual can be better at assessing risk than a large company with thousands of actuaries. There are limits to the amount of knowledge that an insurance company can have or use to price their insurance products. For instance if you were a very aggressive driver but didn't have any recent tickets or accidents because you were in college and didn't have a car on a regular basis, but now you have a job and drive 30 miles to work every day. You know your risk is relatively high but the insurance company sees you as relatively low risk and aren't able to price that extra risk into your premium. Just because a person can survive financial after losing something like a car or a house doesn't mean it isn't desirable to pay a small price to mitigate that risk. If you are using your savings to pay for an emergency then that money needs to be semi liquid in case you need it limiting your investment options. Where as if you purchase insurance you pay a small amount of money to be able to invest the rest of your money. Liquidity is a big deal particularly if you are a small business and investing into your business where your money can make your more money but you may or may not be able to access that money very easily. You can get no load annuities through some no-load financial companies like Vanguard so to start with I'd see how what she is being offered compares with something that comes free of a sales load. I'd also question that fixed rate, seems pretty impossible to me, which makes me think there is some catch or 'gotcha' that we are not seeing that either brings down that rate, or makes it delusional (they are kidding themselves) or deceptive in some way.  In any case it's setting off my 'too good to be true' alarm at full volume, along with the 'shark attack' alarm as well. (I would strongly suspect the 'advisor' is advising the product that makes the most money for him, NOT what is in your mother's best interest)  A fixed annuity is an insurance product, not a security, because the insurance company must credit the annuity holder’s account with the specified interest rate for the contractually-stipulated time period, regardless of market fluctuations in actual interest rates. It is the insurance company that bears the investment risk, which it does by investing the annuity holder’s purchase proceeds in fixed-income instruments that the company hopes will provide sufficient return to fulfill its contractual representations to the holder.  THIS is why there is no prospectus (it's not a 'security' they are not required to provide one by SEC) because the risk is entirely with the company. Obviously as pointed out in the comments, the company could easily go out of business (especially of they sell a lot of these and can't find a way to get that kind of return on the invested money).  Now, ask yourself, if I was the insurance company, would I be comfortable guaranteeing that level of return over that much time if I intend to make a profit from it, pay sales comissions, and stay in business?   In terms of 'will they stay in business' I'd have a hard look at their ratings, and go compare where that is on the total range for AM Best (they are lowest 'secure' rating, next thing down is in the 'vulnerable' category) and Standard and Poors (4 places down from their best rating, next thing down is 'marginal' followed by 'poor')   You might also want to see if you can get any idea of historical ratings, is this company's ratings falling, or rising?   Personally, for the amount of money involved, I'd want a company with MUCH higher ratings than these guys..  THEN maybe someone could say 'no risk', but with those ratings?  an no, I don't think so! BTW I'd check over what this bozo (um sorry, that's not fair to clowns) is recommending she do with her own funds as well.  For example is he recommending she take something that is already tax sheltered such as an IRA and investing the stuff inside that in an annuity (kind of pointless to 'double shelter' the money, or lock it up for a period of time when she may be required to make withdrawals) make sure you don't see something there that is actually against what is in her best interest and is only done to make him a comission. Setting aside for the moment the very relevant issue of whether you need the full amount quickly, I'll just tackle comparing which option gives you to maximum amount of money (in terms of real dollars). The trick is, unless you think inflation will suddenly reverse itself or stop entirely (not likely), $50K today is worth a LOT more than $50K in 20 years. If you don't believe me, consider that just 30 years ago the average price for a mid-level new car was around $3k. When you grandfather says he got a burger for a nickel, he isn't talking about 2010 dollars.  So, how do you account for this? Well, the way financial people and project managers do it to estimate how much to pay today for $1 at some point in the future is through a net present value (NPV) calculation. You can find a calculator here. In your question, you gave some numbers for the payout, but not the lump sum prize amount. Going solely on what you have provided, I calculate that you should take the lump sum if it is greater than $766,189.96 which is the net present value of 20 years of $50K Payments assuming 3% annual inflation, which is fairly a fairly reasonable number given history. However, if you think the out-of-control Gov't spending is going to send inflation through the roof (possible, but not a given), then you almost certainly would want the lump sum. I suppose in that scenario you might want the lump sum anyway because if the Govt starts filching on their obligations, doing it to a small number of lottery winners might be politically more popular than cutting other programs that affect a large number of voters. Theoretically there is always a time value of money. You'll need to keep your cash in a  Money Market Fund to realize its potential (I'm not saying MMFs are the best investment strategy, they are the best kind of account for liquid cash). Choose an accounts that's flexible with regard to its minimum required so you can always keep this extra money in it and remove it when you need to make a payment. Thanks for your service.   I would avoid personal investment opportunities at this point.  Reason being that you can't personally oversee them if you are deployed overseas.  This would rule out rentals and small businesses.  Revisit those possibilities if you get married or leave the service.   If you have a definite time when you would like to purchase a car, you could buy a six or twelve month CD with the funds that you need for that.  That will slightly bump up your returns without taking much risk.  If you don't really need to buy the car, you could invest that money in stocks.  Then if the stock market tanks, you wait until it recovers (note that that can be five to ten years) or until you build up your savings again.  That increases your reward at a significant increase in your risk.  The risk being that you might not be able to buy a car for several more years.   Build an emergency fund.  I would recommend six months of income.  Reason being that your current circumstances are likely to change in an emergency.  If you leave the service, your expenses increase a lot.  If nothing else, the army stops providing room for you.  That takes your expenses from trivial to a third of your income.  So basing your emergency fund on expenses is likely to leave you short of what you need if your emergency leaves you out of the service.   Army pay seems like a lot because room (and board when deployed) are provided.  Without that, it's actually not that much.  It's your low expenses that make you feel flush, not your income.  If you made the same pay in civilian life, you'd likely feel rather poor.   $30,000 sounds like a lot of money, but it really isn't.  The median household income is a little over $50,000, so the median emergency fund should be something like $25,000 on the income standard.  On the expenses standard, the emergency fund should be at least $15,000.  The $15,000 remainder would buy a cheap new car or a good used car.  The $5000 remainder from the income standard would give you a decent used car.   I wouldn't recommend taking out a loan because you don't want to get stuck paying a loan on a car you can't drive because you deployed.  Note that if you are out of contact, in the hospital, or captured, you may not be able to respond if there is a problem with the car or the loan.  If you pay cash, you can leave the car with family and let them take care of things in case of a deployment.   If you invested in a Roth IRA in January of 2016, you could have invested in either 2015 or 2016.  If 2015, you can invest again for 2016.  If not, you can invest for 2017 in three months.  You may already know all that, but it seemed worth making explicit.   The Thrift Savings Plan (TSP) allows you to invest up to $18,000 a year.  If you're investing less than that, you could simply boost it to the limit.  You apparently have an extra $10,000 that you could contribute.  A 60% or 70% contribution is quite possible while in the army.  If you max out your retirement savings now, it will give you more options when you leave the service.  Or even if you just move out of base housing.   If your TSP is maxed out, I would suggest automatically investing a portion of your income in a regular taxable mutual fund account.  Most other investment opportunities require help to make work automatically.  You essentially have to turn the money over to some individual you trust.  Securities can be automated so that your investment grows automatically even when you are out of touch. I recommend saving for retirement first to leverage compound interest over a long time horizon. The historical real return on the stock market has been about 7%.  Assuming returns stay at 7% in the future (big assumption, but don't have any better numbers to go off of), then $8,000 saved today will be worth $119,795 in 40 years (1.07^40*8000).  Having a sizable retirement portfolio will give you peace of mind as you progress through life and make other expenditures. If you buy assets that pay you money and appreciate, you will be in a better financial position than if you buy assets that require significant cash outflows (i.e. property taxes, interest you pay to the bank, etc.) or assets that ultimately depreciate to zero (a car).  As a young person, you are well positioned to pay yourself (not the bank or the car dealership) and leverage compound interest over a long time horizon.