From the course: Personal Finance Tips and Tricks
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What to do with a windfall
From the course: Personal Finance Tips and Tricks
What to do with a windfall
- Let's just all assume that at some point in your life you'll receive some money that you didn't earn in your day-to-day job. It could be an inheritance, a bonus, a legal settlement, or if the odds are truly in your favor, a lottery win, which just so you know, your just as likely to be struck by lighting as when you begin a lottery. Still it happens, so here's three things that you need to do when a windfall comes your way. First, check if the money is taxable, and if you will owe tax on it, take that amount and don't touch it until your tax bill comes. An unexpected tax bill can be a nightmare. Then, consider this question, how can this money improve my long-term financial situation? For the 50% of American households that are carrying credit card debt, the number one best thing to do is pay it off. The interest rate you pay on credit card debt is higher than what you can earn on most investments. So, don't even think of trying to make money off the investment to pay off your debt.…
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