Here's a note I recently received from a reader:
Just had a relative come across a $50k windfall after taxes. It had me thinking of what the best thing to do with the money. This is especially interesting if you are debt free. How can you make the most out of this?
I have a few thoughts on this:
1. $50k is a nice amount to "fall into", but it's not life-changing. It's not like I'm going to retire on $50k. Now if the amount was $2 million, we're in a whole different ballpark!
2. I'd probably be fairly boring with my $50k -- giving some, saving most, and spending a bit.
3. What would I suggest others do? Get an emergency fund, pay off debt, and save. Again -- boring.
4. I think it would be fine to spend some of it -- maybe $10k -- but I wouldn't blow it all on things like an expensive vacation, a boat, etc. Then again, it's your money, so do what you like with it. I'm just telling you what I thing you should do -- which may be worth what you paid for the advice. ;-)
5. The closest thing we've ever received to a wind fall was $10k or so when my wife's father passed away. It was a nice amount to receive (obviously, we would rather have had him live longer and not gotten the money at all), but again it wasn't life-changing.
How about you? What would you do with a financial windfall? Have you ever received one?