As Luck Would Have it

As I was walking into work today, looking at the rabbit tracks in the snow, I noticed something familiar.  It was a $10 bill. I picked it up, shook off the snow and stuck it in my pocket.

What could I do with my newfound $10 bill?  Some people would buy a pack of cigarettes, some make-up or grab a bite to eat at McDonald’s.  I decided it would be best to apply my “windfall” towards my credit card debt instead of wasting it on something I wasn’t planning on buying anyways.

This leads to the question of what should be done if you suddenly find yourself with a sizeable amount of unexpected money.  What is the “right” thing to do with it?  Should you invest it, or pay down debt, or go and blow it on something nice for yourself?

The answer depends on what your goals are.  Some people would be happy to spend this money on a 52″ flat screen television.  Others would invest the entire amount into an Index Fund.  Others may donate their money to a charity which is important to them.

Here are some ideas of what you can do with any extra money that may come into your life:

1) Pay down your debt- Do you have a good reason not to?  I didn’t think so.  Just do it.

2) Start an Emergency Fund- Bad things will happen, be prepared.

3) Save & Invest- Start or fund an IRA.  It is never too early to start planning for retirement.  As a matter of fact, the earlier you start the better.

4) Enjoy yourself- There is no reason why you shouldn’t enjoy some of your new money, but be sure that you are putting the important things first.  A trip to Europe is probably not a great idea if you still have thousands of dollars in credit card debt.  Be smart.

There are as many different ways to spend money as there are people on this planet, however a little bit of planning will go a long way.  If you have plans for your life, finding ways to bring yourself closer to your goals will be easy.  The moral of the story is this:  A windfall has the potential to help move you closer to your goals, but only if you are prudent about the choices you make with that money.