What to Do with a Windfall

Question of the week:We've just received an unexpected windfall of $10,000. My wife says that we should invest it, but I want to pay down some debt. Which do you think is best? --Russell from Tampa

Dear Russell,

Yours is one of the classic dilemmas in personal finance. We posed your question to members of the Armchair Millionaire community. Some advocated paying down debt, others the investing route. And others, like this one, advised a little of both:

"I would break it down into four buckets of $2,500 each. I would pay some credit card debt, put $2,500 in my emergency fund, invest $2,500 in either individual stocks or a stock mutual fund and I would spend $2,500 on something fun for me." --Mattchiavo

Either way, you'll get a return on your investment. The question is which offers the best return. To run the numbers, you'll need to look at the interest rate on your debt and figure what you would save in interest, as well as assume an annual rate of return on the investment you might make. And you'll also have to figure in the impact of the taxes (if any) that you would have to pay on your investment returns.

Here's an example. Let's assume you're paying 15 percent annual interest on credit cards, and that it would take you another five years to pay them off with your current payments. By using your windfall to pay them off immediately, you'll save $4,274 in interest over the next five years. On the other hand, if you invest that money in a tax-deductible account and receive an average annual return of eight percent over the same five years, you'd earn $4,898. Keep that investment over the next 20 years, however, and you'd earn $39,268.

However, the numbers don't tell the entire story. The best alternative will depend entirely on your own situation. My guide will help you make the right choice.

The Armchair Millionaire Guide to Choosing Debt Reduction or Investing

• What kind of debt is it? Some kinds of debt are better than others. A mortgage, for example, is a far cry from high-interest credit card debt. The interest rate is lower, the interest may be tax deductible, and that debt allowed you to buy an asset that's likely to increase in value over the years. On the other hand, credit cards have high, non-deductible interest and are often used for one-time purchases, like dinner out or a tank of gas--things that are gone long before we even pay for them.

• Do you have a plan for avoiding future debt? If you pay down your debt but then immediately run up your credit cards again or take out a new loan, you'll have gained little for the long term and will have lost a great opportunity to invest.

• Do you have a good place to invest the money? If the stock market doesn't look attractive to you right now and your investing alternatives are a low-yielding money market fund or CD, you're probably better off paying off the debt. But if an investment in the stock market looks good to you, this could be the better route.

• Can you make the money go even further by investing it? If you can tuck your extra money away in a 401(k) or tax-deductible IRA over the next couple of years, you'll enjoy a nice tax break in addition to your investment returns. You'll do even better if you employer matches some portion of your 401(k) contribution.

THE BOTTOM LINE: Financial windfalls are as rare as blue moons, so act carefully. Take time to weigh your options and arrive at the one that will have the best impact on your long-term financial health.

Comments

[Prosperer]

Here is a safe investment for $10,000.00 while it only requires a tenth of it!
STOP WHAT YOU'RE DOING AND TAKE 30 MINUTES TO SET THIS UP!!!! THIS WILL MAKE YOU CASH>>>FAST!!!! IT'S WORKING!!!

Make $32,000.00 in 2 weeks with Paypal
"I came back to $32,000.00 in my account in 2 weeks...Thank You!

TESTIMONIAL

Mary Gatters of Columbus, South Carolina:

"I only have one thing to say to you... OH MY GOD! I sent out 142 copies total before 50 replied, like the instructions said. Then I went on a short vacation. When I got back, my account had over $32,000.00 in it already and the money was still coming in!

I'm still floating on air! (especially with my new car!!) I thought the guardian system was cheesy, but now I realize that it is the formula that makes this letter really work! THANKS!!!

Remember, all you're out of pocket is about the cost of a few cups of coffees ($10)

with the opportunity of banking thousands of dollars into YOUR PayPal account!

MAKE $32,000.00 in 2 Weeks with Paypal!!!
Could YOU use an extra $40,000?

That's Right, $40,000!
That's right! $40,000 in your paypal account!! It was proven on Oprah and is completely legal!! You may have seen or heard of this program on Oprah, 20/20, or in the Wall Street Journal. You may have even received
numerous messages about this program and probably just deleted them. I know, I have. However, I decided to give it a try this time.

After all, It's only a $10 investment!

Please give this an honest effort. You will not be disappointed and will be very glad when it begins to work

for you. $10... that's all it takes.

Most people have been responding because of the low investment and high profit potential. There is NO limit to the income that you can generate from this and you CAN do it over and over! If you follow the instructions precisely, you will reach

thousands of people! Honesty, faith, and integrity make this system work.

Follow the instructions EXACTLY

and in 2 or 3 weeks: YOU will have

as much as $40,000.00 in your PayPal account or even much more.

TEAMWORK MAKES THIS
DREAMWORK

So let's get started!!!

Step 1. Copy this whole page then paste it in a new email to edit it.

Step 2. Set up your PayPal account.

If you're not already a PayPal user,

just follow the link below. It's really

easy to set up, anyone with an email address can join and it is *F*R*E*E*!

Just make sure that you have a Premier or Business PayPal account,

or you will be subject to a monthly income limitation that can slow your money and this program down. Go here to open your PayPal account:

https://www.paypal.com/us/mrb/pal=XEFFJ8TYX8KFW

Step 3. Send a $5 donation from your PayPal account to the FIRST email address on the list, select "Service" as the Category of Purchase and include "Please add me to your list"

in the "NOTE" box Before clicking on the CONTINUE button. This note is important. It keeps the program legal.

Step 4. Send the other $5 donation

from your PayPal account to the FIFTH email address on the list, and then, send an email to the FIFTH email address saying, "Thank You, I've joined." This helps the 5th person keep track of the letter and continue to send out more emails.

Step 5. Remove the FIRST email address. Add YOUR email address to the bottom as the FIFTH email address. *Make sure you use the very same email address that you used to open your PayPal account.

This is the way that you will receive

payment. This moves the 2nd email address to 1st place, 3rd place to 2nd, 4th place to 3rd, and the 5th place into 4th. Do not try to put yourself in the first place because then it will only get sent to the people you send it to and you will lose the power of viral multiplication as your name will be removed from the list.

Step 6. Keep sending the letter until you get 50 "Thank You I've Joined."

replies in your email inbox. The 5th person is the guardian of the system. It is your job, as the 5th person on the list, to ensure that there are at

least 50 "Thank You I've Joined." email replies. If not, then the 5th person will keep sending the letter until there are 50 email replies. If you do this, the way that it was designed, the letter will reach thousands by the time your name gets to the top. Here is your list:

1.healthywealthwisdom@yahoo.com

2.jesusislovingyounow@hotmail.com

3.prosperer@yahoo.co.uk

4.tennesseedeliverycompany@gmail.com

5.doug@freemoneypierecipe.com

When your name moves up to the 1st slot after moving its way up, 8,000 to 15,000 will send you $5!! Keep in mind... the most you have spent is only $10!

(Remember, what goes around, comes around... Pay it forward! )

*Please Visit Our Sponsor: Sign up to begin receiving YOUR $997.00 payments here:

">http://www.DougBarger.com

$32,000.00 in 2 weeks with Paypal Official Site®

--------------------------------------------------------------------------------
Start Making at least $1,000.00 like the rest of us. Go to http://www.DougBarger.com and sign up to join us now!

[Wendell]

You can tell that Doug Barger spammer to shove his pyramid scheme up his ass so hard it bursts out through his nose.

[Nbkvqcf]

http://sexocolor.info x

[Stock Newsletterss]

SpeculatingStocks.com regularly reviews its hundreds of past stock picks and small cap stocks. We have been picking stocks since 2004 with a focus on stock picks that create large percentage point returns. We identify hot stocks and stock trends. We also have penny stock picks. Take a look at our huge list of past stock picks. www.speculatingStocks.com