What You MUST Do Amidst A Financial Windfall
Most of us may not be as lucky as others who are frequently getting money as free handouts. However, when things like such happen, may it be an incentive or an annual bonus, or a huge inheritance, deciding what to do with it can be overwhelming. Perhaps, you’re thinking to go out for a trip or a vacation or getting the latest high-end gadgets that you ever dreamed of; a splurge celebration or purchases can be tempting during this time. Hence, reading this article might give you an idea of how should you deal with your finances wisely amidst a financial windfall.
Examining Your Finances
You might need to take a look at your financial condition before you consider the idea of spending your money without any caution. Take a look back at your priorities and financial goals. Check whether you have paid off your debt or save some money for an emergency fund, or if you’ve started up some contribution for your RRSP or TFSAs.
Order Your Priorities
If your utmost priorities are to pay down your debt, then discerning where to spend the money can be easy. So, whether you’re following the snowball method or avalanche method towards debt payments, the wisest move is to put the entire amount to pay down your debt. This will help you accelerate the duration of time you dwell on being in debt.
Besides, if your goal is also to start up a small emergency fund and pay off the money that you owe at the same time, you can actually target both with one stone. This is made possible by putting a $500 as a start-up amount or $1000 depending on the amount you got; while paying the rest of it towards your debt. If in case, you’re so much lucky to get more than what you have in debt, it can even give you so much room for savings and investments. By then, you can spare some for charity, and spend a portion of it to whichever you want.
Have A Little Bit Of Fun
Though it isn’t bad to spend a portion of the money that you got, still you need to be cautious in spending within your means. Of course, you have to settle your priorities first, then spend some amount for dining out or maybe going for a trip just within the city. It can be overwhelming, yet if you know how to manage your spending and where to spend it, then you’ll end up with no regrets.
Be Reminded About Taxes
Make sure that you have validated how you will be taxed on the money you got. You might have made the decision to pay your entire credit card debt, and later on, knowing that there’s an enormous tax bill that awaits during tax time. Thus, before you get too excited, make sure to check your options before you dump your cash into whichever you decide. The key is to think before you leap and scrutinize all aspects of your decision.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.