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Sock it away or invest it in some way. Got a windfall in 1999, Bought a $50k car. Still have it, I might be able to get $25k for it now. Did I get $25k of use/enjoyment out of it? No, considering I could have rented that same car several times and would still have $50k+ now.
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Having no other debt than my house at the moment I might buy something that I'd like for the house... maybe a new stove, or a nice bar. Or maybe just buy all the pieces needed and build the bar, seeing as it'd be mucho cheaper that way and it'd maybe even leave money over to stock the bar. ;)
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@enm4r:
Interesting theory, but I might posit that many people with bad spending habits get a windfall or two every year...tax returns, bonuses, perhaps a severance or 401k payout. If every year it gets blown, that becomes a habit itself. Hence why I believe most lottery winners end up broke...\"free\" money is treated as such.
I'm not saying that saving windfalls might not cause other behavioral pattern problems, but I would rather see someone spend down debt than develop the habit of spending money just because it's out of the ordinary.
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BY MIKE1731 AT 09:19 AM
Although I think King of the Wild Frontier has a good point, I still like paying down debt, but with a twist. As you pay off credit cards, close them so they aren't there for the next spending spree. If you box yourself in on credit cards, it makes it that much more difficult to go wild in the future
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Do not cancel your paid off Credit Card if you are concerend about your credit score.
Your score will go down if you cancel because your score is based on your debt to available creidt limit. If you cancel the card you have less available credit and your score will go down. If you keep the card your score will increase because you have lower debt but the same amount of available credit.
old Suze Orman advices this.
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Blueskylaw...lol...actually just a reference to George Constanza on my part.
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Hmm. Something I didn't know 10 minutes ago: Frogs in hats = funny
I say spend it on something that you normally wouldn't.
Finance is about having and establishing habits. Paying off debt in one huge lump some isn't going to help establish the habit of keeping your consumer debt at/near 0, so I'm inclined to agree that because most people have poor spending habits, they would easily spend the money anyway after paying down the debt.
Saving is the same way, and you should be saving regularly, every paycheck, every month, etc. I understand people don't, but I'm inclined to think that if someone dumps some windfall into retirement savings, they're not doing anything to establish proper savings habits and would actually be setting them back by falsely thinking they have done enough, and therefore don't need to even work on proper habits in the first place.
That's why I say spend it, have a ball. You need to separate distinctly that what you're spending is uncommon, and the more obvious you can make the distinction, the better for the long haul.