Many of us are receiving settlement offers for amounts of money that exceed anything we’ve seen at one time and probably more than some of us make in a year. Some of you are lucky enough to have received (or will soon receive) an initial settlement check. So you’ve got a check, now what?
Not being a financial advisor myself, I started digging around the interwebs on best practices for receiving a cash windfall. . .most say the same thing, so here’s a summary of what is suggested (with a little of my own opinion added because I can’t help myself):
1.) Pay off critical bills or debt first focusing on those with the highest interest rates. . . .Hello!?! Who here still has medical bills?
2.) Stash the rest into a savings account and don’t touch it for a few months. This will give some time for the initial excitement to wear off and you can actually devise a plan for the rest. None of us are being made rich by our settlements and it’s amazing how quickly one can burn through tens of thousands of dollars and not have anything to show for it (just search “lottery curse”). So, let’s be smart people!
3.) Put aside an emergency fund (6 months salary). Don’t forget, most of us are still susceptible to a clot reoccurrence or will be on medication for life. Putting money aside for future medical costs is just smart and essentially what these settlements are for.
4.) Make a donation to a non-profit (The National Blood Clot Alliance “Stop the Clot” would be a nice one to consider for most of us).
5.) Set aside a small portion (SMALL!) to just blow on anything you want to.
6.) Get financial advice from a fee-only financial advisor and possibly a CPA just to be 100% sure you won’t have to pay taxes on the settlement.
7.) Don’t start lending money to family or friends or buying expensive gifts for everyone.
8.) Don’t change your lifestyle. Let’s be real, ain’t none of us going to be living like Kimmie and Kanye off these settlements (unless you were before, in which case, awesome for you). But, if you’ve lived a modest life so far, don’t change that. If you’re an Old Navy kinda girl, don’t start shopping at Saks.
Maybe some of you who have received an initial check can chime in? Again, don’t share dollar amounts, but maybe if you have some advice.