Some people struggle with what to do with a lump sum of money. Should they save it for an emergency? Should they invest in real estate or crypto?
For many of us, the day-to-day battle to make ends meet leaves us little time for thinking about what we will do when we’re debt-free or rather when we’re finally rich.
But sometimes we get a break.
Hollywood movies, magazines, stories, and social media give us an opportunity to day-dream of all the places we would go and all the things we would buy and do if we won the lottery, if we suddenly became rich, or once we become successful.
The truth is, in life, there are moments when you suddenly get an influx of money.
Sometimes it’s a few thousand dollars in a tax return, or a big sales commission for that deal you’d been working on for six months.
And sometimes that sudden rush of money can be huge: an inheritance, a surge in your stock portfolio, and so on.
So what do you do when you receive a big sum of money?
To reverse engineer the answer, let me give you a real-life story that I observed with a friend of mine who struck gold so to speak!
My friend Eric had been dabbling in the stock market for a few months when he latched onto mining for bitcoins. At the time one bitcoin was $10 apiece and he had mined 20. I don’t know much about bitcoins myself but you can imagine where the story goes when a few years later a bitcoin was worth $18,000.
My friend Eric had suddenly become rich!
Years later I was talking to him and he made a comment about trying to buy a house and from the sounds of it, he wasn’t flush financially. This made me wonder, what happened to all the money he made with bitcoin?
He had traveled to Asia, and lived like a King for several years, then came back to the U.S. and was essentially back where he started.
Now that’s definitely one way to do it, I have to admit. But that’s not what I’d suggest you do.
Too much of our life is consumed chasing money to pay our debts. Today, debts create an enormous amount of stress to the point that most Americans don’t even imagine ever getting out of debt.
So what should you do with a sudden sum of money?
Some people may tell you what to do with a lump sum of money is to invest it, some people may tell you to use it to create a new business, some may advise you to buy real estate, but at the end of the day, all those people aren’t in your shoes. They don’t need to come up with the money every month to pay your debts and your bills.
The less debt you have, the more time you will have for your family and for things you want to do.
As unpopular as it sounds, you need to pay off your debt as a first and primary action. The faster you pay off your debt, the faster your earning will be positive income and the faster you’ll be on your road to success.
Editor, Sleepy Money