Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Md., advises people to approach a windfall by first looking at areas where you are financially weakest. Then, use your windfall to strengthen your position.
Behind on the mortgage? "The best use might be to catch up," she says. "This will eliminate late fees, which only add to the balance."
Paying only the minimums on credit cards? "A good use could be to put the money toward the debt with the highest balance," she says.
Or, pay off a small bill. "This feeling of accomplishment often encourages a person to keep knocking off bills," Cunningham says.
If you're financially stable but without savings, you're "really on a slippery slope," she says. Using your windfall to start or augment your savings account could create a safety net for emergencies.
If you're stable financially, consider splitting the money between one of the above and a personal reward. "Treating yourself to a reward for responsibly handling your money can be an incentive to continuing this behavior," Cunningham says.