8 smart ways to spend a hefty windfall
What if your financial picture is rosy?
If your finances are healthy and this is truly extra money, then remember the 80/20 rule. "Save 80 percent, spend 20 percent," says Wayne Bogosian, co-author of "The Complete Idiot's Guide to 401(k) Plans." "Follow the 80/20 rule and you won't have any regrets."
How do you spend it? "Any way you want," he says. Buy things that last or do some philanthropic giving, he says.
For the savings? Aim to max out IRA and 401(k) contributions for you and your spouse over the coming years, he says.
"If your income is outside the Roth IRA limits, open a nondeductible IRA and immediately convert it to a Roth IRA," he says. Your objective over the next eight to 10 years should be to deposit all or most of your 80 percent into a Roth IRA and then into a 401(k).