You won $10,000 playing the *lottery and it is burning a hole in your pocket. You have several options: spend it on your wants and desires; pay off/down your debt; donate it to a local charity; loan it out in increments at a 21% monthly interest rate; invest, play the market (which market(s).
You can do one, all, or any combination of the above. What would you do and why? What are the benefits associated with your decision?
*You elected to retain the full winnings and settle up with the IRS when you file your taxes. How do you plan to adjust for this future pay out? Please follow this link and calculate the amount of future taxes you will owe based on your current state of residency.
From Your Instructor- Congratulations!! When looking at this discussion post consider the pros and cons of each option.
- Consider the fact that 21% monthly interest is 252% per year. That is a pretty handsome return, but what is the risk and who is willing to pay that much interest?
- Spending the money on yourself or paying down debt is a logical choice, but what is the interest rate at which your debt is owed?
- Are there any tax benefits for a charitable donation that may make this an attractive option?
- If you choose to "play the market" or invest the money, what would you invest in?