Always pay of debts first, that way you won't be paying interest on the debts. That’s the money-smart option.

This actually happened to me in October. I put the majority in the bank, but paid off around £1,500 of debt my mum had hanging over her shoulders, so now we have a slightly better standard of living and can afford Christmas for a change. Plus my mum is less stressed and doesn't cry all the time, and I kept my promise of I'd make it all better. SO yes, debt paying is definatly worth it. However, now I am kicking myself because I have enough money for what I want to do, but can't touch it. So I would recommend getting rid of your biggest debts for the most impact, and then treating yourself. And don't let your mum put it all in an ISA you can't touch until you are 21 (or whatever age, mine is til I am 21). No matter how much she asks!

definetly pay your debts first. its such a big stress reliever when you dont have to worry about owed money. and then buy things youve been wanting.

Really depends on the sum. The smart thing is to pay off debts, but there's so little feel-good there. You could try one of these. 1. Pay off the debts, but keep paying the monthly debt payments into a savings accounts - then treat yourself every few months with the money you save up! 2. Put the stash in a savings account. Depending on how much interest it earns, use that to meet (or help meet, or supplement) the debt payments. Once the investment has (helped) paid off the debt, you still have the investment! 3. Put the whole lot into Premium bonds. You might end up with a million quid! You don't lose any money. I would buy more investments. Even if you still have debts, it is really good psychology to have investments earning money for you. The more money you have, the less you are inclined to spend it and the more you are inclined to add to it. Money makes money. But spending it straight out is a waste. You could just cream the interest off and be still spending it when Answerbag is a distant memory.

Hi LF, OK, here's what I suggest, since it happened to me 13 years ago, and I didn't do it all as I should have. So I will share what I learned. The debts (I assume credit cards, with your propensity for shopping and nice clothes and all?) are all interest accruing, and take a LONG time to pay off. So it makes sense to really take out the ones with the **highest finance charges** first. Pay off in full the ones that hit you hardest each month or pay as much as you can in order of their finance charges. Depending on how much your debts dig into your monthly income (if it is more than 25%, I would use ALL the money on debts, as bad as it sounds, or 90% anyhow) you need to figure out best what percentage to pay on debt and how much to pay on more frills and "do-dahs." :) If you are not stretched monthly NOW, given the debts, and given your monthly "take home" or net household income, I would apply 50% anyhow to debt, and then do what you want with 40% of it, and I would put 10% of it in a little "reserve fund" that earns abit of interest. An emergency fund for dental or other expenses that might come up where insurance doesn't pay for it, or you just need money to fix your furnace or AC or buy a new TV or whatever. Or repair the car. It never hurts to have a little slush fund for things like that. After all, Santa, Oprah and I can't keep bailing you out <wink>. If you are pretty comfortable monthly, even WITH the credit card and store card bills, then you could pay less on bills I guess, but in the end, you are losing money that way. If you whittle down the debt that takes the highest from you interest wise (You pay them $50. a month and $15. or so of it goes to "finance charges" for example) at least, then you can be even more comfortable monthly. As for what you do with the money you decide (if you do) to buy "a few new thnigs you have been wanting for ages" (what they might be boggles the mind) I would prioritize them into categories of 'REALLY WANT and also will be somewhat practical and last a long time,' 'Want and NOT so practical' and 'May not last a long time' (like some fashion & trendy things) and 'Sheer folly stuff that is just luxurious and I'll either use it up, eat it up, or it will wear out and maybe it will not be worth the money.' Those are good categories I think. So, not knowing specifically your situation, from my experience and my friends advice, who are CPA and financial planners, what MOST people ought to do, unless they are very comfortable monthly financially, even with paying all the bills, is this: 1. At least put 50% toward the highest finance charging credit or store card accounts. Pay any off in full if you can, as it looks REALLY good on your credit report. 2. If you decide to not use more to pay on bills or other practical things, spend 40% on gee-gaws and whatever you have been dying to buy. 3. Bank/save 10%+ in an interest earning but totally safe and liquid emergency fund (like a simple savings account) for a time when you really need money badly, and wish you had not spent the 40% on all the things you just "had to have." ;) Hope this is helpful. I spent 80% on crap I "had to have" and only 20% on bills and it was a big mistake down the road. But again, I don't know how much "wiggle room" you have monthly after you pay all your bills. If you have plenty to save and for emergencies, then you can allocate more to "stuff you have wanted for ages" and less for debts, and not have to worry so much if an emergency hits and you need $1000.-5000. or so in a big hurry. Congrats and happy spending. :)

Second bite of this cherry. ALWAYS keep your capital (large sums of money). It doesn't matter whether you spend it or use it to pay off debts; you can only get rid of it once. The general rules of finance (I work in the City) are that you only borrow to pay for capital expenditure; things that either help you earn money, or will increase in value themselves (like a house). Cover expenses (including debt repayment) from cahs flow; that is, your income. Buy luxuries from the interest earned on capital you have saved. I'm not after more points here; but since I do actually know about this stuff, I feel really strongly about it. Have you comes across this? http://www.richdadpoordad.com/

You,re asking the wrong person here, Blow it. All of it. Every last penny. Spend spend spend. oh and Enjoy!

Invest it and make it grow. Then you should be able to satisfy your wants and needs.

The sensible thing would be to pay off debts, especially the ones that are amassing interest like credit cards and loans. So that is what I would advise although you will feel like that you have not gained anything from your windfall because there is nothing tangible to see from it, but in the long run, you will be saving so much money. Save yourself a little bit, and treat yourself for being sensible and not blowing it all on a helicopter.

Unexpected income usually means you're going to have an unexpected expense. Since you obviously have credit, the best thing to do would be to use it all to pay off those debts, so that when the unexpected expense comes along your credcards won't be maxed out. Also, it is IMPOSSIBLE to get as high a rate of return on ANY safe or liquid investment as you will get by paying off your debts.

you can invest 50% and save the 50% the best to invest that safe, you can visit myfxfunds.com for more info

I would pay off any credit cards with high interest rates.pay some of my bills and treat myself too one nice thing.