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You might know what you should do every time you get a paycheck. Maybe you have a system in place. You may put some money in the bank, and you use some when you have bills that you must pay. You might also put some aside if you have hobbies or fun events you’re funding.
If you get a windfall, though, you might not have a system in place. You must consider where to put this money or what you might buy instead.
Car accident settlement checks aren’t exactly windfalls. It’s unexpected money, but you might have some practical things you must do when you receive it. It’s not like winning the lottery or getting a sudden inheritance.
We’ll discuss some possible things you might do with that money right now.
Let’s say that a car hit your vehicle, and you blamed the other driver. The driver disagreed, and you sued them. You won your case after it worked its way through the court system. The whole process wore you down, but you eventually got a jury verdict in your favor.
After paying your lawyer, you should get a settlement check. You might get it fairly quickly, depending on where you live. For instance, Florida rewards car accident settlement checks within 20 days, but every state has different laws.
Your check should come in the mail, so stay vigilant. While you wait, you can consider what you might do when it arrives.
Earlier, we mentioned unexpected windfalls like lottery winnings or an inheritance that some rich uncle left you. If you get money that way, you might do something frivolous with it. You may feel like it’s found money, so you should do something fun.
After a car wreck, you might have some outstanding medical bills. Maybe you owe a doctor who did your surgery following the crash. Perhaps you owe a hospital emergency room that treated you.
You may owe a private practice if you saw your personal doctor. Maybe they did an MRI or took some X-rays.
If you have health insurance, maybe that covered your bills. Perhaps it only covered some of them, though. Many health insurance policies have high deductibles, so you may still owe some money. Maybe you didn’t have the cash in savings, so you have a delinquent account now.
Paying off those bills makes sense. If you don’t pay them off, then they’ll hang over your head, and you probably won’t like that feeling. You can quickly pay off your medical debts and see how much you have left over, if anything.
Maybe you have some additional outstanding debts once you’ve paid off any medical bills following the accident. For instance, perhaps you have some student loans. Maybe you graduated college years ago, or perhaps you never finished.
Either way, millions of Americans have outstanding student loans. Maybe you’re eagerly awaiting the Supreme Court’s decision about President Biden’s loan forgiveness plan. If a private lender lent you money, though, the decision won’t affect that.
You can pay off your student loans with the remaining money, or maybe you can pay off a big chunk. If you got cash for pain and suffering or other non-economic damages after the car wreck, you might feel good if you cut down your student loan debt quite a bit.
Maybe you have some outstanding credit card bills as well. Many Americans do. If you owe some money on your credit cards that you’re carrying from one period to the next, you can pay that off. You won’t have interest continually accruing on your debt that way.
Unfortunately, rising rent costs and inflation have created scenarios where some Americans have back rent that they owe their landlords. If you’re in this situation, you should consider using some of the remaining money and paying that off. Like credit card bills, that’s a pressing financial concern you should alleviate while you have the chance.
If you’ve paid off your landlord, you’ve paid off your student loans, and you’ve paid off any medical bills from the car accident, then you could take the remaining money and put it in the bank. The Fed keeps raising interest rates, which means you can get excellent rates if you open a savings account.
You can have that money as a rainy-day fund. You might also look into CDs since you can get great rates on those at the moment as well.
However, if you have any money left over after paying off your bills and doing other practical things, you might get something fun instead. You need some playtime in your life, too, so maybe you’ll use some of the remaining money to get a video game system or some new games. If you like reading, perhaps you’ll get some new books.
You could take a vacation. You might look around and see if you can get a cheap flight and visit a popular vacation destination like Cancun or Hawaii. You can take this chance and pamper yourself. After a traumatic car accident, you certainly deserve it.
You must look at your situation following a car wreck and the subsequent legal action that gives you this settlement check. You might spend some money paying off bills or doing other practical things, but then, you may have some left over that you’ll use for getting yourself gifts or a vacation.
Only you can decide, but you should also bring in your adult family members if you live with anyone else. They should have some say in this matter as well.
Together, you can make a decision that seems best. Everyone has unique situations, so no two courses of action should look the same.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.