What to Do When You Get a $20,000 Windfall
She got a bonus and wanted to put the money to WORK
Yesterday, I had one of those conversations that makes me love what I do.
A client called me because she had just wrapped up a gig and was about to receive a $20,000 compensation package. Her first words?
“I don’t want to blow this—I want to put this money to work.”
She could’ve booked a trip. She could’ve upgraded her wardrobe or bought a designer bag.
But instead, she wanted a plan.
So that’s exactly what we built.
Step 1: Understand What Money Is Really Yours
The first thing I asked her was:
“Are you W-2 or 1099?”
Here’s why this matters:
If you’re a W-2 employee, it is likely taxes are already withheld from your paycheck.
But if you’re a 1099 contractor or self-employed? That $20,000 isn’t all yours.
She was paid as a 1099 contractor—which means no taxes were taken out.
So I explained to her something that catches so many people off guard:
The money you earn as 1099 income has not been taxed yet. The IRS will be knocking at your door at some point. Be prepared!
That’s why we made our first move was to speak with an accountant:
But be prepared to put 30–40% into a separate “tax savings” account.
Out of sight, out of mind.
Because if that money sits in your checking account, you will accidentally start spending what technically belongs to the IRS.
And I don’t care how disciplined you are—if it’s in front of you, it’s tempting.
I always recommend clients talk to their accountant, but as a rule of thumb:
Put away 30–40% of all 1099 income immediately.
You’ll thank yourself come tax season.
Step 2: Deal With High-Interest Credit Card Debt—Immediately
After we talked about taxes, my next question was:
“Do you have any credit card debt?”
She did. Not a lot, but enough to be eating at her monthly cash flow—and her peace of mind.
So I explained something I say to people often:
You cannot out-invest high-interest credit card debt.
Here’s what I mean:
Most credit cards charge 18–25% interest, compounding against you every single month.
There is no guaranteed investment that can consistently beat that. Not the stock market, not crypto, not real estate syndicates, not your friend’s “startup.”
Even if you have a great year investing, you’re still running uphill—and you’re carrying weight on your back while doing it.
There are cases where holding on to student loans while investing might make sense.
But credit card debt is never strategic.
It’s just expensive.
So together, we decided:
Pay off the credit card debt in full.
She wouldn’t owe anyone anymore. And from that moment forward, every dollar she earns goes to her, not a lender.
Step 3: Build Her Emergency Fund
With her taxes set aside and her debt cleared, we moved on to the next financial pillar:
What’s the plan when life happens?
She had a small emergency fund—but not enough to comfortably cover 3–6 months of expenses. So, this was our third move:
Use the rest of the money to build her emergency fund.
This gives her breathing room.
If something unexpected happens—car issues, medical bills, a surprise job transition—she’ll be prepared, not panicked.
It also means that the next time she gets a check like this, she’s not playing defense. She can play offense. And that’s a whole different feeling.
Step 4: Reframe Her Relationship With Monthly Payments
Now here’s the part I really love:
I asked her how much she was paying towards credit card debt monthly. She said around $200 per month.
And I told her this:
That right there is the only silver lining of having had credit card debt.
You’re used to making that monthly payment. Now you get to redirect it—toward your future.
So that became our fourth and final move to our plan:
Increase her retirement contributions by $200/month (about $100 per paycheck).
It’s a small, steady move that pays off huge over time. She’s already used to parting with the money—now it’s just working for her, not against her.
The Power of a Plan
Here’s what I love most about this story:
She didn’t ask how she could spend the money.
She asked how she could leverage it.
She used a short-term windfall to make long-term progress:
Protected her future self from surprise taxes
Freed herself from the weight of high-interest debt
Built herself a safety net that gives her confidence
Started investing in her retirement at a higher level than ever before
This, to me, is how you really put money to work.
Final Sip
Windfalls don’t come often—but when they do, you can use them to change your entire trajectory.
Don’t spend just because it’s there.
Don’t confuse relief with reward.
And please, don’t forget the taxes.
Whether it’s $2,000 or $20,000, every dollar is a tool—and when you have a plan, that money can go farther than you ever imagined.
Want help coming up with your own plan? You know where to find me.
Because a second opinion might just be your smartest one.
Keep This Newsletter Going
If you (or someone you know) have a story to share, I’d love to hear from you!
Your experiences help create meaningful conversations around financial literacy and empowerment.
📩 Here’s every way to get in touch with me.
Thank you for your support—I truly appreciate it! If you enjoyed this, please share it with someone who might find it valuable.
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