I have $5,000 in debt, $1,000 in savings, and I make approx $25,000 a year. I have about $4,000 coming to me soon. Would I be getting too far ahead of myself to try and invest $1,500 of that in both stocks and mutual funds? Then maybe put $1,500 into paying off debt? Then the rest in savings?
Hey, I love that you're planning on how to make the most of the $4K that's heading your way. However, I'm not sure I like your initial plan.
I do think you may be "getting too far ahead" of yourself. My initial thought was to use the majority of the money to pay down your debt, but it certainly depends on what type of debt you have. If it's double-digit interest debt of one sort or another (for example, credit card debt), consider applying a lot (if not all) of the big chunk of money that rolls in against the debt. Once the debt is gone, you could use the money that was going towards it on a monthly basis to save and invest.
If you do decide to invest a portion of the money, you might consider a contribution to a Roth IRA. Within the Roth, you'd be able to invest for your future and depending on your income and filing status, you might also get a valuable "Saver's Credit" from the IRS.
Give one of our advisors a call at 800-771-9960 and they can ask some additional questions and help map out a plan that makes the most sense in your particular circumstances.