No. of Recommendations: 3
But I wanted to look at these numbers separately because I knew I wasn't doing so well this month but I was receiving a minor windfall at the end of it. With my last employer, we didn't receive a severance package at all. About a year and a half later, I received a check in the mail for $5400 from the class action lawsuit that followed the lay off. Normally, I would take about 10% of a windfall and have fun with it, but I have already schedule a $5400 payment to one of my credit cards tomorrow which pay it off completely. With the (little) progress that I've made this month, I dont' think I deserve the 10% splurging so it is all going to debt. The one good thing is that I was expecting about $4000 from the lawsuit and getting $5400 was a nice surprise.

Are there any tax consequences with the settlement? Sometimes lawsuit compensation is taxable. Paying $5400 now toward your debt is great, but not if it means that you end up owing $1350 that you don't have next April.

If you've checked it out, and won't owe taxes on it, that' great. But if you haven't, you might want to just put about $4000 toward your CC debt until you do.

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