Just got a lump sum, what should I do with it?

Receiving a lump sum of money is something you think will never happen to you — until it does.

And though it will often be due to unfortunate circumstances, like a death in the family, you’ll still have to know what to do with it.

A family member recently gifted me $6,000, which was one of the largest sums of money I’ve ever received. Now I’m wondering what the smartest move is.

My current financial situation:

After getting divorced in 2012, I moved in with my dad for a few months. Frustrated by sharing a bedroom (and bed) with my two daughters, I took out a $10,000 loan against my car, purchased a trailer, and put it on land owned by my dad.

This loan was on a four-year term, with the interest hovering a little over 3 percent. The current payoff is right around $6,700, and it is my only debt.

My emergency fund is in place, but I wouldn’t mind having more in savings. I also just began putting my extra money in a personal investment account.

I’m now presented with a choice: Would it make the most sense to save the money, pay off debt, or invest it?

Save

Having an adequate amount of savings makes me feel comfortable. I also have other savings goals, like purchasing an investment property, towards which I could use this money.

I started freelancing full-time in October of last year, and I need to have plenty of money to back me up. Fortunately, I live a very low-cost lifestyle and am pretty confident I can earn extra money if I need to. And I haven’t had to touch my emergency fund yet, which I’m thankful for.

Normally, I’d recommend starting an emergency fund after receiving a windfall. But since I’m okay with the amount I’ve saved, I’m not sure saving more is the right choice.

Pay off debt

I hate payments. Hate them. To me, there’s nothing worse than writing a cheque and mailing someone else my hard-earned money.

That’s why I’m leaning toward putting the whole check toward my debt and just being done with it. But with such a low-interest rate and payment amount, I’m not sure it’s worth it.

If I had high-interest debt, there would be no doubt in my mind about how to spend the money. It’d be my first step (after starting an emergency fund).

Invest

There are so many options when it comes to investing. Buying stocks, investing in real estate, funding a retirement account, etc. The returns from investing could be far more lucrative than the 3% interest I’m paying on my current debt. While paying off debt is certain, however, investing is not. As hopeful as I might be that things would work out, it’s impossible to know for sure.