By Joseph Jennings
Director of Investments, PNC Bank

February 9, 2011 -- If we are lucky, sometime during our lives a large sum of money may fall into our laps. This can come from any number of sources: an insurance payout, tax refund, inheritance, or even lottery winnings.

There are a number of ideas that one may consider for managing this wonderful opportunity, and PNC offers a few tips.

-  Evaluate your financial goals and work with an investment professional to build a well diversified investment portfolio that will help you to achieve your dreams and objectives.

- Eliminate credit card debt, starting with highest-interest balances. Let’s say you have a fixed-rate credit card that charges 13.7% in interest. At that rate, if you have a $5,000 balance and pay $100 per month, it will take more that 5.5 years to pay that debt – any you’ll pay $1,999 in interest. If you pay $2,000 toward your balance and continue paying $100 per month, you’ll eliminate the debt in less than 3 years and reduce interest to $495, saving $1,504 in interest.

- Start an emergency fund so that you don’t have to take on debt or dip into retirement savings if you face a costly problem, such as a long illness or a leaky roof. Financial planners generally recommend keeping enough cash to fund 6 to 9 months of living expenses.

- Pay off the mortgage early. Assume you have a $200,000 mortgage, 30-year term, at an interest rate of 5% and the monthly payment is $1,073.  By paying an extra $100/month on the mortgage, the loan will be paid off in 25 years. An extra $200/month would shorten the loan to just over 21 years.

- Make annual contributions to a Roth IRA. Unlike traditional IRAs, contributions to Roth IRAs are not tax deductible.  However, withdrawals are generally tax-free, subject to certain restrictions. For individuals who want to save for retirement and lower their taxable income in retirement, Roth IRAs are a good solution.

- Fund college savings accounts, such as 529 plans, for your children or grandchildren. Benefits include a potential state income tax deduction and professional management of the funds.  529 plans are not includable in one's estate for estate tax purposes.

- Consider funding a life insurance or long-term care policy.

For more information on financial planning, contact Joseph Jennings at joseph.jennings@pnc.com or visit www.pnc.com.