How should I allocate a large amount of money from a recent legal settlement?

I was recently bit by two dogs. The dog's owner had homeowner's insurance and we settled at $55,000. I'm a 23-year-old female and was recently let go as a marketing manager at a real estate company. I am not currently working. I have a total of $6,000 in various kinds of debt. My rent is $450 per month. My other expenses include car insurance and a cell phone bill. My total recurring expenses are $800 per month. Given this information, how should I allocate this amount of money?

Debt, Asset Allocation
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Until you’re back at work, you don’t want to become overleveraged. You should pay off the credit card debt immediately, because that will reduce your monthly payments. After that, spend as little as possible while you look for your next job.

Have you been receiving unemployment since getting laid off? If you have money coming in that covers most of your bills, you should be safe to invest around $5,000. Once you’re working again, I’d invest another $10,000 or so (your total investment should be between $15,000 and $25,000, assuming you get back to work sooner than later). Consider putting that money in either a municipal bond, a quality, dividend-paying stock, or some other fund that won't come with too many fees or penalties.

You should also look at how this money can assist you professionally. Is there a course that will help you earn a higher paying position with another company? Can you purchase software that will enable you to work freelance and get back to work right away? Marketing is an excellent and competitive field, and this could be a good opportunity to get ahead. There’s a fine line to walk with a windfall like this; you don’t want to spend money while you’re not generating income, but investing in yourself is usually the best way to increase your future earning potential.

While you think about your next move, try to keep about $45,000 in the bank. Pay off your credit card, invest a small amount if you’re receiving unemployment, and see how quickly you can get back to work.

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