Make Wise Use of Windfalls

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In addition, since this young person already has a good start on an emergency fund, I wouldn't get stressed out about making it to the three-month benchmark. As long as you have something saved in case of an emergency, building a three- to six-month reserve doesn't have to happen all at once.

More important, when faced with whether to pay off debt vs. saving or investing it, keep in mind there's a psychological reward that you should factor into your decision. That's the priceless feeling of getting rid of debt.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

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· By e-mail:singletarym@washpost.com.

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