What to do with the cash you get

You took the buyout. Now you have to figure out what to do with the money.

This isn't the time to think about investing, but there are lots of variables that need to be considered before you actually cash your check. Do you already have a job lined up? Do you have a spouse who can support you? Can you cover your monthly bills? Have you got enough cash in your emergency fund?

You may even have to take into account the continuing health of your former employer. That's because some buyout participants have the option of taking their buyout money as a lump sum or spreading the payout over time.

"If the company isn't particularly strong, absolutely take the lump sum," says Dana Levit, a fee-only adviser with Paragon Financial Advisors in Newton. But if the company is looking healthy, you may want to consider opting for regular payments. One reason: In some cases, companies actually give you less if you choose to take your buyout as a lump sum.

Spreading the payments out can also have some tax advantages. A big lump sum buyout check will mean big withholding. It can also push you into a higher tax bracket.

Opt for the lump sum payment and you'll likely be handed a very big check. All that money can be exciting, but that money may have to last for a very long time as you navigate a tough job market. That's why fee-only financial adviser Beth Gamel of Pillar Financial Advisors in Waltham tells people, "Do nothing. Put it in the bank. Then sit still for a while and think about it."

A high interest Internet savings account is one good place to park the money, or you can shop the rates at your local banks. You might even want to tuck the money into a laddered portfolio of certificates of deposit, says Gamel. But remember, she says, if you put it into a money market mutual fund, it won't qualify for the $250,000 of coverage provided by Federal Deposit Insurance Corp.

For some people, the money decision may not need to go any further. "See how long it takes you to get a job," says Lynnfield-based financial adviser Barbara Nevils, noting that people need to make sure they have enough to pay the bills. Being conservative with that buyout cash now doesn't preclude you from putting any remaining money to a different use once you've landed a new job.

Paying down debt may seem like a good idea, but Levit says this isn't the time to either pay off the mortgage or get rid of those school loans.

"The only loan I would consider paying off with a buyout is high interest credit card debt," she says. And people shouldn't even consider that option unless they have enough money in their emergency fund to cover at least six months of living expenses.

So when can you consider investing? Not until you have a new job, come into a substantial inheritance, or have enough assets to cover all the family expenses.

Only then, says Nevils, should you start thinking about using the money to build up your portfolio.