(I am pulling this one out of the archives. It was originally published on March 14th, 2011. How would you respond to a million dollars showing up on your door step? Sandy @ Yes I Am Cheap is putting together a round up of related posts on her site so check it out! )
You won a million dollars... now what?
Fig at Figuring Money Out posed an interesting question... what would you do if you won a million dollars?
My answer is a little different.
If I won a million (let's assume it is a million AFTER taxes), I don't think my life would change all that much. I would do the following:
If I won a million (let's assume it is a million AFTER taxes), I don't think my life would change all that much. I would do the following:
1. Pay off my house and car ($115,000).
2. Set up an account to cover health insurance costs and IRA contribution costs (being sure to stay within IRA contribution limits) for a few years until my investments kick in ($35,000
3. Add to my emergency fund ($100,000)
4. Invest the rest in diversified accounts ($750,000)
If I lived off the earnings from that $750,000 at say, 4% a year with some easy investing, I would have an income of $30,000 which is more than enough for me to live on, especially with no debt. I would still live relatively frugally and would continue to check my gas and electric rates via Moneysupermarket, shop at Aldi, frequent thrift stores, and do all the other fun things I do now to save money! I would not need to work and could spend my time working for charity and blogging! I have no real desire to change how I live my life, but it would sure be nice to have the financial freedom to have the time to really live and enjoy my life. (And good news... since the 2011 fica limit is not changing if I use some of my investments to open a business in the future and make a ton of money, things look good from a tax standpoint!)
Am I going to win a million anytime soon? I doubt it. But just think how different your life could be if you had no debt and a large chunk of change to live off of. I don't know about you, but it gives me incentive to save as much as I can now so I can retire early.
What would you do with a million dollars, and why?
16 comments:
I'd save half for myself, give 10% to charity, and use the rest to pay off debt and go on a spending spree. I'd probab;y keep working, too, because I like havng lots of money to spend.
I would definitely pay off my house, and then probably invest in another rental property!
Hmmm lets see...
Id give 10% to charity (100,000)
Id pay off my mortgage (230,000)
Give 10% to my parents (100,000)
Put 10% in my savings (100,000)
Id invest 400,000 into dividend stocks, average yield of 3.5%, but I would use DRIP for now, as I would continue working for awhile.
The remaining $70,000 would be used to purchase engagement ring, wedding, honeymoon, and whatever is left over in a specific travel fund.
www.moneyistheroot.com
Robert - buying a rental property is a great idea. I wish I had thought of it!
10% Tithe
Pay off all credit card, car and student loan debt
Blow at least $2,000 at the mall
10% in liquid investments (stocks and forex)
put the rest about $698,000 in TIPS and continue working :)
I don't know if much would change at first. I think I'd want some time for it to sink in.
I guess the first thing I'd do is tabulate out how much more I'd need to retire and accelerate my early retirement plan..or figure out where to be semi-retired. My kids are young, so I don't know if it would be enough to cover things like schooling, etc.
There's nothing wrong with making your money work for you and kicking back a little. That's what life is all about.
probably I will start a business with that money, without leaving current job. A fast food franchise is an option I am always pondering since last few years.
$1M should sufficient to start that.
You are all so responsible with your money. Makes me feel guilty about wanting to buy shiny pretty things.
A rental property would certainly be one of my first investments.
That said, @Marissa I'd definitely be shelling out on some shiny pretty things too!!
Marissa, I may be responsible, but I am also boring! I wish I had more guts so I would buy some shiny things. LOL!
A million dollars is not enough to really change your lifestyle. It's great that you can live on 30k though.
I would give half of it of charity and with the rest I will start a business - either a real business or a rental property.
I don't know about RB40 but a million bucks would change MY lifestyle
My lifestyle wouldn't change... but I'd be a lot more stress-free!
Living on 30K might be a squeeze in coming years!
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