Comments on: Accidental Windfall

By: LAL

LAL — Thu, 09 Jul 2009 14:40:35 +0000

Yeah $1M doesn’t go very far.

By: Meg

Meg — Wed, 08 Jul 2009 22:26:26 +0000

My answer is the same for $1k, $10K, and $100K – I’d just stick it in my “emergency fund” and increase my sense of security.

If I got $1MM I would stick it in savings (as high yielding as possible) and sit on it for awhile as well. I’d use the income from it to max out my retirement accounts (which I can’t afford to do yet) and put 3 years of savings in my EF. I’d also give away 10%.

But after that I think I’d have to think about it. I’d probably just consider it “retirement” or long term savings. Maybe to use before “retirement” if I want to start a business or send my kids to private school or something. But I wouldn’t quit my job or anything. Right now $1MM in the bank will only generate around $15,000 a year in income.

By: LAL

LAL — Wed, 08 Jul 2009 21:17:27 +0000

Sarah, sounds great to get a small $10k windfall every six months. That would be awesome. I agree it would be nice to get $1m or more.

Although if you get $10k every 6 months, then how long until you hit $500k or $1 m? Is that a possibility?

By: sarah

sarah — Wed, 08 Jul 2009 14:18:09 +0000

Interesting question. DH and I are lucky enough to receive 10k every 6 months as part of inheritance. 100% of the money goes into our taxable investments (when we qualify for Roth IRA it goes there first). It doesn’t change our current lifestyle at all. In the future we will (hopefully) have a larger retirement cushion than we would have otherwise and that could lead to a nicer home or more vacations (whatever is needed/wanted at the time).
If I received 100k? I still think it would go straight into investments, although I would take a portion for charity and helping out family with some projects I know they want.
If it were 1 mill, I would do nothing until we have our first child, then quit working (as currently planned) and pursuit other interests. With an added mill DH and I would both probably take a year off and live at our farm and enjoy life/family/finish projects at the farm as well as help family and make larger charitable donations each year that follows.
If it were 10 mill, we would quit work immediately and do the same things mentioned above (plus build a small but well-designed winter home at the farm and a summer home on the west coast).

By: LAL

LAL — Tue, 07 Jul 2009 00:09:46 +0000

It’s likely around the same. The difference is the emotional aspect of paying off debt or pretending it never happened OR spending it.

By: Kristen Sullivan

Kristen Sullivan — Mon, 06 Jul 2009 03:25:53 +0000

FiLife has a calculator that helps you figure out whether you’re better off paying down your debt or investing a windfall. It’s worth a look:

http://www.filife.com/calculator/should-i-pay-down-debt-or-invest-my-monthly-surplus

By: LAL

LAL — Mon, 06 Jul 2009 02:53:17 +0000

I’d invest the $100k probably because I would want to pretend I don’t have it and just save it for retirement.

Although $10k for a purchase or home stuff would be nice.

By: Meg from FruWiki

Meg from FruWiki — Sat, 04 Jul 2009 18:13:10 +0000

I’m afraid I’d be really boring and apply it to debt. Even $100k (would be paying off part of the house at that point).

Of course, I might have a couple nice dinners if I hit it that big, but I’d try not to make it a habit.

At a million I’d be easily debt free, but I’d want to set aside plenty of that for retirement. I wouldn’t want to change my lifestyle drastically. It is really easy to go through big money if you’re not careful. However, in this case, I think I would take a few grand and travel for a bit — a few weeks here and there. As it stands, that’s one of the things I already really want to do when I get out of debt. So, that’d be pretty much as planned.