Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
What would you do with a major windfall? For the sake of argument, let’s say that someone dropped a million bucks in your lap. Would you pay down debt? Buy something nice? Save or invest it?
About a week ago, I posed this question to my “Tweeps” (people that follow me on Twitter). The primary limitation on their responses is that Twitter requires that all messages be 140 characters or less.
I never answered this myself, so I’ll do so now:
@fcn: “First, I’d pay a bunch of taxes. Then I’d take a nice vacation, maybe renovate our attic, and save/invest the rest.”
As for everyone else, I got 24 responses:
- @SuburbanDollar: “I would pay off my mortgage and student loan, buy a new boat, and invest the rest. 8% return on the remaining 750 is like 60k…”
- @The_Weakonomist: “I’d upgrade my honeymoon, buy a house, save $50k and invest the rest.”
- @TheHappyRock: “$400k is enough to pay pay off current house and buy a new one with cash. Total debt freedom!”
- @ElBueno: “Buy a modest house. Invest some. Give some to sister and brother-in-law for their business. Take a few years off from job to build mine.”
- @ManVsDebt: “Conservately invest it all, live only off interest, and devote life to form nonprofit to educate inner city teens on personal finance.”
- @centsiblelife: “Pay off all debts, spend $100K updating our house/yard, put away $ for 4 college educations, save the rest and live off the interest.”
- @jeffrosecfp: “Treat my family to a few nice things, donate some and invest the rest and live off dividends and interest for years to come.”
- @enochko: “Approx. 10% in inflation-protected securities (emergency cash for 2-3 years), rest in index funds (currency hedged for int’l funds).”
- @freefrombroke: “With $1M? Buy a house, go back to school full time, and put away the rest.”
- @zenshinji: “Something like save 100K for my kids’ college, invest 400K, save 400k, and pay myself with the remainder.”
- @FiscalFizzle: “With $1M and rates a bit higher, I’d buy a house and car for cash, invest the rest in something relatively safe and live off the interest.”
- @Flexo: “Buy a house, invest, give to charity. Unfortunately $1M isn’t enough to start a foundation unless I forgo the house and investing.”
- @jayarezee: “Pay off our mortgage and invest the rest!”
- @MyLifeROI: “Pay off my parents mortgage so they can finally relax, MBA, max ret. accts, start a 529 for (way in the future) kids, Vanguard funds.”
- @beatingbroke: “Pay everything off. Set up investments for college and retirement. Long vacation. Donate, donate, donate.”
- @closedblueyes: “Pay off $73k in student loans, buy a house ($300k or so), pay off my mom’s mortgage ($80k), and save/invest the rest.”
- @stephonee: “I don’t think I would even pay off my student loans. I would invest the whole sum carefully, but aggressively. All stock index funds.”
- @Azuaron: “Student loans? Gone. Move out of campus housing to an apartment. Setup emergency, car, computer, and moving funds. Invest the rest.”
- @RevancheGS: “Buy house, keep cash for spending/maint/prop taxes, set up housing for parents, revise the will, get a Master’s, save/invest rest.”
- @countmypennies: “Pay off my house (or buy a house), make a few charitable donations, and start saving for my hypothetical children’s college ed.”
- @nbnw: “A million bucks? Pay off my debt and take the job I wanted, not the one that I can afford.”
- @Shondratasha: “Pay off all debt incl. mortgage, invest in real estate I can buy and hold, research for @ least 1 angel investment.”
- @katekashman: “$1M? Give 10%, Save 10%, Spend 10%, put aside 10% for kid’s colleges, and invest the rest. Real fun is planning to spend the 10%.”
- @bargainr: “I’d put half in savings (for a rainy day!), the rest into some income bearing investments to supplement my income.”
It looks like debt reduction, saving, and investing are all high on most everyone’s list. Honestly, I was a bit surprised that more people didn’t mention treating themselves to something nice with at least a fraction of the money. I wonder how closely reality would mirror the above responses. Perhaps the majority of respondents are just more responsible than me. 🙂
What about you?
What would you do if fate presented you with major windfall? Again, let’s assume that we’re talking about a million dollars. Would you be 100% responsible? Or would you go a little crazy?
And now for some shameless self-promotion… If you’re not currently following me (@fcn) on Twitter, you are cordially invited to do so. Oh, and you can also get new article notification on Twitter by following @fcnfeed.
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (536)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (329)
- How Much Should You Pay a Babysitter? (288)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (237)
- Will Mac OS X Lion Kill Quicken 2007? (191)