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.
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