I Just Won One Million Dollars!!!
Two words. I WISH! But it is fun to dream so let’s continue with this theoretical situation… We have to make assumptions so everyone is on the same page when they share what they will do!
- You just won One Million United States Dollars so convert to your own currency if necessary to find out its buying power.
- The taxes have already been paid so you can spend every penny of it if you wish.
- You are in the financial situation you are currently in, not in my financial position.
So What Would You Do with One Million Dollars?
While I can’t say what you’ll do (that is for you to determine in the comments below) I can tell you what I would do so here it goes.
Starting Amount: $1,000,000
I’d Put Aside Enough to Pay Off My Girlfriend’s Student Loans
I’d do this so that when we get married we could pay them off. Amount Spent $64,000 Remaining Amount $936,000
Finish Remodeling Our Townhouse the Way We’d Like It.
This involves remodeling our kitchen ($15,000), a full bathroom ($2,500), a half bathroom ($600), replacing the carpet upstairs ($1,500), replacing the tile downstairs ($3,000), replacing the windows (no clue but I’m going to guesstimate $2,500 for three windows), replacing a sliding glass door (also a guesstimate, $1,500) and painting the outside of the townhouse (guessing again, $600). Amount spent on remodeling $27,200. Remaining Amount $908,800.
I Would Buy Our Next House!
Wait a second, I thought you were remodeling your current house. We currently live in a two bedroom one and a half bath townhouse which will be the perfect size for us for the next 10 years. Problem is once we have a kid or two our townhouse will be feeling a bit tight. Kids are a ways off but we still are planning ahead for our next place.
We’d like to be more in town rather than at the beach and there are some great deals right now. We’d likely buy an affordable 4 bedroom 3 bath house for around $150,000. I’d still take out a mortgage so we’d pay 20% down plus closing costs.
We plan on renting it out until we decide we need the extra room. At that point we will rent out the townhouse so that we can return to it many years later after the kids move out. Amount spent $40,000 (just to be safe, any extra above closing costs would be put toward down payment). Remaining Amount $868,800.
I’d Take $68,000 for Our Fun Money.
We could use this on whatever we want to prevent us from making some huge purchase that we really shouldn’t do. Chances are we would go take a few vacations to places we’ve wanted to go and buy some gifts for our close family but we wouldn’t do anything extravagant that would raise our current standard of living.
We don’t want any lifestyle inflation sneaking in so this amount definitely would not be spent all at once. I imagine it would last us a couple years but we would definitely want to enjoy it. Amount Spent $68,000. Remaining Amount $800,800.
I Would Invest the Rest!
However, first we would go talk to a fee only financial planner and make sure we have all of our bases covered. I’d like to think this wouldn’t cost more than $800 as we would go into it very organized so they didn’t have to do a ton of digging to get the answers they would need. Amount spent $800. Remaining Amount $800,000, all invested!
So there you have it! That is what I’d do if I won a million dollars. If you were paying attention there were a few things I wouldn’t do. I wouldn’t quit my job, I wouldn’t pay my mortgage off and I wouldn’t buy a new car.
I don’t have any recommendations for what you should do if you do end up with one million dollars and you shouldn’t take my ideas as a recommendation or advice for what you should do.
So, what would you do if you won one million dollars? I’m interested to hear both what you would and what you wouldn’t do with the money!
Lance Cothern, CPA holds a CPA license in Indiana. He’s a personal finance, debt and credit expert that writes professionally for top-tier publications including U.S. News & World Report, Forbes, Investopedia, Credit Karma, Business Insider and more.
Additionally, his expertise has been featured on Yahoo, MSN, USA Today, Reader’s Digest, The Huffington Post, Fast Company, Kiplinger, Reuters, CNBC and more.
Lance is the founder of Money Manifesto. He started writing about money and helping people solve their financial problems in 2012. You can read more about him and find links to his other work and media mentions here.