You Just Won $1 Million…Now What?

by Khaleef Crumbley on October 1, 2010

in Personal Finance

Post image for You Just Won $1 Million…Now What?

Many of us have dreamed of what we would do if we were given $1 million. But have you really sat down and figured out what you would do? Let’s assume that you are given, or win $1 million after taxes. What would you do?

Here’s what I would do…warning, boredom ahead!

  • Pay off debt – Every extra dime that we bring in is going toward this goal, so that wouldn’t change.

  • Pay off my parent’s debt – That still wouldn’t repay them for all that they’ve done for me in my over 3 decades on this earth, but it’s a start!

  • Give much more than 10% to my church – One of our strongest motivations for getting out of debt is supporting our local church!

  • Retire – Well, sort of. I would focus more on this site and my consulting business. This would free me up to get the necessary certifications and full-time experience to become a financial adviser.

  • Save – I would fully fund IRA’s for both of us, and put aside 1 year worth of living expenses.

  • Take an extended vacation – We love to travel, but we hate debt even more, so we are usually limited in our options. We would probably go somewhere (or a couple of places) for at least a month!

  • Buy a new laptop for my wife – Her laptop is so beat up and run down – I would have no problem replacing it!

  • Buy a house? – I think I would need more than $1 million to do this. I detest mortgages, so if I wouldn’t have enough left over to pay cash, then we’d wait. I have no real desire to own a home (I haven’t been fooled by the “pride of ownership” brainwashing), and would only do this so we could better help out family if they needed it. I honestly don’t know if I would rent or buy in this case!

So, there you have it. That is my boring list.

How would you spend your $1 million?


photo credit: aresauburn™

© 2010 – 2013, Khaleef Crumbley. All rights reserved.

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{ 35 comments… read them below or add one }

1 Lori

I have already did a budget for 1 million dollars. I took inventory of all my bills and estimated all my purchases and expenses on a monthly basis. There is no way that I would be able to think about retiring on that amount of money.

I was able to budget in a reliable, and safe vehicle, pay off all past debt, purchase a house with cash (less than $200,000) But newer and comfortable. I also made a monthly budget with the remainder and found that I could donate to charity, give a designated amount to each family member, invest a little each month, and would have the ability to learn new skills and work because I enjoyed it, and not because I had to for a few years. 1 Million dollars would help me live more comfortably, but it would not allow me to never have to work again.

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2 sandy @yesiamcheap

Oh, this one is easy. I dream about it every day.

So if I won a $1M in NY after taxes I’m only taking home roughly $400K. Bloodsuckers. $5K goes to the attorney collecting the money for me since that’s the only way to get around having to publicly get the money and have your name and photo plastered all over the place. $100K goes to paying off all of my debt including the damn state taxes. $100K goes to retirement (at 32, I have a long time to let it grow). $100K for a down payment on a home. $50K for emergency fund. $15K goes to mom for my sister’s education fund. $25K to my brother to complete his final year of college and pay his living expenses for that year so that he can effectively run his business. Final $5K goes to a long needed vacation…maybe to Bora Bora as cheaply as I can get there. I haven’t had one in 10 years. I’m a simple girl.

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3 Khaleef Crumbley

Hey Sandy. The good thing about my dream is that the $1M is the net after taxes – so you don’t have to worry about the “bloodsuckers” ;-) !

Sounds like your siblings will be given a solid foundation – I like that! I guess if we give you the 600k back, then you could buy your house outright and extend you stay in Bora Bora!

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4 Khaleef Crumbley

@ Ditch the Boss – sounds like a pretty good list.

@ Joe Taxpayer – That’s not boring at all. In fact, it’s pretty exciting to know that you only have one debt payment and you live below your means!

Much of our money would be tied up in debt repayment; at least you’re able to rebalance your portfolio and prepare for retirement!

@ Jackie – I love the scholarship idea! Yeah, I really think that the money would just accelerate our current plans as well.

@ B Simple – Good balance between future and fun!

@ Roshawn – Thank you for your kind words! Just based on your writing and goals, I think you would make very wise decisions!

@ Kevin – I love the idea of getting some ongoing help for your grandparents! That is so thoughtful!

I like that you would be so active in helping others and traveling. If you don’t have a very expensive lifestyle, then $1 million can open up a lot of doors!

@ Andy – That sounds like music to my ears! Being debt free makes it so easy to retire!

@ Danielle – It sounds like you’ve given a lot of thought to this! You seem like a very caring person. Do you think you’d help any other family members? Do you honestly think you could say ‘no’ if they asked?

I think your friends might excuse that iPad as long as you get good use out of it and not just say “it’s so pretty”!

I’d probably wait until HTC releases another tablet before buying one.

@ Car Negotiation Coach – Laser eye surgery doesn’t sound bad – just don’t use a coupon (sorry, King of Queens reference)!

@ Charles – The $1 million would be enough for me because my “retirement” plans include working – just for myself as a financial planner, instead of for someone else.

But you are correct – For many people & places $1 million isn’t enough to let you sit around and do nothing all day.

@ Slava – Great point about inflation! That always takes some of the steam out of our “lump sum” dreams! That’s why it’s important for your savings to keep up with inflation at the very least.

@ Everyone – Thanks for all of the great comments! I just have one follow up question:

How would you avoid giving away all of your money in an attempt to help everyone in your life? Do you think some relationships may get ruined if you are not able to help all who are close to you?

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5 Charles

$1 million would be GREAT! But I think nowadays, depending on what part of the country you live in, you might need just a little more to become financially free. I think $5 million would do it. At 1.5% interest, you earn $75,000 every year on interest alone.!

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6 Slava

You’re forgetting inflation. $75’000 this year is not equal to $75’000 30 years later. Actually at 2% inflation 30 years later you’re going to get $75’000, which is equal to $42’000 of 2010 money.

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7 Car Negotiation Coach

Khaleef, I’m shocked at how close your boring list comes to MY boring list. I really would do much of the same things! I might tack on laser eye surgery for my wife as well.

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8 Danielle Coleman

Well because of poor credit card choices and school i also have dept. I would pay all my debt off and all my mother’s dept too. Since i live with her and her dept is my annoying to me too!

I would then prob buy us a new place to live. Our current surroundings arent the greatest so I’d do that.

I’d buy me a modest vehicle to get me around. Id feel funny riding in a fly car while still in school. Ill wait till i can replace the funds that i spend every month on keeping up a 70,000 dollar vehicle. Then I will save. I dont want much, I like gagets…Maybe I”d buy me a iPad (even though some really good friends of mine might be aginst it). But that would be it.

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9 Andy Hough

I’d do about the same as you. Pay off all debts and then retire. There would probably be some traveling in my retirement.

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10 Invest It Wisely

Interesting. I would pay off all debts too, then I’d send my grandparents on a nice cruise all expenses paid and then pay for someone to help them out with groceries and stuff, since it’s hard when you get to that age.

The rest of the money I would invest in various ways and then travel around the world. I’d take some of the money to just travel and relax, while I’d also like to get involved in projects like charity home construction and things like that, so I’d like to do that as well. Money doesn’t buy happiness but it certainly does give you the opportunity to pursue happiness, and it opens up doors when you don’t have to worry about next week’s bills.

I can’t forget about a brand new laptop, so I can be sure to blog about all of this each step along the way. ;)

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11 Roshawn @ Watson Inc

Khaleef,

You have such a kind heart to want to pay off your parents’ debt and give more to our local church. This is such a balanced list, it makes me question how I would approach a $1 million windfall. I would certainly be operating in the broad categories you mention (spend, save, & give), but the allocation…. the “devil” is in the details!

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12 B Simple

If I won the lottery, I would take some time to map out my financial goals and evaluate if my winning will enable me to live the lifestyle I want to live. I will also do some traveling and other fun things.

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13 Jackie

Well, I’d finish paying off our house, pay for my son’s college, take a trips, and maybe start a scholarship, but beyond that I don’t think I’d really spend it. I’d plop $600k in a variety of “safe” investments, invest the rest more aggressively, and just live off interest. This is pretty much my basic plan without winning a million too though.

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14 JoeTaxpayer

Sorry, my answer is more boring than yours.
I take a look at our asset allocation and, using the new investments, make sure I am appropriate for one that much closer to retiring.
We are currently (too) heavily loaded on the stock side, as we get closer, I need to be more toward a 50/50 mix to mitigate the market volatility.
We have no debt other than the mortgage. I am finally at a point in my life (48) where my wants are well below my ability so there’s no purchase I’d run out to make.
I have relatives that can always use some help. I’d keep the windfall quite and help them anonymously.

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15 ditchtheboss

I would:
– give 10% to help others
– pay off my debts
– invest
– save.

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16 Aloysa

Well, I would pretty much spend it the same way as you did: pay off the debt, buy a house for my parents, travel a lot, retire and write. I think most of my life I would spend traveling and writing. Oh well…

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17 Khaleef Crumbley

I think these answers show that a lot of us are learning from our mistakes.

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18 Everyday Tips

Khaleef – it sounds like you are a wonderful son!

I would pay off my mortgage first. Next, put away more for college. We already fully fund 401k, so no options there.

With the rest, I would:
1. Anonymously fund scholarships for hard working, low income teens to go to college.
2. Go on vacation some where we have never been.
3. Go on a vacation with my mom.
4. Invest

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19 Khaleef Crumbley

Thanks Kris!

It sounds like you would have a very full future.

I really like that all of the comments are focused on securing a future, rather than just blowing it all!

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20 Everyday Tips

By the way, congrats on breaking 100,000 on the Alexa scale. Great job!

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21 Debt Solution

Believe it or not I’ve actually advised someone that won over $8,000,000 from the lottery. They had a friend ask me what they should do with the money. I advised them to pay off their debt and move to a better neighborhood that they wanted to live in and spend about $10k on clothes, etc.

After that I told them to wait and get use to having that kind of money. When you’re given a lot of money its not the same as slowing earning a lot of money. People that slowly earn a lot of money get in trouble too, but people that are given a lot of money get in to trouble FAST!

We did they take my advice? NO – within 2 years they lost all the money and the house that they shouldn’t have purchased because it was in a area that they really didn’t want to live in.

More than anything I would advise anyone that comes into a lot of money to first get use to having that money.

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22 Khaleef Crumbley

Well, you can’t say you didn’t try. We see this all the time with lottery winners, athletes, and singers. It seems like they either don’t have anyone giving them sound advice, or they just ignore it!

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23 Squirrelers

I really think I would save about $990,000 of it. Really. The other $10,000 I would use for 3 really cool vacations, one in each of the next 3 years.

That’s it.

Nothing else would be spent. I would want my lifestyle to match my regular cash flow, and I wouldn’t let a one-time million change that, no matter how incredible spectacular it would be to have that happen.

Actually, I would add that I might take some of this savings, and donate a portion of it. There are plenty of people that could use help with things. It’s important to be generous.

So, maybe a better way to put it is that I would only SPEND $10,000 on myself :)

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24 Khaleef Crumbley

I think that’s great! It doesn’t seem like too many of the comments include massive indulgence. That’s good!

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25 Carol@inthetrenches

We used to discuss this at work to pass the long hours. I said that I didn’t want to win one million dollars. They all asked why. I responded that it was just too much responsibility and I just didn’t want the headache. They all looked at me like I was crazy. I just figure that if God gives us a million dollars in one crack He must have something very important He wants to accomplish and I better get it right the first time. To him that much is given much is expected.

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26 Greg McFarlane

On what planet is having $1 million fall in your lap a “responsibility” and a “headache”? Good Lord.
I’ve been dirt poor. That was a headache, excruciating and exhausting. When I finally got to the point where I was making enough money that I wasn’t dreading looking at my bank balance, everything felt better. I stood taller, the air smelled fresher.
And if you want to add a religious component to it (“God must be giving me this money for a reason”), shouldn’t you be glad to do His will, rather than pass it off?
———————–
I noticed that no one’s mentioning buying any assets with the $1 million. Paying off debts is kind of the same thing, but doesn’t anyone want that money to build, too?

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27 Khaleef Crumbley

@ Greg, it seems like everyone so far has had to pay off debts. For me, if I don’t buy the house, I would definitely invest (especially since I would then have the time to direct my own investments) and have my money work for me.

At this point in your life, what would you do?

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28 Greg McFarlane

Well, I would hope that no one who’s posting is so far in debt that they wouldn’t have a lot left over after paying all their bills.

With home prices and mortgage rates being what they are, I’d buy all the starter residential real estate I could find. Say, 25% down payments on forty $100,000 houses. 15-year mortgages on each, which are currently around 3.8%. That means $547.28 monthly payments on each house. Rents are going for more than that, say around $800. Add the mortgage interest deductions, and the fact that I’m getting renters to make my payments and then some (minus the 6% a property manager would charge), and hopefully that million could grow into something more substantial.

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29 Khaleef Crumbley

You make a good point. The good thing is that you’d have all the time you need to pray and listen!

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30 Sherrian Crumbley

Great list! Not that I’m complaining, but uhm, I DO wish a laptop was a little higher on the list {written from my ‘on-its-last-leg’ laptop :-( }

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31 Khaleef Crumbley

Don’t worry, we can buy the laptop right after we pay off our debt. You just have to find $1 million now.

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32 youngandthrifty

lol great minds think alike!! I have a post on it too:
http://youngandthrifty.ca/the-frugal-life/if-you-had-a-million-dollars/

but with a twist, in that you can focus on only one thing.

If I didn’t have those restrictions, I would donate some of my money, travel around the world, and pay a large portion of my mortgage off (were I to get one because I don’t have one yet lol).

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33 Khaleef Crumbley

Your restriction makes it tough! I would probably buy a house in that scenario. However, there is no way that I could be convinced that a home is worth that much money! Travel is probably my favorite choice.

Judging by your comment here, it looks like we are on the same page! Now, we just need the $$$!

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34 Little House

Hmmm…my plan would look very similar to yours! So I don’t think it’s all that boring, just smart. As for purchasing a house, I like how you mentioned you haven’t bought into “all that brainwashing.” Not everyone needs to own a home! At least not in the traditional sense.

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35 Khaleef Crumbley

Smart vs. Boring?…I like your way of thinking better! ;-)

Buying a house where I live (New Jersey) would eat up so much of that $1 million, and I would be disappointed with how little I was able to buy!

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