November 28, 2007

What would you do with $1 million?

The question occurred to me yesterday. What would I do if I experience a sudden cash windfall, say from winning the lottery or stumbling upon a treasure? Here's my tentative plan:

- Pay off all debts and loans (assuming the windfall is worth more than the financial obligations). That way, I'll be able to start a clean financial slate.
- Cancel all but two credit cards. This would be difficult since I currently have two. So maybe no cancelling.
- Sell the condo and buy a house. Hmmm...that would entail rethinking the paying off of the mortgage, but still.
- Distribute money in different investing vehicles. Why put all eggs in one basket?

Better yet, here's how I will distribute the (hypothetical) $1 million (assuming I will get the $1 million lump sum untaxed...yeah right!):

50% - $500,000 - investments (assuming the interests will provide steady source of income)
20% - $200,000 - mortgage payments
10% - $100,000 - IRA
10% - $100,000 - money for parents' welfare and/or future kids' education
3% - $ 30,000 - credit card debts and car loan (there will definitely be leftover amount that will go into savings/checking/money market OR emergency fund)
2% - $ 20,000 - savings/checking/money market accounts
2% - $ 20,000 - miscellaneous (to be determined)
2% - $ 20,000 - emergency fund
1% - $ 10,000 - travel/vacation fund

What would you do if you had $1 million? Let me know!


Paige said...

Oh yeah, for sure pay all debts. But first you need a lawyer to set up the trust funds and take of taxes and those "kin folks" you didn't know you had and all the other "Can I have" people.
Although it sounds like a lot of money one million would not be enough to retire on if you are still young (say younger then 55) So consider keeping that day job but smile cause they know you can quit just cause you want to.

Perfectwound said...

Seems like there's a lot of tax to pay in US huh...

I've the same idea about 2 months back, and did a calculate back then. I forgot what things I plan for, but in the end I got at least $30 bucks everyday, to last more for the next 30 years. :)