Time to close your eyes and dream for a moment. What would you do if you suddenly had a million dollars? I’m not talking about a million in net worth. I mean a million dollars in cash, after taxes, sitting in the bank. This is no time for excuses or to say how implausible this may be. That isn’t the point. The point is to get you thinking about what you would do if you woke up tomorrow and had that kind of cash sitting in the bank.
Some of you could probably answer this question in a few seconds, but for others, I bet it makes you stop and think. A million bucks might not be the kind of money that buys you a private island that you travel to on your private jet, but it is no doubt a potential life-changing sum. What’s even more interesting are the different priorities that surface from person to person. Some may be content to park it all in an investment that churns out interest to live off of, others may donate it all to charity, while some would act like nothing happened and go about their daily lives.
You’re probably wondering what I’d do, so I’ll start things off. First things first, I’d pay off our second house and put a few thousands into some improvements. It needs new carpet, a few fresh coats of paint, some miscellaneous maintenance, and things like that. That would hopefully increase the chances of selling before the end of the year. We might not recover every penny that we have into it, but unloading that from the books would be nice in the long-term. Next, I’d put enough money into an interest-bearing account so that we could pay off our current mortgage in 5 years, which would probably take a little over a quarter of the money. Then I’d secure our daughter’s college fund. Our plan has a $350,000 total maximum, but with nearly 18 years until she heads to college I can let compound interest do most of the work. Just a $100,000 contribution given 18 years to grow at a modest 5% would yield around $240,000 for college. Hopefully she gets scholarships and doesn’t need a penny, but it’s a large enough sum that it’s there if need be, and hopefully enough left over for any possible future children or even pass it on to grandchildren in the future. After those necessities are taken care of the rest would be spread out across retirement accounts, taxable investment accounts, and some kept liquid so that opportunities could be taken advantage of as they come up. Last, but not least, I’d probably put a nice chunk aside to start a scholarship fund at my alma mater. I know, it’s kind of dry and practical, but I enjoy what I do too much to quit, so I might as well just put things in place to secure our future and keep doing what I’m doing.
Share Your Answer and Enter to Win $25
So, now it’s your turn. There’s a poll below that has some general answers, but I know these can’t entirely encompass the goals most of you have in mind. So, just pick the answer that closely resembles what your general action would be. Then, share your thoughts in detail in the comments. Each person who leaves a comment will be entered into a drawing to win a $25 gift card to Amazon. Hey, I can’t give you a million bucks, but $25 is a start! Make sure you include a valid email when leaving your comment and get your comments in before 10 pm EST Friday, February 5th, and I’ll randomly select one comment as the winner.
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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.