How would you handle a $2.4M windfall?
- inheritance
- lottery
- or, say, selling a website :)
How would you wisely apply this windfall?
I'll start -> Hookers + Blow
Quote: 100xOddsLets say you got a $2.4M windfall.
- inheritance
- lottery
- or, say, selling a website :)
How would you wisely apply this windfall?
I'll start -> Hookers + Blow
Probably sit at home on my tail and do nothing.
See if it is all I imagine it can be.
Quote: MoscaIt sounds like a lot, but it's not really that much. I'd bank it and keep working. (Edit: by "bank" I mean give it to my retirement guy to invest.)
+1. I would buy a house in the SF peninsula but not in the city of SF, then put the rest in investments.
I could also take part time and live wherever I want, that's probably the far more prudent option.
to Beverly Hills on 10mil. But that's
80mil in today's money. Even Jed
couldn't move to Beverly in 1962
on 1.6mil.
Quote: EvenBob1.6 mil after taxes. Jed Clampett moved
to Beverly Hills on 10mil. But that's
80mil in today's money. Even Jed
couldn't move to Beverly in 1962
on 1.6mil.
Forbes has a fictional 15 richest characters.
Scrooge McDuck is richest with 44.1 billion.
Quote:Famously frugal: Once fought a bear over a $2 jar of honey, never gives to charity, still has the first dime he ever earned. Once traveled back in time to use an expired coupon.
http://www.forbes.com/lists/fictional15/2011/profile/scrooge-mcduck.html
Strange. Golf is supposed to exist solely to make bets over. Although perhaps that is not actually true. I do know caddies make good money for some strange reason, perhaps as caretakers for those who go around hitting a ball away from them, catching up to it and then hitting it away from them again. If I had to do that 18 times, I'd sure need to hit that 19th hole too.Quote: Mission146Fore!!!!
Invade capital. Sort of a "sinking fund"... fine but what happens when "the unknown" takes place and the sinking fund sank while you are still going strong or are needing medical care?
I'm struck by how few say "I'd keep working because I love my job and would really do this for free if need be". I remember one biochemist who survived an airplane "controlled landing/crash" (let's not split a very fine hair) but loved his work so much he truly would stay at it.
These ten acres and a mule types proved during the Back to the Land movement that its easy to have subsistence farming and small but profitable farms. One woman was a classical Greek scholar at Harvard and after graduation embarked on a career as a farmer. Didn't do what others expected of her, didn't care. No need to wait for 2.4 million to live that way.
Two housewives in Oregon lamented the lack of a good organic breakfast choice so they formed their own oatmeal company, moved to North Las Vegas, established production in Rancho Cucamonga, CA and became millionaires.
One poster said something about living anywhere. You can pretty much do that now. Living in Santa Cruz, get a day pass for parking on the beach lots and your RV becomes California living for 18 hours a day. Move the RV elsewhere for six hours to stay legal though. Rents and Sales prices are too high in Santa Cruz? How do the unemployed manage it, yet others say its too high?
Of course it might not be 2.4 on the barrelhead, but a stream of payments.
Educate the kids? A good education usually means getting away from a school system. The Life Nomadik is in its second year of sailing the seas on a catamaran. Rarely use the engine at all. Kid visits dozens of islands and countries in a year, sees more than any kid in a classroom does. Average expense runs five dollars a day for the last two years.
Run a casino? Run a poker game? Run a marathon? Climb mountains? Heck, what is a windfall anyway?
And I'd tell my so-called friends and acquaintances to stop counting my money.
Quote: beachbumbabsTitle is hypothetical, but certainly targeted (playfully?) at Mike, so... I don't call getting bought out of 17 years of work a "windfall". If anything, it's "validation".
Joe Duck, a pseudonymous expert at Internet Entrepreneurship: "my advice to bright young entrepreneurial folks is to … take a deep breath and fill out an application to work for a big player in Silicon Valley" as part of his Klondike Theory wherein money was made in the bars and brothels rather than mining claims. He recommends the 120K salary over the entrepreneurial route.
So I guess anyone who made it as an entrepreneur is still doing well.
At JoeDuck.com, FoolsGold comments that Klondikers often were economically desperate before embarking on the journey, had little idea of the hardships or distances involved, often purchased a paste to apply to their clothing so as to be able to roll down a hill and collect the gold dust on their clothing and that no one would ever have hired them at 120k a year salary but that those who do get hired at such a salary have the same difficulty in putting aside savings as do those hired at 12k a year.
Probably buy one of those old punch buggies and supe it up.
Quote: Mission146Fore!!!!
Five?
In general, I would say to spend as little as possible and get yourself to a financial expert so you won't lose it to inflation. That would be a good start.
Quote: KonbuI would buy a house in the SF peninsula but not in the city of SF, then put the rest in investments.
Where are you going to find a house anywhere between SF and San Jose for only $2.4M, much less what's left over from $2.4M minus taxes? (Besides, say, East Palo Alto?)
Quote: ThatDonGuyWhere are you going to find a house anywhere between SF and San Jose for only $2.4M, much less what's left over from $2.4M minus taxes? (Besides, say, East Palo Alto?)
Squat?
Houseboat?
Whats so great about the San Andreas Fault anyway?
The Lost Coast area is much nicer and you won't have neighbors.
Quote: FleaStiffSquat?
Houseboat?
Whats so great about the San Andreas Fault anyway?
The Lost Coast area is much nicer and you won't have neighbors.
Send me to Fort Bragg and I would be set for life. The Ocean views and North Coast Brewery are all I would need until my liver gave out.
Quote: MoscaIt sounds like a lot, but it's not really that much. I'd bank it and keep working.
Quote: 1BBIt is not a lot of money. Take a moment to let that sink in. Now say it with me. It is not a lot of money.
It's a lot of money though. [g]
It's just not enough to do whatever you want. It's just not enough for someone to be sure he couldn't blow it faster than he thought just by living above the wherewithal it actually gives you.
Quote: ahiromuYou could take out less than 2% every year and just do whatever you want for the rest of your life.
If we use the 4% rule [which requires investment] the 2.6 million that gives you $104,000 per year that you can increase for inflation and expect it to last for decades. That, though, is suggested for people in retirement age trying to get about 3 decades. [also, there are folks out there saying 4% is too much to expect anymore. I use 3.5%=91,000]
At Michael's age maybe he *should* use 2%, $52,000. That's starting to sound like not a lot of money [g].
Yeah, I like the ocean views and breezes but some of those inland breweries are pretty good too: Dunsmuir and Weed, CA have good water and some really good breweries. I did like Fort Bragg and surrounding towns, the Point Reyes area is great, everything there is a farm to fork restaurant or a brewery. I came down from Oregon and took the 28 mile drive to the coast with curves at 25 and 15. Found it thrilling. Deep gorges, headlights on at noon.Quote: BozSend me to Fort Bragg and I would be set for life. The Ocean views and North Coast Brewery are all I would need until my liver gave out.
The bankruptcy of the creamery changed a few things around there though.
Lost Coast has no more housing to be built. Ever. Scientific study area. No more roads.
Or become an ExPat? Combine knowledge of Spanish Language with love of foreign culture. Apply to the Society for Pediatric Medicine to open a new casino at an established exchange rate and live in South America as a casino owner?
Were I a whipper-snapper, I'd blow it in a couple years and barely regret it; middle aged, I'd upgrade home, furnishings and college plans for family; were I in my dotage I'd invest most of it and give out some to family as estate planning.
Either way, a good chunk would wind up in the casino drop box.
I would take whatever is needed to eliminate car/consumer debt and/or purchase new vehicles so nice transportation is covered for you and the significant other for a while....assume this takes $100K
Next I would look at home mortgage debt......pay down enough on the mortgage to get to 65% LTV on the house (or less than $1.0M, whichever is lower, $1.0M is the maximum debt level allowed for full a tax deduction) and I would refi it into a 30 year fixed rate loan in the high 3%'s/low 4%'s. This is a real variable depending on the individual situation, but I am going to say this takes $250K.
Next are home improvements/deferred maintenance for all the crap at the house that you want re-done.......bathrooms, kitchens, new flooring, exterior paint, landscaping.....take care of the house to the point that it won't need anything for at least 10 years. Assume this takes another $170K.
Then I would invest the balance of $1,350,000 and invest it in a portfolio with a risk profile based mainly on my age at the time and tolerance for risk. I feel pretty confident I could generate at least an 8% rate of return which provides $9K per year of cash flow. Not enough to stop working, but if you let it accumulate for 10 years and then quit working, you could be sitting on $2.3M assuming you had to pay 32% in taxes on the annual income each year.
With $2.3M generating an 8% return, you are looking at being able to pull $16K per year gross out of the account for another 35 years before it was depleted. You can retire on that and maintain a pretty comfortable life in 98% of the United States.
Quote: ThatDonGuyWhere are you going to find a house anywhere between SF and San Jose for only $2.4M, much less what's left over from $2.4M minus taxes? (Besides, say, East Palo Alto?)
Quote: FleaStiffSquat?
Houseboat?
Whats so great about the San Andreas Fault anyway?
The Lost Coast area is much nicer and you won't have neighbors.
Not all houses between SF and SJ are 1 mil +. In South SF, Daly City, Brisbane, San Mateo, you can still find houses around 700k.
I don't love my job to the point I would do it for free. I like the bay area enough and my job pays enough so I would keep working, buy a house, and put the rest in investments.
Quote: ParadigmI get a tax rate of 22% assuming Nevada resident and long term capital gains rate/NIIT. That leaves $1.870M on a $2.4M capital gain event. Net number would be a lot lower living in a high tax state like NY/CA or if it was lottery winnings that were subject to ordinary income tax rates (some states exclude lottery winnings from tax, but you still have a much higher federal tax on that type of income).
I would take whatever is needed to eliminate car/consumer debt and/or purchase new vehicles so nice transportation is covered for you and the significant other for a while....assume this takes $100K
Next I would look at home mortgage debt......pay down enough on the mortgage to get to 65% LTV on the house (or less than $1.0M, whichever is lower, $1.0M is the maximum debt level allowed for full a tax deduction) and I would refi it into a 30 year fixed rate loan in the high 3%'s/low 4%'s. This is a real variable depending on the individual situation, but I am going to say this takes $250K.
Next are home improvements/deferred maintenance for all the crap at the house that you want re-done.......bathrooms, kitchens, new flooring, exterior paint, landscaping.....take care of the house to the point that it won't need anything for at least 10 years. Assume this takes another $170K.
Then I would invest the balance of $1,350,000 and invest it in a portfolio with a risk profile based mainly on my age at the time and tolerance for risk. I feel pretty confident I could generate at least an 8% rate of return which provides $9K per year of cash flow. Not enough to stop working, but if you let it accumulate for 10 years and then quit working, you could be sitting on $2.3M assuming you had to pay 32% in taxes on the annual income each year.
With $2.3M generating an 8% return, you are looking at being able to pull $16K per year gross out of the account for another 35 years before it was depleted. You can retire on that and maintain a pretty comfortable life in 98% of the United States.
Nice plan, but you're forgetting 3 kids in very expensive private school. No idea, but I bet it approaches 50K/year.
Quote: DrawingDeadEight-thousand highway signs.
Heeheehee...
Quote: 100xOddsLets say you got a $2.4M windfall.
- inheritance
- lottery
- or, say, selling a website :)
How would you wisely apply this windfall?
I'll start -> Hookers + Blow
Wisely? Stuff wisely!
Hire a female PA after many interviews/auditions
Hire a bodyguard to keep me out of trouble
Hire a lawyer to get me out of trouble
Then go out looking for some slight mischief.
:) Oh. Tell a lie! wouldn't do any of that, 'cos I'm happily married.
Quote: 1BBI said it in the other thread and two posters have said it here. It is not a lot of money.
not all of us make 6 figures. 2.5 million is more than I will make for the rest of my life.
Quote: beachbumbabsNice plan, but you're forgetting 3 kids in very expensive private school. No idea, but I bet it approaches 50K/year.
more, I think it is 25-30k per kid.
ETA: how did we go to talking about MS, other than this is the amount of his buy out. I think the general question was to ask what we would all do with the money and not what he should do with it.
Quote: beachbumbabsHeeheehee...
I forgot about the sign. Mike sold too low..
Quote: beachbumbabsNice plan, but you're forgetting 3 kids in very expensive private school. No idea, but I bet it approaches 50K/year.
The plan anticipated working for another 10 years to allow principle to grow. Still have to work for the next 10 years and pay the bills including the refinanced mortgage debt.
I could probably walk away from my current gig, but not after I carefully invest those funds. I'd set aside whatever I need to cover taxes in the form of a CD or a high interest money market fund at a reputable institution. Assuming I leave my gig and pursue other means of employment and/or retirement, I would invest the remainder in a semi-conservative portfolio that yields about 6-8%. I would avoid throwing lavish parties or purchasing lavish things.
BIGGEST RULE OF THUMB WHEN HITTING THE JACKPOT -> LIVE WITHIN YOUR MEANS. KA'CHING!!!!!!
+1Quote: Asswhoopermcdaddy2.4mm isn't a lot these days but it can be enough. Most people blow through a monetary windfall (inheritance, lottery, insurance) because they upgrade their lifestyles to ridiculous consumptive levels that can't be paid for by the money that has been bestowed upon them. They buy luxury mansions, cars, or jewelry. They mortgage the crap out of something or make really bad investments in additional insurance or buying a restaurant. Not to mention the long lost relatives that come out of the blue.
I could probably walk away from my current gig, but not after I carefully investments those funds. I'd set aside whatever I need to cover taxes in the form of a CD or a high interest money market fund at a reputable institution. Assuming I leave my gig and pursue other means of employment and/or retirement, I would invest the remainder in a semi-conservative portfolio that yields about 6-8%. I would avoid throwing lavish parties or purchasing lavish things.
BIGGEST RULE OF THUMB WHEN HITTING THE JACKPOT -> LIVE WITHIN YOUR MEANS. KA'CHING!!!!!!
America is a very wealthy country and most people here won't make much more than half of that over their lifetimes. It is a lot of money.
Now, it may not be FU money. But, at the same time, you don't have to live in San Francisco. There are beautiful, fun and interesting places all around the world where you can purchase a very comfortable home for a few hundred grand or less. Because you have an entire lifetime of excellent pay in hand, you can chose whichever you want.
I'd likely get a modest, off the strip house or condo here in Vegas. I'd dial my gambling way back. I'd probably play bigger, less often. Play in some good 2/5-5/10 NLHE games. Do some sports betting. Maybe do some UTH or whatever.
I'd enjoy it and this would provide me with some income without working. I could also rent the place out when I wasn't there, or during hot periods. Like during the WSOP.
I'd buy a couple similar places. Perhaps one in the American NW. The other one, in some other country. I could also rent those out short term. Whenever the chance to make a nice profit arose, or I just wanted to try living somewhere new, I'd sell those places and buy new ones some place else.
Once I felt like I had everything stabilized, I'd give a big chunk of it away.
Quote: RigondeauxThe "2.4 million is not a lot of money" set are 1) spoiled and 2) not very creative.
America is a very wealthy country and most people here won't make much more than half of that over their lifetimes. It is a lot of money.
It's a significant amount of money, but it's not a lot of money.
It's significant in that you can't stick it all in one bank account (well, you can, but you lose FDIC or NCUA protection on a lot of it).
It's not a lot of money because if you stick it in bank accounts, you can't live off the interest. (I'm assuming 1% APY, and comparing it to the poverty guidelines. If you didn't pay taxes on the $2.4M and had a family of 5, you're dipping into capital to stay out of poverty.)
I fully understand that there are better investment vehicles than savings accounts and CD's.
Quote: DieterIt's a significant amount of money, but it's not a lot of money.
It's significant in that you can't stick it all in one bank account (well, you can, but you lose FDIC or NCUA protection on a lot of it).
It's not a lot of money because if you stick it in bank accounts, you can't live off the interest. (I'm assuming 1% APY, and comparing it to the poverty guidelines. If you didn't pay taxes on the $2.4M and had a family of 5, you're dipping into capital to stay out of poverty.)
I fully understand that there are better investment vehicles than savings accounts and CD's.
I guess I can't argue about what 'a lot' means. You seem to think it can only mean a multi-generational family fortune. To me, that's like saying only Hummers are big cars.
2.4 mil is almost twice the average american's lifetime earnings. Most of us already have some money and stuff, so we get that in addition to the 2.4. Plus, having all the money at once allows you to do things like buy real estate in cash and start earning on all the income immediately. So, overall, it gives you the ability to live at more than twice the comfort level of the average person in our wealthy country without ever doing another day of work.
The first million alone would put you into the top 5% of richest Americans. Not sure how much higher the next 1.4 would push you. Worldwide, I'm sure it's like .1% . All without having to work. In my book, that's a lot of cash.
Plus, like I said, a lot of people who pull down big bucks have to live in ultra-expensive places to keep that income. You can live wherever you want.
Edit: yes, the money would eventually run out, probably some time after you died.
Quote: RigondeauxThe "2.4 million is not a lot of money" set are 1) spoiled and 2) not very creative.
America is a very wealthy country and most people here won't make much more than half of that over their lifetimes. It is a lot of money.
Now, it may not be FU money. But, at the same time, you don't have to live in San Francisco. There are beautiful, fun and interesting places all around the world where you can purchase a very comfortable home for a few hundred grand or less. Because you have an entire lifetime of excellent pay in hand, you can chose whichever you want.
I'd likely get a modest, off the strip house or condo here in Vegas. I'd dial my gambling way back. I'd probably play bigger, less often. Play in some good 2/5-5/10 NLHE games. Do some sports betting. Maybe do some UTH or whatever.
I'd enjoy it and this would provide me with some income without working. I could also rent the place out when I wasn't there, or during hot periods. Like during the WSOP.
I'd buy a couple similar places. Perhaps one in the American NW. The other one, in some other country. I could also rent those out short term. Whenever the chance to make a nice profit arose, or I just wanted to try living somewhere new, I'd sell those places and buy new ones some place else.
Once I felt like I had everything stabilized, I'd give a big chunk of it away.
As one of the "$2.4 million is not a lot of money set" I take umbrage of your characterizations of me as spoiled and not very creative. Anyone who knows me will say that I am the complete opposite of both.
What I and the others in that "set" are trying to hammer home, especially to the young people here, is to use it wisely. Your vision of a life of gambling and buying homes in other countries may work for you but not for others. Sure it's a lot of money to most but not enough to retire to a life of luxury. If you live in your parents' basement it's huge. If you are supporting a family of five with three kids in expensive private schools it's not.
My creativity has given me a financially independent life which I am thankful for each and every day. Not a spoiled bone in my body.
Quote: RigondeauxYou seem to think it can only mean a multi-generational family fortune. To me, that's like saying only Hummers are big cars.
I'm not yet 40. I don't expect to live past 73.
If I got $2.4m right now, I don't expect that I could quit working and have it last that long, much less leave an inheritance for my darling daughter.
Don't misunderstand - it would help substantially. It is a lot of cash - it's at least a briefcase. It's just not a lot of money.
Stuff just keeps getting more expensive.
It's not as bad as it seems. Food and non alcoholic beverages are included free of charge.
Find a way to invest it so I can fulfill my dream of NOT WORKING.
I would pay off my mortgage, and a hospital bill. The only debts we have.
My wife is disabled, so I would work a few more years until I could retire with our insurance intact.
Her health isn't good so we need the insurance.
I'd meet with my CPA for advice on how best to invest it and work out the tax issues.
Then I would retire in 3 years. We will be able to live modestly ( as we do now) on my pension and social security plus her disability.
The windfall would just make it easier to live modestly.
Children can fight over what's left after we die.
Now's his chance.
Sell the home in Vegas assuming some capital from that.
Find the best PUBLIC school in the Pac NW. Aka: Bellevue, WA. Don't waste 75K/year on private schools!
Buy a 800K 4BR / 3BA home with 320K down, mortgage the rest paying 35K/year over 15 years.
100K on 2 nice vehicles.
1.4 million left. Invest at 7%, have
Continue working at WoO and odd jobs for 15 years using salary to pay bills.
After 15 years, kids graduate college.
Travel.
Enjoy life.
Continue to make good bets.
After kids out of college, sell home for 1.2M. Take the 2.75M in the nest, buy a $2M oceanfront property and live off the other 2M at $110K/year @ 5%.
Based on my income, the 2014 tax tables (the latest I could find,) and a $2.4 million jackpot, I figured up that I'd owe $981,538 in taxes, assuming a married filing jointly status and a pre-existing income of $80,000 combined. I assumed that I would win the jackpot in Vegas, which conveniently is in a state with no income tax. This factors in Social Security and Medicare tax as well as the 0.9% additional tax on any income above $250,000.
I assume that I would win the jackpot in a slot machine, since I am aware of no table game with a jackpot that high (the Super Royal at Caesars is only $1 million.)
So I'm left with $1,418,462 left, which I'll round down to $1.4 million since I'll undoubtedly blow part of it on nice suits, steaks, and fine champagne during the rest of my trip. So realistically, that means $1.4 million to work with. I think I can keep myself to $18,462 in frivolous purchases during my New Year's trip to Vegas.
After that, the first thing that goes? Debt. All my student loans and my wife's, and my mortgage, and my Maui trip. And renovating my condo to rent. I'll be down to an even $1 million after that.
So the question becomes a cliche for me - $1 million. Tax free. No debts to pay. Now what?
