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Thanks a Million!

Posted on November 10, 2008

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What would I do if I won $1,000,000?

I’d spend it.

Well, maybe just half of it. And I’d bank the rest.

You know, after tax winners don’t receive the entire milli, so let’s say I’ll only have $500K to work with.

First, I will NOT be sending my employer a two-week notice, because half a mil is not enough dough to retire on. I know a lot of people would quit their job and blow that money thinking it will last them and that it’s just enough to retire. Seriously, that will money will go quick. I mean real quick. Just think about how expensive everything is now—gas, groceries, utilities, gas, clothing, entertainment…did I mention gas?

Remember when a gallon of milk used to cost $1.99 like three years ago and you could buy a dozen eggs for $1.00? Now a gallon of milk costs at least $4.00 and a dozen eggs are $1.50! So don’t quit your day job. 

Second, I will pay off ALL my bills…car note, credit card and student loans.

Then I would go out and buy a new house; nothing flashy or too big for two people. I have to ask myself if I can maintain the house once the money is gone and if my income will support the space. Lawdy, lawdy, imagine being in your new house and you can’t afford to pay the bills three months later! So then what do you do? The only option would be to sell it or find a second job to help pay for the bills – meaning you wouldn’t really get to enjoy your house since you’ll be working ALL the time.

I don’t know about you but I am out on that!

Okay, so I have $200K left from the $500K. I’d spread out $50K and give to church, my family and a charitable organization of choice.

Now I have $150K left to play with. I won’t be replacing something if it isn’t broken. What that means is that I don’t need any fancy furniture or clothes to go into my new house.  I will invest the rest.

You see — my money will be making more money for me. Sing it…make money, money, money. It will compound/multiply and increase in value! More than likely I would place at least $75K into a Share/CD account.

How COOL is compound interest?

Here is an example:

Let’s say my credit union will pay 3.87% APY on a 24-month share certificate. With a $75K balance, I would make $5, 917 for the entire 24 months! Here’s how:

$75K earning 3.87% for one year = $2, 903.

$75K + $2,903= $77,902

$77, 902 * 3.87% for the second year = $3,015.

So this means I would earn $5,918 just for having my money safely secure in a share certificate and not having to lift a finger.

Cha-ching!

Of course, do check to see if there are any limited offer specials for better interest rates. For example, a financial institution may have a limited offer special certificate with a better rate. If you found one for 27 months with 4% APY, that’s just 3 months more than the 24-month certificate and .13% rate increase! See what patience can do for you?

Now, back to the million I was spending. I would then invest the other in mutual funds, bonds, and, despite the market, stocks. I would contact my financial advisor for advice. And you know I will have to do a little shopping and budget $5K for the awesome retail therapy bonanza. : ) So I won’t have the urge to spend more than I need to.

So what would you do if you won a million bucks?