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Showing results for tags 'Windfall'.
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A million bucks still sounds like a lot of money to me!! I have not calculated what I have made thus far from the many jobs I have had and I guess it could come close to that or maybe even exceed a bit ( I have not had high paying jobs ) This article put things in a sobering perspective -- and unless you exercise some discipline and smarts that million bucks could vanish quickly -- These thoughts have been voiced before but I thought it was still an interesting article to share -- You know we pass over a lot of articles or read them when we are in a certain mindset and they do not necessarily "click" at the time - whereas at a different time they do -- 3 Reasons Why $1 Million Is Just Not a Lot of Money The infamous $1 million. It’s been the top prize on hit game shows like Deal or No Deal and Who Wants to Be a Millionaire? – it’s also a financial goal many people strive to meet. “I want to be a millionaire someday,” people may say when talking about their career and financial goals. But how much money is $1 million? Is it enough to live happily ever after without ever having any financial troubles? Probably not. Even if the $1 million you received was somehow magically tax-free, it’s still probably not as much money as you think it is, and the large sum of money certainly isn’t what it used to be. 1. Past, present, and future Although it sounds like a lot of cash, $1 million of today’s money is only worth about $42,000 of 1914 dollars, which is less than today’s median household income. Even if we go back 50 years, $1 million in today’s money would only be worth a fraction of that amount — or around $133,000 — worth of 1964 dollars. Also, think about it this way: How old are you? If you received $1 million today, at age 25 or 30, for instance, you would probably have at least another 50 years on this Earth (if you lived until the average life expectancy of around 80 years old). During the next 50 years, your $1 million is only going to decline in value. According to Buy Upside’s Inflation Calculator, its value will be roughly $225,000, if the inflation rate is constant at 3%. The only way to protect your money is to invest it, which requires a degree of discipline (you’d have to refrain from spending it all). 2. Have more, buy more Those who have more money are inclined to spend more money. A simple glance at the Bureau of Labor Statistics’ consumer expenditure surveys shows that as income rises, so does spending. The lowest income group had $22,830 in average annual expenditures on the latest survey, the middle-income groups had average expenditures of $36,093, and the highest spent an average of $85,264. When you have a bank account that’s filled with all that money, it’s easy to convince yourself that you “need” to buy a five-bedroom house on the water, instead of a modest two-bedroom home. It’s also easy to get into the mindset that you “have to have” a Bentley, instead of a Honda Accord. A million dollars will go quickly unless you hold onto the same lifestyle as you had before you acquired the sum of money. 3. You would likely have to remain employed A $1 million tax-free windfall would probably not allow you to up and quit your job, unless you had some sort of brilliant investing strategy coupled with extreme self-discipline. If you were to simply save and live off of the money, it would only amount to an annual salary of $50,000 over 20 years, $25,000 over 40 years, or $20,000 over 50 years. Also, let’s not forget that those relative amounts will decline in value over time. The average worker with a bachelor’s degree earns $2.4 million over his or her lifetime, which is more than double the $1 million windfall. Even those with no college degree far exceed the $1 million mark over a lifetime. So, although a $1 million cash prize could certainly be life-changing for most people, it wouldn’t necessarily be the permanent answer to all of your money problems. Unless you have a constant income source flowing in — through employment, investment returns, or elsewhere — your $1 million windfall would blow away fairly quickly. http://wallstcheatsheet.com/business/3-reasons-why-1-million-is-not-a-lot-of-money.html/?ref=YF
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I bet there would be many different "first" reactions to this scenario -- I think it would be a good project for theses people that do things like this and post you tube videos of lol -- What do you think your knee jerk reaction would be and the first thing you would think about doing before you "really" gave it thought without the emotions? lol I like having options don't you? I also like to hear different perspectives on an idea -- especially the pros & cons don't you? Of course the final decision is ours and ours alone -- (unless you have a significant other lol) Below is just more advice with maybe a little different twist to what we have been viewing / contemplating / and discussing for the past few years -- I like to keep things fresh in my mind don't you? I have many posts in archives and find going through them periodically is helpful - UNEEK 3 Things to Do When a Bunch of Money Falls in Your Lap By AJ Smith A windfall of cash can seem like a dream come true, but it turns out that if you're not careful, that money can disappear quickly. It is all too common to ignore the warning and end up squandering the money before putting it to good use. Consider taking the following steps if you ever come into a hefty sum so you can make the most of your newfound wealth. 1. Stop & Think You just received a massive influx of cash so you should hit the stores, right? Wrong. Shopping sprees as soon as your check clears is the No. 1 mistake to avoid. The shock of a sudden large-figure windfall can cause irrational behaviors, lavish spending or sharing too extravagantly. It's a good idea to avoid spending all the money you just received without making proper use of it. You can try to take a few months and consider your short- and long-term financial goals. Then you can make sure your spending decisions align with those goals. Park your money somewhere safe like a savings account or CD so you have time to get your emotions under control, evaluate your needs or wants and get in the right mindset for better decision-making. You can also always consider working with a financial adviser if you are unsure about what to do with the money and feeling overwhelmed with the options. 2. Dump the Debt It's a good idea to consider your whole financial picture when determining how best to use that new money. It may be hard to learn which debts should be paid off first, but consider the high-interest balances like credit card bills before you get to other debts like student loans or mortgages (the lifetime cost of debt is staggering — paying off high-interest debt can make a big dent in that cost). If you can make prepayments or even finish paying out all the money you owe, your life could be in for a big, positive change. It's important to make sure you won't have to pay any penalties if you pre-pay any loans, including your mortgage. Also, even as you pay off debt, it can be a good idea to save some money in an emergency fund so you are covered if any surprise expenses come up. Many experts recommend establishing or strengthening your emergency fund with six to nine months' of expenses. Keep in mind that paying down debt has the added benefit of helping your credit score. On-time payments and lower credit utilization rates can help maintain or build a great credit score. You can see how your debt is affecting your credit scores for free every month on Credit.com. 3. Plan for Your Future Once you address your immediate financial health, don't forget about the future. It's a good idea todetermine how much you will need for retirement, how much your child's education will cost, details on that second home or business you want to start and get to work on those goals. You could even consider using some of the money to pay the closing costs so you can refinance your mortgage to a lower interest rate. Depending on how high your current mortgage rate is, this can save you significantly in how much money you will pay in interest over time. Last but far from least important, remember the taxes you may face now that your income for the year has grown substantially. The exact amount will depend on how you came into the money, but it's important to research what is taxable and be prepared for the sudden bracket bump. Once you have some funds allocated for saving and repayment, you can invest in the market carefully or splurge within reason. Just be sure to review your finances regularly to make sure you get maximum benefit from that windfall. http://finance.yahoo.com/news/3-things-bunch-money-falls-113043756.html
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