If I had a million dollars

[kate_nepveu]

I wouldn't be rich.

Chad pointed out a Cognitive Daily survey on what it means to be rich, which had questions about both income and net worth. It's interesting reading, and I recommend all of it, but one thing in particular caught my eye.

The survey creators asked how much people would give away if they won a tax-free million dollars. The answer was roughly $200K, which prompted at least one person to express digust at the lack of generosity.

If someone wanted to give away most or all of a tax-free million, I would applaud them. But it's not what I'd do, and I think that "digust" is a bit of a strong reaction.

Here's what I'd do, at least my immediate reaction:

First, I'd figure out how to get full health coverage for our parents for the rest of their lives, everything from annual checkups to the less happy possibilities like nursing homes or hospice care. This would probably be very expensive, since I'd want to set things up to cover every possibility (buy an annuity to pay the insurance premiums, maybe? Something like that.).

Then I'd set up a college trust fund for our child(ren) and the child(ren) of our siblings, which would itself be a substantial chunk of change.

Whatever is left, either we'd renovate the kitchen or just sock it away as a vacation-and-treats fund.

And with the money freed up by not having to save for FutureBaby's college, I could increase my monthly charity budget. That's the thing with a million bucks, it's not enough to retire on, but it would give me the opportunity to provide for later contingencies and incrementally increase my standard of living and peace of mind today.

Anyway. What would you do with a tax-free million dollars?

Oh, and yes, some of you live in places where you wouldn't have to fund these contingencies personally, congratulations, I'm very happy for you, you don't have to comment just to say that. If I didn't have those things . . . probably new house, dream vacation, and yeah, an up-front chunk to charity.

(On the other hand, I definitely don't understand the people who answered the survey who said that they couldn't have enough annual income, that no amount would maximize their personal satisfaction and happiness. Seriously? The best spin I can put on that is that they have much better imaginations than I do.)

Comments

[pnkrokhockeymom.livejournal.com]

Well, I would get rid of the $140K in student loans I have. And I would pay off the house and get some serious repairs done that I'm actually, right now "saving up" for. And I'd get rid of the rest of the debt. And put away for Puppy's college education, and start a college fund for each of my 2 best friends who have just had or are getting ready to have babies. And take care of my parents' health care and their mortgage. And I would have a slush-fund for emergencies that Financially Smrt People always say you should have--what is that, 3 mos? 6 mos?

I would pay the balance of my alimony off lump sum, too.

Which might just break it, I think. And that probably looks TERRIBLE; if I got any more I would give it to charity, but I would want to help my parents and my friends with their kid's educations first, because I'm not sure they'll be able to save much for that.

[kate_nepveu]

Yeah. I wonder if the commenter objecting to people not giving most of it away didn't have a lot in the way of debt or personal contingencies?

Or, maybe they live their lives this way regardless. Some people do--Chad knew people once who literally tithed to their church, and also applied for food stamps, missing the eligibility cutoff by *that* much.

[avram]

Hm. I think I'd research what kinds of places I'd be able to buy a house with that kind of money. I'm thinking buy a multi-unit house, live in one unit, rent out the others, live off the rent. I'm not sure how the numbers work on that, though.

My parents already have great health insurance, and I'm not planning on having kids.

[kate_nepveu]

I don't know how the numbers work either, but for me, being a landlord would be just too much work. (Snce it seems unlikely I'd be making enough profit to hire a management company.)

[mswyrr]

First, I'd pay off the debt on my parents' home; it's one of those adjustable things that just keeps growing bigger and bigger even has the falling housing market makes the home's actual value drop, damn its eyes. We all live together anyway, and I think they'd be cool with putting me on the house w/ them so I'd be able to stay here even if something happened to them, instead of having to go through the court's inheritance rulings.

Then I'd talk to somebody about the safest ways to invest it and set it up so my mom and I get interest payments off of it. It would make it easier to survive when jobs are lost, etc. If I could, I'd give regular money to charity off of the interest I got, but I wouldn't touch the main money after paying off the house, though.

[kate_nepveu]

Oh, ouch to that mortgage.

(ObLawyer: Err, do your parents not have a will?)

[veejane.livejournal.com]

I know that, in the real world, I would do things with that million dollars -- like pay off my mother's mortgage and take care of my niecephews' schooling -- but off the cuff I was sitting here thinking that, all other things considered and me being a frugal person, I could probably live off a million dollars for 20+ years.

Or a lot fewer years, and put myself through the artsy-fartsy impractical graduate program of my choice with no financial aid.

[kate_nepveu]

I think the standard draw on endowments is 5%, so yeah, you could live off that indefinitely, or even for a good while if you didn't bank all of it. (For us, one of us could retire if we were willing to take a pay cut, because we are extremely fortunate in our employment, and I think that would not be a good arrangement for a number of reasons.)

[dsgood.livejournal.com]

Give money to some people I know who could use it.

Spend a lot of time traveling to various places around the world.

Donate a bunch to food shelves.

[janni.livejournal.com]

I'd get together with a trustworthy investment counselor, and work out ways to invest it so that some portion could serve as part of a yearly income and some could go toward part of something resembling retirement. And then I'd give to charity and do other worthwhile things out of the yearly income part.

Probably, unless the investment counselor convinced me it was a really bad idea, I'd pay off our house before doing all the rest.

[montoya.livejournal.com]

A million dollars is really not enough to retire on, unless you want to live rather austerely. If you're not retirement age, so need it to last indefinitely, you can get a withdrawal rate of 2-3%, which amounts to something like $25K a year. Which you have to pay taxes on (though if that was your only income, I think just 5%).

But it's a heck of a nest egg...

[montoya.livejournal.com]

I'm one of the "no limits" sort of people.

How much would it cost to run a space program? What kind of supercolliders did you physicists need? Mr. Whedon, would you like a big budget TV show that's guaranteed to lose piles of money (oh, I'll buy NBC to air it without commercials)? What sort of incredibly awesome underground lair can really be built within the limits of modern construction technology, and what's it take to advance the state of the art? Oh, and how about something like Orb only with a broader catalog (at a start, every book I own, because I want matching copies), selling absolute top-quality (hand-sewn, leather-bound, etc.) editions for like $5?

None of this stuff is necessary in any way, of course, but wouldn't it all be COOL?

[kate_nepveu]

Huh. I guess, but at some point, I start shoveling most of it into charity--which, I suppose would maximize my _personal_ happiness if I knew I were responsible for eradicting malnutrition in the world, for instance, I just didn't think of it that way, and probably I should've.

[cofax7]

Make donations to various siblings' kidlings' college funds. Set aside an amount for my folks' retirement/medical. Set aside an amount for my own retirement. Sell my house and move half a mile east. Put $20,000 or so aside for fun, make some long-term commitments to charity.

[kate_nepveu]

Half a mile east? That sounds very . . . specific.

[lbmango.livejournal.com]

Interestingly, $1mill is enough to endow a chair at a college. so, one answer that I've had is "endow a chair, with the stipulation that I be the first person to take it.

In other words, create a job for myself, and then do it.

That would have unfortunate political ramifications, I'm sure.

Alternatively, by really nice condo, and stick the rest somewhere intelligent...

For the most part, Investing a million dollars, and then paying for health care out of pocket will be more efficient than paying health insurance for all parents.

I agree with you, that the effect it would have on my charity giving would be indirect. I'd buy a house (condo) again, and have more financial flexibility, so my yearly charity giving would go up, but I probably wouldn't give any of the original million directly to charity.

[kate_nepveu]

Re: health insurance: oh, probably; the appeal of doing it this way would be, in my daydream, that I'd never have to worry about budgeting or running out--one-time arrangement and then peace of mind from then on.

Creating a job for yourself is definitely a creative method, though as you say, possibly not optimal . . .

[calimac.livejournal.com]

$1M would be barely enough to buy a house around here. It's not worth it, anyway, so I wouldn't do it.

[kate_nepveu]

Ouch. I continue to be grateful that we landed someplace with really cheap (by my growing-up-in-Eastern-Mass. standards) property.

SAVE IT!

[spiderweb888.livejournal.com]

I don't have any debt so I'd save it. All of it.

There will be very little social security or Medicare soon because of the baby boom. More people are getting Alzheimers (witness pTerry!). That money would sure come in handy for long-term care for me or someone in my family should that happen.

[coraa.livejournal.com]

Pay off my debt and then save the remainder Just In Case (of medical emergency, lost job, etc.). Though I'd probably blow a relatively small chunk of it on something moderately frivolous, like travel, beforehand, but I am a fairly anxious person, and having a significant emergency fund would make me measurably happier.

Most likely, when I have children, some of it will go to their college fund.

[kate_nepveu]

I think if one can manage it, it's hard to go wrong with a *little* something frivolous. =>

[kiya]

This question comes up often enough that I'm tempted to crunch the numbers on it for real sometime.

My immediate thoughts run something like:

- We have some irritating debts that would be useful to pay off.
- I don't honestly know if it would be more useful to pay off the mortgage or keep that liquid for the future (as we have hopes of moving in with our partners in a few years, and buying or building a house that suits us all and handles whatever size the family is at that point will not be insignificant)
- We have very little in savings; this needs corrected, but I don't know to what level.
- We need a second car, or, if the magic money appears after said car is acquired, will need to pay off second car.
- Education/care for the whole children thing needs considered.
- For that matter, one of these days I'd maybe like to get a bachelor's so I can pursue an M.Div.
- My other partner is in a going-back-to-school phase as well, and I'd like to be able to help him with that more than I can as a paid-in-royalties freelance editor for a teeny press.

If I presume that that takes half of it -- I got that number reasonably, but doing something like a full undergrad college investment fund for multiple offspring would eat much more, or putting more into savings, or -- I'd have to think about the remainer.

(I would note that I'm not doing any of this directly into 'personal indulgences'; my thought on that is, frankly, 'If we paid off the mortgage, that'd be n hundred dollars more a month we'd be able to spend on whatever we want', which means working out how much it would cost to accumulate everything on my to-acquire booklist (including the rare OOP only available for ~$3K and the like) doesn't go into windfall-magic-money calculations -- the freed-up money would come in faster than my reading speed anyway, even if I only got some fraction of it, especially given my backlog.)

So supposing I don't do as much long-term 'immediate family support and responsibility' stuff as I could in theory do, and am left with half of it:

I can think of two pipe-dream "If I had the money" projects that I would love to try to make work. I frankly have no idea how much it would take to float either, or for that matter if either is feasable, but that's enough money to think about starting.

Project One: park this notion somewhere near the intersection of 'grocery co-op', 'soup kitchen', 'community college home ec department'. Ideally in cooperation with local farmers (I know a community farm near here sends produce to charitable organisations in the inner city). Increase access to produce, bulk grains, etc., in an area where the nearest grocery store that has such things is an hour's bus ride away; produce healthy meals for people who don't have the time to do it due to things like 'holding down two and a half jobs'; offer instruction on basic cooking techniques, crockpot cooking, etc., for people who would do more if they only had the skills.

Project two: a goddamn religious foundation for my religion that's actually worth shit. The explanation of which is a whole other rant, but. If nothing else, at least that might be the resources to start to build something worth having as a semi-private location/foundation. (I know of a couple of groups doing this, one a working farm, one an intentional community/religious retreat space.)

Somewhere in there, that's what I'd do with a million dollars.

[kate_nepveu]

Those are very interesting projects. Perhaps someone in your community might be interested in picking up project one as a charitable endeavor, a university project, or some such?

[firecat]

I'd invest the $1 million. I give away some money to charity, but mostly I just have plans to give it away when I die, assuming any is left.

I can kind of get the "not enough annual income." On the one hand, I'm quite happy with the income I have. But I have fantasies. One strictly selfish one: I would love to travel more, but I'm pretty mobility impaired. In my fantasy I would have unlimited use of comfortable air, water, and land vehicles and enough personal attendants to make traveling anywhere I want comfortable.

Then there would be the opportunity to fund of all sorts of cool stuff. I would love to set up an alternative MacArthur grant or something.

On the other hand, I don't really have the personality to deal with that kind of lifestyle, and I probably can't buy the personality.

[kate_nepveu]

Yeah, on one hand I'm starting to open up my imagination on that, but on the other, I still have some hard-to-articulate qualms. Perhaps I'm just too practical--*where* is this money coming from, a white hole? =>

[thette.livejournal.com]

I'd start by paying off the debts. Mortgage and student loans together would be about a million SEK, which right now is about 160 K USD. The rest? I'd give a lot of it away to my brother, because he's in a financial hard place, and has been for ten years now. Say another 160 K. 180 K to charity, invest the remaining half million, and then we could live comfortably on my salary alone and KJ could do whatever he wants.

[ninjoo.livejournal.com]

I would pay off the mortgage of my parents’ house, or buy them a house where they like. Whichever they prefer. I’d pay off my student loan, which luckily isn’t that much. I’d give a large portion to environmental charity.
And if I happen to have a house of my own already, I’d spend some to get a large, cozy kitchen, to make it the heart of the house.
And if I have some left after all this, I’d probably save it. I have no need for a cool car or designer clothes.

All this, if it would be a million euros. I cannot do a lot with dollars here in Europe, at least not the things I’d like to. :)

[kate_nepveu]

Not these days, with dollars in Europe, anyway!

If I were sinking a good amount of money into a house, it would definitely be kitchen first and then bathroom--my life would be better on a day-to-day basis if I had a Japanese-style setup with separate toilet, big shower, bathtub, etc.

[dhole.livejournal.com]

In Orthodox Jewish law, there's actually a cap on how much charity you're supposed to give -- there's a minimum of ten percent, and a maximum of twenty percent. The logic is that you're not supposed to make yourself poor giving money to charity, because that doesn't help anyone, and that people have an obligation to financially support their families.

So, 200k to charity, and 800k invested, which would mean somewhere in the range of 40k a year, assuming relatively cautious investment. 40k a year actually is enough to retire on here. It would mean more trips back to the US for visits, and maybe we'd get a nicer apartment after a few years.

All in all, a cash free million would be rather nice indeed.

[kate_nepveu]

That's very interesting, about Orthodox Jewish law. Poking around, it looks like Islam has a specific required percentage of assets over a certain amount, which would have a similar effect; I wonder if other religions have similar rules?

And yeah, it would be nice, wouldn't it? Ah, daydreaming . . .

[itlandm.livejournal.com]

Well, my job will be supernumerous starting June next year, if all goes as planned. My 30 years of job experience is not transferable outside our organization. So I would probably not give away much, if anything. It is hard for people over 50 to get a job these days.

[kate_nepveu]

Ouch. Sorry to hear that.

[papersky.livejournal.com]

After paying of debts/mortgage, I'd keep about $200,000 invested for us, and put the rest, which would be about $600,000 in an investment fund called "The Jo's Friends US Healthcare Fund". Then I'd invite my US friends to join it -- for a premium of $100/year, you're entitled to draw on the fund for any healthcare you're not otherwise covered for, until the fund runs out. It would also pay the frugal salary of a fund administrator, chosen from among my friends looking for work at the time, who would also be able to encourage donations from other people. It's tossing jellyfish back into the ocean, but so is a lot of stuff.

If the US had healthcare, I'd go back to my original dream million plan of using it for library funding.

[kate_nepveu]

Library funding is also highly awesome.

[sraun]

1) Pay off all my debt (including my mortgage) - IIRC, that currently eats about a $250k.
2) Do some house improvements / deferred maintenance - that'll probably eat another $50k
3) Pay off some (all?) of the kids debts - I'm betting that will eat another $250k, maybe more. There's two smallish mortgages and some college loans in that mix.
4) Give some to charity - probably 10%
5) Spend some on toys - new computer stuff, new car(s?) - probably $50-100k

That's about 3/4 of a million there - we'd probably take the rest of it and invest it - it wouldn't be enough to live on, but it would buy some nice vacations. And with the mortgage paid off, I could afford to do some training and job-hopping - maybe having to take a pay-cut for a while - and still be able to maintain our standard of living.

[kate_nepveu]

With an amount that size, treating it like an endowed vacation fund makes a decent amount of sense, really.

[leighdb.livejournal.com]

My idea of giving to charity is making sure I or my family don't become candidates for it. So, yeah, I can see why people would make snotty remarks about not being generous enough with a windfall, but when it comes to my family's future health and wellbeing, they can, frankly, suck it.

If I had a million dollars, I would immediately pay off my debts, my sisters' debts, and the rest of my mother's mortgage. I would set aside a portion to be used to send Kate to college, send Liz enough money so that she can move back home, and another portion to finally finish repairs on my mother's house.

Then I would take us all on a month-long trip to various points around the world, the kind of trip my parents would have loved to take their daughters on and never could afford to.

The rest, I would take to the best investment advisor I could find, and set up one fund that will supplement my yearly income to the point where I can work where I want to work rather than to make sure I have enough to live on, and the rest to be socked away for future healthcare/retirement/emergency purposes.

Alternately, I might go crazy and use the rest to start up a company with myself and my sister.

[kate_nepveu]

What kind of company?

[ginny-t.livejournal.com]

That is seriously messed up, to be disgusted that someone would give away only 20% (one fifth) of their lottery winnings. For one thing, lotteries support charities and infrastructure (here in Ontario they do, at least). Buying a lottery ticket gives money to charity. For another, different people are in different financial situations and have different priorities. For example, if I won $1 million, I'd buy a condo for me and one for my parents (who've made some short-sighted financial decisions), and if there was anything left (real estate in Toronto is not cheap), I'd set that aside for a rainy day.

Finally, that's one fifth of the winnings! How many people donate one fifth of their annual income to charity? I would say that I'd like to meet that person to shake his or her hand, but I don't believe that giving to charity should be a public thing because then it becomes a spectacle.

As for the people who say they can't have enough income, my reaction is that they're fundamentally unhappy people looking to things to distract them from that unhappiness. I think they lack imagination, rather than having too much.

[montoya.livejournal.com]

Can't have enough: The question, though, is literally asking at what point more money of any amount could not possibly make you any happier? That is, there is nothing that could be done with the money, no matter how much, that would cause you to even smile briefly.

If your answer isn't infinite, I think you're just not thinking about what infinite money means (largely because it's a ridiculous and insane concept, but hey).

[buymeaclue.livejournal.com]

First thought: replace my car, which is due to start having problems any day now. Then, second thought: keep my car, but sock away enough in savings to be able to replace it when the time comes.

Which is basically the main thing that I'd do. I'm doing okay day-to-day, but I'd really like to have more (read: any) in-case-something-goes-wrong cushion. Establish savings. Sock away a car fund. Sock away an emergency horse/dog fund. Do a whole lot of homework on investments and set up some of those. I might try to buy (or put a hefty down payment on) a little house or condo, but I'm iffy--if I were going to buy, I think I'd want to be down by the stable, but I don't like that commute to work, so--I also might not.

I would probably get myself a truck and horse trailer. I would probably stop worrying about being able to afford all the lessons and entry fees that I want. I would probably do a little traveling to cool places.

I would like to think that I'd check into the folks around me and see what I can do to help them out. I'm just not sure exactly what that would be, for most of the folks I'm thinking of.

I'd like to think I'd give a good-sized chunk of it away. My usual approach to unexpected windfalls is half to responsible stuff and half for fun. So I'd like to think that I'd do what I felt like I needed and wanted to do and then look at whatever was left and say, "Okay, I don't need this." But I'm honestly not sure. Generosity, in general, is not one of my better things. I'd like to think I'd take the chance to practice, but I don't know.

[kate_nepveu]

One of my fantasies about winning a *lot* of money, whenever lottery jackpots get big enough, is to send all my friends checks up to the current gift-tax exemption, just because.

But I totally understand about cushions. It would take much larger annual income than we have now for me to have no money anxiety, which kind of amazes me because by any absolute standard we are doing very well, but there it is: money anxiety.

[prince-corwin.livejournal.com]

One Meelyun Dollars, tax free, once?

Roughly half of that would purcase a nice condo downtown, and the other half would support me as I went back to school, full time, for the PhD. (And really, factoring out rent and factoring in the assistantship I assume I would get, that would keep me comfortable for quite some time.)

There would be a consultation with a financial planner and a real estate planner to make sure I do that right, but that would be the basic outline of the plan. The really difficult decision to make is this: Do I quit work entirely, or do I continue to work two or three days a week to maintain the industry contacts I have here? (I have goals past the PhD.)

As for how much money is enough....

Enough money to live comfortably, in tax-free terms, is probably on the order of $120k/year. After all, when you think about that, it's $10k/month, which is a substantial shitload more than I take home right now, and I am not hurting. But let's assume there are hidden costs associated with not working, like health care, retirement planning, etc. So double that, and round up to $250k/year. Really, if twenty grand a month and spare change can't get you comfort, I don't know what would.

Enough money to do all the things I want to do, on the scale I want to do them.... Well. DARPA's budget is over $3b/year. Yes, b, billion.

[kate_nepveu]

Your ballpark of annual income sounds roughly what we were thinking--there's two of us, but we don't live somewhere as expensive.

Perhaps I do lack imagination, or ambition, after all . . .

[fledgist.livejournal.com]

I'd retire all my family's debts (including my own), make sure my mother's medical costs were covered, pay off my mortgage, and dump what was left in my and my wife's retirement accounts.

[kate_nepveu]

It's weird how I've been assuming I wouldn't pay off the mortgage, probably because we are fortunate enough to have a very reasonable mortgage and we have higher-interest debts. But there is something comforting about the idea of being sole owner of one's residence.