How Would You Spend A Million Dollars?

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millionbucksOne of the things I do is contemplate how much differently I would have spend the last decade of my life financially had I had the foresight to see how I would end up today. Too many people end up in the trap of working and barely being able to pay the bills, only to have one emergency or unplanned expense drive you past due on payments and threaten to topple your whole financial infrastructure. Most of the time this is the fault of the individual or family who allows this situation to happen, but in even those cases it can mostly be due to ignorance and lack of financial education. Somebody had asked me the following question recently:

  • Today, if you were to inherit or win a million dollars (after taxes), how would you spend a million dollars?

I can tell you that when I was eighteen years of age I would have thought that money would have lasted forever, and I would have splurged and gotten all my material wants and desires. Now in my thirties I am much wiser and realize that a million dollars will last a short time if you “live rich” but can last your whole life if you “live middle class”. The key here is financial security being more important than any single or small time material want. Forget about jewelry, cars, million dollar house or a boat. These items would drain through the money and you would have little to show for it in fifteen years. That is at least how I think about it now that I have been in the financial struggle over the past decade.

I would spend a million dollars by first and foremost getting rid of every monthly payment that I owe. This would involve paying off my house, my car, student loans, credit cards…etc. This would consume about 45% of a million dollars to achieve this goal. Then I would devote 30% into variety of savings and deposits including some in an ING account (50k or so), mutual funds, bonds and maybe some physical assets like gold in case something dramatic happened to American currency or the market. 10% would be put toward my son’s college educations and deposited into their 529 accounts.

The last remainder (lets say 20-50k) or so I would spend on vacations with my wife. I do this because spending quality time on vacations and enjoying the experience of a week breathing and exploring life and the world is worth far more than any tangible item. I would rather spend five thousand dollars on a memory with her than purchasing a 70″ LCD TV or something like that.

Bottom line:

If I were to win a million dollars I would wisely use most of it to secure my financial situation and I wouldn’t quit my job at all. I would continue to use that income to help keep my situation happy, because happiness partly comes from not stressing and worrying about finances.

So tell me readers, how would you spend a million dollars?  I want to hear from your point of view on what you would do with the money.

-Justin Germino

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Updated: November 30, 2009 — 6:40 pm