If I Had A Million Dollars…

If I Had A Million Dollars…

We have had two windfalls in our lives. The first was when Ms. Blue Ribbon’s grandmother passed away. The money we inherited was used to pay off some new windows on our house (naturally, we financed them). It wasn’t much and wasn’t expected but I feel like we used the money wisely.

The second windfall we received was $20k from a family friend who had passed away. This was considerably more and we took our time figuring out exactly what to do with this money. Thankfully we had started getting our financial act together. Our debt snowball was taking off and we used the money to smash the last loan and jumpstart our emergency fund. That gracious gift helped us become (consumer) debt free and allowed us to have the money in the budget to get life insurance and increase contributions to the retirement accounts.

Since those two windfalls, I haven’t really thought about what would happen if we got another windfall. If we received a small windfall we would likely have a small discussion but ultimately applied to one of our goals. Larger windfalls need a solid plan around them. Slow Dad from somethingsdontchange.com proposed an interesting challenge.

What would you do with a Million Dollar WindFall?

I, for the sake of simplicity, am going to assume we are getting one million tax-free, or the windfall is one million after taxes (whichever is easier to fathom). Here are the steps we would take if we were to receive one million dollars:

Be 100% Debt Free

The first thing I would do is take out the last standing debt we have. $160k would go right into the checking and a check would be cut to pay off the house. I listed this one first partly because of my dream of owning the whole house. When I think about our mortgage I feel as though the bank owns it and we only own a closet. The rest of the list gets into the more complicated things.

Take A Break

No matter how we come across this windfall it would be good for the family to get away. (God forbid it is from an inheritance.) Ms. Blue Ribbon suggested we take the whole family to Disney World (@FrugalGene that’s the one in Florida :P). This would check something off our long-term goals/bucket list. That is about $10k based on our back of the napkin planning we did a year ago.

A little while later Ms. Blue Ribbon and I would take $5k and go on a much overdue vacation all by ourselves. What is the point of having this new safety-net if we don’t take some time for ourselves for once. We aren’t sure where but it would likely involve beverages and a sandy beach. (@Ms. BR …do we really want to remodel a bathroom? I say take a trip now!!!)

It’s Tool Time

home improvement

Now that we own the house it is time for us to do some of the projects we have been wanting to do since buying it. $100k would be set aside to do a kitchen remodel, the upstairs bathroom and put in new floors throughout the house. (Lame I know but it would check a lot off our bucket list.)


One thing that just makes sense would be to create a Donor-Advised Fund over at Vanguard. We would be able to set aside $100k to give to charities as we see fit. If we do have to pay taxes on the windfall this would help mitigate them. This money would also have a chance of growing so we could give more. Ultimately, we could contribute more over time and use the 4% rule to keep the fund going for a very long time.

Load Up That Brokerage!

For those following along that leaves us with $625k left to work with. The plan for that money would be to put all of it into a brokerage account. That would give us a serious leap in our FI path.

Using the plans from our Million Dollar Pledge I was able to see what this would do to our outlook.

million dollar windfall

That would shave 9 years off our early retirement date!

You: Mr. BoaS I think you missed some things
Me: Like what?
You: Those children you talk about non-freaking-stop?

Why The Kids Get Nothing

you get nothing

Wow, that was a harsh title! Besides, I’m sure they will get all sorts of cool autographs at Disney World. What I mean to say is we would not be adding any money to their 529s. I would much rather have that money in a brokerage account with high accessibility versus being locked down in a 529. We have every intention of paying for our kids higher education but I have serious issues with the 529 account.

If they modify them to make the money easier to access if a child doesn’t need all the money in the account for whatever reason I may change my mind. (I will keep off my soapbox for now.)

But In The End…

in the end

We will keep working. One million dollars after all our plans are complete doesn’t get us all the way to being able to quit our jobs but pretty darn close. We’ll still have to load up the Roths and 401k for a little bit longer if we want the 4% rule to work out for us. Since the timeline is sped up so much we may work a few years past our FI date. Just because you can retire early doesn’t mean you have to. Plus, we would be able to have Fat FI then :).

What would you do first if you had a big windfall? What is the thing you would want to do the most? Have you ever had a big windfall?

28 thoughts on “If I Had A Million Dollars…

      1. I’m not disagreeing with your course of action for yourselves.

        For my wife and I though, we decided to invest it all and add 3.5% of that amount to our annual income allocation… which pushed us over the edge into FIRE mode.

        If we’d still have been a few years from FIRE even after investing it, we probably would have enjoyed some of the windfall short term and stuck with our aggressive save/invest goal.
        Brad – MaximizeYourMoney.com recently posted…Is It Time For An Investing Fire Drill?

  1. Love the section title “Why the Kids Get Nothing” and I 100% agree with you. However, you are giving them the gift of education, which is setting them up for success in life (whether they know it now or not). That is good parenting.

    I myself have some issues with 529 plans and would be curious to hear your concerns. My wife and I have not been blessed with children just yet, but often think about what I am going to do for their education.
    Church recently posted…Be Helpful. Become Valuable.

    1. Haha yeah they get a lot but I just couldn’t help myself ?.

      I do think 529s are important but they have drawbacks. We have 2 for our kids but are being strategic with them. I’ll try to articulate that in a upcoming post.

  2. Woo if only I did. I’ve wrestled with this idea for a bit. For me, It varies depending on the current economic standing. Since we’re in a bull market, I’d be putting this in a high yield savings accounts to be liquid when the market crashes so I can buy assets with pennies on the dollar. The alternative would be pay off debt just to have that extra weight off and hedge the market with the remainder. Your take on the 529 plan is interesting. I don’t have offsprings yet so I seldom wonder how I’d approach it.

  3. A plan has to begin in your head before it can take form in your life – so you’re already completing step 1 of what you’d do with a million dollars.

    At this point in my life, a million dollars would be added into additional investments split between mutual funds, my childrens college savings, home remodeling (increased equity in house), online business seed money, and perhaps increased 401k contributions. Kinda boring, I know but what can i say – I’m happy with the life I have. More materialism won’t make me happier. However the security of making money from my million while I sleep adds a nice sense of comfort.
    Jason Ellis recently posted…Do Men Mind Cellulite

  4. I did a post about this a couple of years ago, so I went back to see what I had decided…
    Turns out I had a similar idea as you, I would pay off our mortgage and then invest the rest… That was a couple years ago now, and I feel like I may not invest the whole rest now… I might fund a few of our other goals first, but definitely pay off the mortgage!
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  5. I was just daydreaming about this today. A million bucks really isn’t a lot of money, in the grand scheme of things. It’s not enough to retire on, but HOLY HELL could I have fun with that money. 🙂

    I’d primarily use it to pay off all debts (car, mortgage). After that, it would be split between retirement accounts and investments to continue growing.

  6. Like you, my first step would be to pay off the house. It’s a pretty meager $70,000 (well, meager for a mortgage), so that would leave an insane amount.

    I’d max out a SEP IRA and set enough aside to keep doing that every year for at least a few years. (If I do the rest right, we’d have enough in spare income to do that on our own moving forward.)

    Then I’d probably buy two rental properties (around $200,000 each, maybe less) so that we’d have some alternate income in our golden years.

    We’d spend about $10,000 fixing up a few things around the house. Then I’d buy my husband his dream car — a Challenger — and throw the rest in brokerage accounts.
    Abigail @ipickuppennies recently posted…How to dive into personal finance (without drowning)

    1. Oh man only $70k left on the mortgage? I can’t wait until we break through 6-digits.

      I like the idea of rental property. Perhaps we should do something like that. Luckily, plans can be changed as we grow ?

      My dream car is a Tesla Model 3 but I left that out since my dream car would probably be different in the future (who know if or when any of this plan would be needed). Plus you never know if we may get one cheap in the future anyways.

  7. A sound plan Mr BoaS. I like the balance of fun, indulging, and being sensible with the rest.

    I share your concerns about holding money in kids accounts, as opposed to holding it on behalf of the kids.

  8. Very good and detailed plan. Mine would not fill a whole post. If I would get a million today:

    1) use $100k to kill mortgage, do the renovations on the house, fill up the money buffer for emergencies, rainy days and fund a whole year of living expenses

    2) invest the $900k well diversified, quit my job, live happily ever after

    Maybe someone can say that it is not enough… well, supposing just a conservative 4% yield that $900k could produce $36k/year which is not too different from my current annual gross salary. So I think we would be ok 🙂
    [HCF] recently posted…If it is good enough for Samuel L. Jackson it is good enough for me!

    1. I like the happily ever after part! It would be nice to skip a lot of the plans and retire right away so I could spend more time with the kids. Who knows what the plan will actually be if we do ever get such a windfall.

  9. Today a windfall of a million would make me FI, I’d let the dust settle, get the money in the market and start making plans for the future where work is optional.

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