S/O of Giving your Old One: If you won the lottery....

[Girlie]

I don't busy tickets unless the jackpot is over $300 million (and usually not then), so I don't guess I'll ever actually win anything...

Having said that, if I did win in the range or higher, I'd pay off my car, buy a house outright (though not a mansion or anything. Just a nice, charming little place with a good foundation and room for future children and current and future cats), and give my mom money to travel.

I don't know that I'd quit my job - I like having something to do. But I might drop to part-time.

[Outdoor Girl]

I would definitely retire on $1M.  I'll be getting a pension, too, and you can purchase supplemental health insurance in a group plan here in Ontario that would be similar to the benefits I get from work.  I may even be able to pay to maintain my work benefits - I haven't looked into it yet since I'm 12 years from retiring with a full pension.  I would potentially pick up a small part time job at the yarn shop or in cake decorating, just for some extra pin money.  I would definitely volunteer with Meals on Wheels or Hospital Auxillary or something.  I have a cousin who volunteers with the Red Cross and she responds to disasters - I'm not sure I could do that, just because I need my sleep and they often end up on cots in the school gym or something.

I'd probably only invest $800K and use $200K for some sorta fun stuff - new car, pay off the house, trip or two, cars for my nephews, help out my brother, etc.

I really like other people's ideas about paying for a small meal with a $100 bill and walking out.  That would be a lot of fun, especially if I could look in the window and see the server's face when s/he picked up the folder and looked inside.  I might have to do this just once, even if I don't win the lottery.

[Virg]

nuit93 wrote:

"Well, frankly I would have to have at least 10-20 million won before I'd even consider quitting my job.  Why?  Because one serious illness could wipe out all that money.  I'd keep working for the benefits alone, but having an extra, say, 40k a year would make things a heck of a lot more comfortable."

This is a good example of the perspective issue I mentioned before.  You're running under the assumption that if you don't get health benefits from an employer, that you can't have health benefits.  You can buy personal health insurance like the kind that self-employed people buy all the time, and on a "salary" of $100K (that's $2M earning five percent, which is 10-20% of your declared minimum) you could afford quite a package even assuming you're paying double what you're currently having deducted from your paycheck for it.  Millionaires don't normally pay for that sort of stuff out of pocket any more than the rank and file do.

Hmmmmm wrote:

"Since I'm about to have 2 in college, $40k won't even cover their annual expenses."

It's not $40K, it's $40K more.  You're going to pay for it on what you have now by some means, so think about how having and extra forty thousand would change that debt load, and whether that wouldn't change your lifestyle in a significant way (also remembering that in our example, your kids are going to be in college for around five years each and then they'll presumably be self-sufficient, and the income boost we're discussing is perpetual).  Sure, $40K alone isn't likely to change everything about your life, but it's still likely to be life-changing at a reasonable level for the term.  And this all assumes no capital penetration and four percent ROI.  If you double your income from winnings to $80K a year, the money will still last decades, and if you get a better rate on your investment (7% is reasonable) you're talking nearly double the money there too.  All told, unless you're earning into six figures already a million dollar pot can easily reach into "quit your job" levels of lifestyle change.

Girlie wrote:

"I don't know that I'd quit my job - I like having something to do. But I might drop to part-time."

If you didn't need your job for the money, would you do it for free?  Can you not think of anything you'd rather do with your time if money wasn't any issue?  I know that I love my job, but if I suddenly had several millions in the bank, I'd quit in a heartbeat because I can think of many things I'd rather do for volunteer work than my job, most of which would be much more fulfilling but usually don't pay nearly as well.

Virg

[LazyDaisy]

Virg I'm not sure if you're assuming that cost of living is rather the same for everyone. $40K a year is less than I make now working as a graphic designer at a non-profit (notoriously underpaid), and where I live in SoCal it wouldn't get me very far; I drive a 6-year-old car and live in a 700sqft apartment in a blue-collar type neighborhood.  Sure an annual "salary" of 200k a year would be great but would probably put me up into the upper middle class tier not the super rich! I imagine it's the same for other major metropolitan areas like NY or Chicago.

If anyone won 1 million (after taxes etc) in SoCal, just buying a regular ranch-style house in a subdivision would eat half of it. For those talking about paying for college: living as a student at a University of California (UCLA for example) is estimated at $31,902 per year (that does include tuition, books, housing, estimated transportation costs, and a modest budget of $1300 for personal expenses). If someone wants to live the "rich" lifestyle of the mansion and fancy car, and world travel, they'd need to have an income above $1 million per year.

[nuit93]

nuit93 wrote:

"Well, frankly I would have to have at least 10-20 million won before I'd even consider quitting my job.  Why?  Because one serious illness could wipe out all that money.  I'd keep working for the benefits alone, but having an extra, say, 40k a year would make things a heck of a lot more comfortable."

This is a good example of the perspective issue I mentioned before.  You're running under the assumption that if you don't get health benefits from an employer, that you can't have health benefits.  You can buy personal health insurance like the kind that self-employed people buy all the time, and on a "salary" of $100K (that's $2M earning five percent, which is 10-20% of your declared minimum) you could afford quite a package even assuming you're paying double what you're currently having deducted from your paycheck for it.  Millionaires don't normally pay for that sort of stuff out of pocket any more than the rank and file do.

I also live in a rather expensive part of the country, so even if I were able to make 100k/year off of interest alone I'd prefer to continue to work.  That's largely a personal preference, and also because not all insurance plans will cover all the expenses that can be incurred with, say, cancer.  Heck, we're still paying off the $8k out of pocket costs associated with my SO's gallbladder surgery, and that was after insurance paid their portion.

[nuit93]

Virg I'm not sure if you're assuming that cost of living is rather the same for everyone. $40K a year is less than I make now working as a graphic designer at a non-profit (notoriously underpaid), and where I live in SoCal it wouldn't get me very far; I drive a 6-year-old car and live in a 700sqft apartment in a blue-collar type neighborhood.  Sure an annual "salary" of 200k a year would be great but would probably put me up into the upper middle class tier not the super rich! I imagine it's the same for other major metropolitan areas like NY or Chicago.

If anyone won 1 million (after taxes etc) in SoCal, just buying a regular ranch-style house in a subdivision would eat half of it. For those talking about paying for college: living as a student at a University of California (UCLA for example) is estimated at $31,902 per year (that does include tuition, books, housing, estimated transportation costs, and a modest budget of $1300 for personal expenses). If someone wants to live the "rich" lifestyle of the mansion and fancy car, and world travel, they'd need to have an income above $1 million per year.

I was gonna say...me and my SO make nearly 90k/year, but that's not enough to be able to afford a house near where we live.

[Girlie]

nuit93 wrote:

Girlie wrote:

"I don't know that I'd quit my job - I like having something to do. But I might drop to part-time."

If you didn't need your job for the money, would you do it for free?  Can you not think of anything you'd rather do with your time if money wasn't any issue?  I know that I love my job, but if I suddenly had several millions in the bank, I'd quit in a heartbeat because I can think of many things I'd rather do for volunteer work than my job, most of which would be much more fulfilling but usually don't pay nearly as well.

Virg

I work in a small-ish community, and I know a lot of the customers and my co-workers pretty well. I enjoy what I do. I might quit - I won't say that I definitely wouldn't - but I wouldn't start off planning to.
Yes, there are volunteer activities I can participate in - but I already do what I'm mentally and emotionally prepared to do as far as that goes. I don't think suddenly having a lot more money would change me in that aspect very much.

[Hmmmmm]

snip
Hmmmmm wrote:

"Since I'm about to have 2 in college, $40k won't even cover their annual expenses."

It's not $40K, it's $40K more.  You're going to pay for it on what you have now by some means, so think about how having and extra forty thousand would change that debt load, and whether that wouldn't change your lifestyle in a significant way (also remembering that in our example, your kids are going to be in college for around five years each and then they'll presumably be self-sufficient, and the income boost we're discussing is perpetual).  Sure, $40K alone isn't likely to change everything about your life, but it's still likely to be life-changing at a reasonable level for the term.  And this all assumes no capital penetration and four percent ROI.  If you double your income from winnings to $80K a year, the money will still last decades, and if you get a better rate on your investment (7% is reasonable) you're talking nearly double the money there too.  All told, unless you're earning into six figures already a million dollar pot can easily reach into "quit your job" levels of lifestyle change.
snip
Virg

Virg you make good points, but just believe me when I say that me, my DH, and our financial planner are well aware of the amount of capitol we need to have in our savings and 401K's before we retire to live the lifestyle we want and a $1mil pot isn't it.   

[gorplady]

After taking care of bills, helping out family, and building my dream house, I've always wanted to start a non-profit that would focus on a few separate issues.

1. Buying blighted properties and turning them into either greenspace if they're beyond rehabilition, or rehabbing them for homeless families/people or non-violent crime parolees who need a place to land to get back on their feet after doing time.
2. Buying empty land in cities and converting it to public gardens, both flower, orchard, and vegetable (ideally, the folks living in the blighted properties would work to maintain these spaces in lieu of rent)
3. Protecting indigenous people and the rights of uncontacted races (if you're interested, you can read more at http://www.survivalinternational.org)
4. Working to make the Pine River Indian Reservation a green energy-reliant community so that they can survive the winters.
5. Offer grants to homeowners to improve their home through geothermal, solar, or wind power improvements

[Slartibartfast]

I think I can honestly say there are only a few things I would change about my life if I had the money:

1) take more frequent vacations (especially to see family)

2) have someone clean my house twice a month or so

Other than that, I'm pretty happy with what I have    If we won a ton of money I think DH would quit his job and start his own company, but I think he's probably happier with his current job than he would be running a business.  He doesn't like people stuff and management as much as he thinks he does :-P

[magicdomino]

I currently net over $40,000 a year, have no mortgage, and can barely cover costs.  Property taxes alone are about $4,000 a year, and last year the house had three major repairs at over $2,000 each.  I suppose I could sell the house and move to a cheaper area if I didn't have to worry about commuting to a job, but my father built this house, I grew up in this area, and don't want to leave.  So, anything less than a couple of million, and I'll still show up in the office on a regular basis. No life changes more significant than vacationing every year instead of every two or three years.  Oh yeah, and that maid.

Having said that, a post-tax $40,000 extra per year would make a very nice supplement to the income.  Sadly, it would require actually buying a lottery ticket, and I have more faith in statistics than luck.   

[Virg]

LazyDaisy wrote:

"If anyone won 1 million (after taxes etc) in SoCal, just buying a regular ranch-style house in a subdivision would eat half of it. For those talking about paying for college: living as a student at a University of California (UCLA for example) is estimated at $31,902 per year (that does include tuition, books, housing, estimated transportation costs, and a modest budget of $1300 for personal expenses). If someone wants to live the "rich" lifestyle of the mansion and fancy car, and world travel, they'd need to have an income above $1 million per year."

Again, it's a matter of perspective.  Sure, buying that house eats half of your money, but you have a mortgage payment of a back-breaking $0 a month to keep up with coupled with the fact that you've still got $500K in cash after the purchase and you're no longer paying any kind of rent or other mortgage.  At $32K a year for college, you could attend college nonstop for three decades on one million dollars, not counting any interest earned in that time.  And one doesn't need to live the "ultra-rich" lifestyle to change one's life.  Earning a living wage without having to go to work is a significant life change for the vast majority of people out there.

Hmmmmm wrote:

"Virg you make good points, but just believe me when I say that me, my DH, and our financial planner are well aware of the amount of capitol we need to have in our savings and 401K's before we retire to live the lifestyle we want and a $1mil pot isn't it."

Add a million dollars today to what you already have, and I bet it's a lot closer to what you're aiming at.  There are few people who wouldn't consider cutting years or possibly decades off their retirement savings efforts (or being able to retire years or decades earlier) to be life-changing.  And again, we're talking about adding forty thousand dollars a year in earnings with no loss of the starting million dollars, and that's a very conservative earnings number to boot.  As above, I'm not talking about jet-setting, but getting Robin Leach to take notice isn't necessary to change your life.

magicdomino wrote:

"Having said that, a post-tax $40,000 extra per year would make a very nice supplement to the income.  Sadly, it would require actually buying a lottery ticket, and I have more faith in statistics than luck."

Then here's a little factoid that will allow you to dare to dream.  If you look at any lottery, they'll tell you the odds of winning the grand prize.  For Powerball, the odds of hitting the big number is 1 in 180 million ( it's less, but this is comfortably rounded and compensates for multiple winners in the statistics).  Add in the lesser prizes and the fact that the ticket costs two bucks, and when the Powerball jackpot rises above about 220 million, the risk-versus-earnings ratio says that a Powerball ticket becomes an investment-grade security!  OK, it's not exactly accurate, but it's a fun concept and it's inexactly accurate, so it might convince you to buy a ticket when the pot gets huge.

Virg

[Sophia]

...Sadly, it would require actually buying a lottery ticket, and I have more faith in statistics than luck.   

Same here. 

Although, I have to say that the flat 30K I inherited from my Evil Grandmother has already made a large change for us.  With that and some other money, we paid cash for a house in a small town and will be renting out our suburban home in a desirable area.

[onyonryngs]

I'm not sure I want to share my plan lest I be told that my math is faulty and/or my plan isn't nearly exciting enough.  If someone wants to work at their job part time if they win, there's nothing wrong with that. 

[LazyDaisy]

LazyDaisy wrote:

"If anyone won 1 million (after taxes etc) in SoCal, just buying a regular ranch-style house in a subdivision would eat half of it. For those talking about paying for college: living as a student at a University of California (UCLA for example) is estimated at $31,902 per year (that does include tuition, books, housing, estimated transportation costs, and a modest budget of $1300 for personal expenses). If someone wants to live the "rich" lifestyle of the mansion and fancy car, and world travel, they'd need to have an income above $1 million per year."

Again, it's a matter of perspective.  Sure, buying that house eats half of your money, but you have a mortgage payment of a back-breaking $0 a month to keep up with coupled with the fact that you've still got $500K in cash after the purchase and you're no longer paying any kind of rent or other mortgage.  At $32K a year for college, you could attend college nonstop for three decades on one million dollars, not counting any interest earned in that time.  And one doesn't need to live the "ultra-rich" lifestyle to change one's life.  Earning a living wage without having to go to work is a significant life change for the vast majority of people out there.

(snip the long quote)

I agree to that, it is a matter of perspective. A million dollars might change one person's life significantly and another not at all. For me, if would make me less concerned about bills in general -- but not even close to carefree and able to quit my job and travel the world. It's also be a matter of age; I wouldn't be set for life with a million -- I'd far outlive it.

The remaining $500,000 would go quickly after the purchase of a home. I may not have a mortgage or rent, but I would still have the utilities, property tax, insurance, upkeep on the house etc. Bills would grow proportionally with the house. My $15 a month renters insurance now morphs to a home owners policy (I'm afraid I have little knowledge on how much that would be, but I'm guessing more than $100 a month so more than 6 times what I now pay). I can't find a static for the size of the average single family home in my city, so I'll use my parents home as a sample 2,500 sq feet. The utilities (water/gas/electric) on my 700 sq ft apartment is roughly $200 a month. Upgrade to a house and that would probably only cover the electric bill, if that. As a renter I don't have property taxes -- as a home owner, I would now pay about $4,000 a year in property taxes according to city data for my area. That remaining $500,000 is going fast and I haven't even purchased furniture to fill it yet or had to repair the roof, two expenses I don't have now.

So if I won a million dollars, my perspective is that I would change very little in my life over the long run. I'd still need to work. I wouldn't buy a house although I'd probably move to a nicer apartment. Condos are a bad investment over time in my opinion. I'd still need to save for retirement and emergencies. I wouldn't have to sacrifice buying a new car to take a vacation but I wouldn't go on a month-long tour of Europe. Everyday expenses around me are just too high for me to think that a million will last more than 10 years, leaving me out of money still 15 years short of retirement age.