With the Powerball lottery climbing so high, I was wondering to myself what I would do if I won a bunch of money.
Elon Musk is kind of a hero of mine, and I like what he did with his payoff from PayPal. He built freaking rockets (SpaceX). That not being enough, he built some sweet electric cars (Tesla). I wonder what he’ll do next. 🙂 I’d hope that I would invest that kind of money in the same way he did – using it to push the limits of our race’s abilities.
Then I thought, what would I do with a smaller amount, say… $50,000?
What follows are simply some options that I’d have. It also assumes $50,000 – straight out. No income taxes or anything.
Another thing to note, is that the things I’ve listed will probably match for a lot of other people. When reading this, you may realize these are things you’d do as well.
Buy a House
I currently live in a town home that I bought in late 2007 when the housing market was near its peak. The town home’s value has since dropped quite a bit. $50,000 would allow me to pay off the difference in value, and make a down payment on a new house somewhere.
This alone would be life changing. I’d have a yard for the dog and future kids. I could build a fort there.
I’d have garage that I could use to pursue my hobbies as well as discover new ones. I’d have room for an office, and bedrooms for everyone.
Since I’d no longer be in an HOA, I could set up my amateur radio antenna (discretely so that I don’t bug the neighbors), and talk to people everywhere.
$50,000 at my age would do wonders for a retirement plan. To over simplify, if I could get a 6% return over the next 36 years, and didn’t contribute anything else at all to the fund, I’d wind up with $407,000.
I wouldn’t see benefits immediately from this, but when I near retirement age, it would make a massive difference. I’d just have to stay healthy long enough to enjoy it.
Pay Down My Mortgage
If I use it to pay down my mortgage and made the minimum payment over the remainder of the mortgage, I would pay it off 15 years early. I would also save about $82,000 in interest over the life of the loan.
If I paid extra on my mortgage, I could conceivably own my house much sooner. Not having to deal with debt and a bank is nice, but as you saw from the “invest” option, compound interest is a more attractive option.
Fund a Startup
I’ve had it in my head that I’d like to start a company. I’ve got a few ideas of things that I think could take off and even pursued some to just test feasibility.
Because of the risk involved, its very hard to quantify and predict what would happen. I could fail and lose it all, or experience mild success and be financially secure for years to come.
I could be wildly successful and have enough money to do what Elon Musk does and build rockets and electric cars that will change the way we travel.
The other risk here, is that I can’t do it alone. I’d have to talk a small group of people that I really really trust away from their well-paying and secure jobs to come help me on some hair brained idea. I’d need people for the various positions.
I’d need to find somebody I could trust to run the operation, (in my StarTrek fantasy, I’m Scotty, and not Kirk). Hopefully we’d get something going with enough traction to attract some investors and get the thing off the ground.
Party and Waste It All
It seems like the knee-jerk reaction to sudden resources is to have as much fun as possible for as long as possible, ’cause, YOLO, man. I see celebrities with this attitude all the time – they get that role in the movie, or their album comes out and is a hit. Suddenly, giant parties and cars. Next thing you know, they’re selling everything to pay off $3 million in debt or something. They had fun though.
What frustrates me is that while you do really only live once, and while that is very fun, there is little planning for what the rest of your life is like. If managed well, something like $50,000 could improve your quality of life throughout the rest of your life!
I’d rather live a like that, than have maybe a year or two of intense fun.
Money is an interesting thing. $50,000 seems like a ton of money to me. For a lot of people, its an enormous amount of money, (especially people that live in countries that aren’t as well off as the United States). For others, they’ll burn through it going to rehab after all the partying.
When used right, it can make all the difference.
In the comments, tell me what you would do with an unexpected $50,000? (Or, with an unexpected $600 million). 🙂