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What I Would Do With a Windfall

Posted By Crystal Stemberger On 08/01/2011 @ 2:03 pm In Personal Finance | 12 Comments

I will admit that I have spent some time daydreaming about what I would do with millions of dollars.  It’s fun to just sit back and think about how easily my husband and I could live off the interest of our investments for the rest of our lives.  But I haven’t given as much thought to windfalls that we actually may have to handle.  What if we were just given $500?  How about if we sold something for $5000?  What would we do if we inherited [3] $50,000 or more?  In short, would I handle a windfall any differently depending on the amount?

What Would I Do with an Extra $500?

We do sometimes have $500 or more leftover at the end of the month if my blogging income or my husband’s sports officiating income was higher than expected.  We split up any monthly extra between multiple accounts.  Specifically, we divide it between the Emergency Fund (25%), the Extra Cash for Investments account (35%), the Vacation account (20%), and our two individual Fun Money accounts (10% each).

By splitting it up between savings and entertainment, we figure we get to enjoy the best of both worlds.  This also drives us to earn extra money as often as possible since we enjoy watching the Vacation account grow.  Whenever it hits beyond the $1000 mark, we start thinking up our next big trip.

What Would I Do with an Extra $5000?

We haven’t ever had $5000 just leftover at the end of a month.  We’ve Craigslisted our old car for $5000, but we used it as a down payment on our new one.  My in-laws gave us the rest of my husband’s college fund, but we used it along with our own cash as a down payment for our home.  If we were just handed $5000, I bet we would place it directly into our Emergency Fund while we thought about it.  It would then either get divided up like our normal monthly extra or we may just put it towards our mortgage.

What Would I Do with an Extra $50,000?

If we ever came across $50,000 or more via an inheritance or a home sale, we’d probably have to split it up just because I would want to pay off the house and my husband would want to invest it.  We only have about $64,000 left on our mortgage and I crave the feeling of being completely debt free.  My husband loves the fact that stocks and mutual funds are comparably super cheap right now and would drool over being able to invest even more so we can sell higher later.  In short, we’d argue about how to properly use the money in responsible ways and would ultimately split it 50/50 between the mortgage and our investment account [4].  Compromise keeps us happy.

What would you do with windfalls?  Would you do something differently with a smaller amount than you would with a larger one?  What?


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[3] inherited: http://www.bargaineering.com/articles/inheritance.html

[4] mortgage and our investment account: http://www.bargaineering.com/articles/pay-more-mortgage-or-invest-money.html

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