People play this game all the time, “What would you do if you won a million dollars?” Tomorrow night, someone will actually get to answer that question. It got me thinking, what would I do if I won the $1.5 million from Esurance’s giveaway? Without giving it too much thought, here’s what I would do with it.
Hate to be the bearer of bad news, but a substantial portion of the $1.5 million will have to be allocated to paying taxes. You think that the taxes you owe each year are tough, but things ramp up quickly when you come into significant money in a hurry. Winning this prize would instantly boost you to the top tax bracket, which is about $128,000 and almost 40% of anything over $457,600. By my rough calculations, you will owe approximately $550,000 in taxes on the winnings, leaving you with just under a million dollars after taxes. Ouch.
Everyone always acts like they would give away a large portion of their winnings, but I honestly think that most people would do so. If the number is about million, then at a minimum, giving away 10% to tithe is reasonable. Because of the circumstances (coming into money I wasn’t expecting), I would like too give away an extra 10% for a total of $200,000. The primary beneficiaries would be my church (Ethos) and organizations that I care about in Mexico (City of Children) and Honduras (Jovenes en Camino). Note: I’m not tooting my own horn here! I feel like plenty of people would give away just as much if not more! It continues to blow me away that people are always so generous with their possessions. It inspires me to try and give more.
I put the donations section before this one because I wanted to seem like a good person, but the first thing I would do once the money was transferred into my account is to pay all of existing debt. Student Loans, House payment, and everything else with a red number associated to my name. My goal going forward would be to try and pay everything possible with cash to avoid taking on more debt. There is something freeing about not owing anyone anything.
Shortly after paying off all of my loans, I would head to the nearest guitar stores to purchase my dream guitar, the Gibson Les Paul. I don’t know exactly what model and color it would be, but I would chose the one that my soul connected with. I’d have to have a beautiful amp to go with it of course. That would probably be it for my luxury item spending. It seems like a million dollars will go a long way, but irrational spending will drain it pretty quickly.
This one would be primarily up to my wife to plan, but I’m pretty sure we would take a few weeks off to vacation somewhere. This would likely entail a trip to Europe or some exotic beach. Things that would normally be out of the question financially speaking like first class airfare or suite rooms would be in play. We couldn’t be gone too long or we would probably be fired from our jobs. While people would instantly think about quitting their jobs, $1 million isn’t quite retirement money… Needless to say, this would be an epic trip(s).
The rest of the money, probably about $500,000, would go into various savings or interest bearing accounts. I would probably want to setup some education funding accounts for my future kids (Lord willing) and set aside some others for retirement. I realize this is boring, but I am about as practical as they come, so it wouldn’t make sense to blow it all.
How It Would Impact My Life
The great thing about this amount of money is that it won’t completely change your life like winning the lottery would. Lottery winners often complain about being much more unhappy after winning it, and a high percentage of them end up going bankrupt. One million dollars, while enough to greatly impact your life, likely wouldn’t change it entirely. It would be incredible to have to money to be able to bless others. It would be a relief to not worry about bill payments or pending debt. But these are all ancillary things in life. By tomorrow night, someone will be a new millionaire. Hopefully their life will be positively impacted by it, and they can bless others with it.
Sleep well tonight everyone. Who knows, tomorrow night, you might be a millionaire.