Tonight’s Mega Millions jackpot has grown to $355 Million. Can you imagine being the lucky person who has the lone winning ticket? Even after you take out all the taxes from a lump sum payout (approximately $244 Million), you will still be sitting on over $160 Million in pocket. What would you do with all of that money?
Depending on your chosen fiscal lifestyle, you can blow through all of the money within a decade or live forever just on the interest generated by placing the money into interest-bearing savings accounts. I tend to lean more towards the latter, so I would search out financial institutions that have the best savings rates. Doing a quick look at Bankrate.com, the average money market account interest rate is approximately 0.65%. Using that figure, $160 Million would return approximately $1 Million in interest over a one-year period. Taking out taxes, that leaves approximately $700,000 on hand.
Instead of thinking about how I would spent $355 Million, I should ask myself, “How would I spend $700,000 a year?”
Housing: The natural temptation for many jackpot winners is to buy a new home or car. Looking just at housing, if I were to buy a new house, I would have to ask myself how much of a house I would want (or need). Since it would be hard to hide the new-found wealth over the long-term, I would want to buy a house somewhere within a private gated community. Surprisingly, you can find homes in the $300K – $500K range in some private communities depending on where you live. That easily fits within the $700K ceiling. Instead of paying for the house outright, I would lean more towards a 15-year mortgage and set aside $100K a year to cover the cost of the loan as well as any maintenance costs that might pop up over the year.
Automobile: Honestly, I love my current car and have no reason to go out and buy a new one. Instead, I would simply pay off what remains on the loan and not worry about any future payments until I need to replace the car (within 5-10 years).
Entertainment: How much money do I need to eat for a year? For me, it isn’t much. If I were to make a guess (based upon my current dining habits), $100/week is more than enough to cover my needs. That’s only $5200 for the year, or when compared to $700K, it’s a drop in the bucket. So, let’s assume that I start dining out more often as well as entertaining guests (either at home or out on the town). I could probably set aside $25,000 for food. Add in another $25,000 for places such as the movie theaters, concerts, and so on.
Travel: One of the natural limitations to travel is money. Depending on where you are headed, a trip can cost anywhere from $100 to $3000 easily. I have plenty of friends not only in the US but also around the world that I would love to go see. Assuming I were to travel once every two months, I would probably need to set aside $20,000 for travel, just in case I make multiple trips overseas.
Work: It is unlikely that I would quit my current job right away. However, there will come a time that I will part ways with me employer and branch out on my own. I have always wanted to start my own hobby shop, so I would need to identify how much it would cost and start up the store. Since I would not need a salary, it would be easier to make ends meet at first. I would probably set aside $200K during the first year as seed money while I work with a professional to cost out the business.
Charity: Taking the above into account (approximately $500K), there is still be $200K remaining. This is more than I can imagine spending in one year. Considering that I have $160 Million sitting in accounts elsewhere, there are others that can benefit more from this money. Therefore, I would take $150K of the remaining funds and split it up between the Church and charities that serve those in need.
That would be $50,000 remaining on hand to cover any incidentals. $50,000 post-taxes is more than most people make in one year. Now … if only me numbers come up in the drawing tonight. 🙂
How would you spend it?