Over at Clever Dude there is a post called What I would do if I won the Lottery. I really liked that post and I thought about what I would end up doing if I won the lottery.
Well the first thing is that I do not play the lottery. However if I did play and won some money the first thing I would do is to pay off debt.
I am not going to get technical here with the lottery amounts and the taxes etc. I am going to make the simple assumption that I will take the lump sum and I will base my scenarios on the amount I would get after tax, regardless of what the total lottery amount actually was.
If I won $20,000 then I would have to pinch myself to make sure it was not a dream. $20,000 would pay off ALL of my local debt, meaning the credit cards and the car loan. This would free up my money to pay utilities and other monthly bills and then I would be able to increase the amount I send to my mother to pay off the student loan at home.
I would be very satisfied with getting the $20,000 because I would be debt free!!!!! However the money amounts do get to be greater so let’s move on to the next scenario.
If I won $50,000 I would have a mini heart attack I think. I cannot imagine getting that amount of money so I think I would just be in a state of shock for a while. Then when I recovered from all of that I would follow the steps I took for winning my $20,000.
I would then be able to pay off all of the debt for my student loan and pay off the balance on the mortgage on my mother’s house.
What about savings you say? Well I am saving a small amount every month right now. I would increase the savings amount but I would rather have the debt paid off in full and have a miniscule amount in savings than to have a huge savings net and have interest bearing debt.
If there was anything left over after paying the debt then I would look at dividing the money equally between some high yield savings accounts and some long term CD accounts.
These CDs would assure me some cash flow in the future while the high yield savings would allow me easy access to my money on a regular basis.
I would continue to use ONE credit card that offered some cash back rewards but I would not be paying any interest for using the card. I would continue to use the card like I do now. I have a zero balance on the card right now. I gather all the receipts for the day and set up a payment from my Electric Orange account with ING to send that amount to the card in 5 days.
Five days allows time for the charges to post to the card, but since the grace period on the purchases is 20 days then there is not enough time for interest to build up on the card before the payment goes through.
This way I earn cash back rewards and do not pay interest. I love having a zero balance on a rewards card that gives cash back because the other types of cards do not appeal to me.
If I won? MORE than $50,000 then it would really make me go crazy. I would quit my job and drink mojitos all day.
I would continue to work of course but I would be a little bit more relaxed. I would definitely be doing what I loved instead of what I needed to get by. I would move my energy into a job that I loved doing so I would be less stressed.
What would you do if you won the lottery?