If I had a million dollars
Today, many of my blogger friends are writing on this topic – what you would do if you suddenly inherited a million dollars from long lost cousin Bertha who you haven’t seen since you were a baby? We’ll have a round up on Friday @ Yes, I am Cheap.
This is an easy one for me. If I inherit one cool million from cousin Bertha on Sunday, I wouldn’t show up to work on Monday. Even after the inheritance tax (10-20% from a quick Google?), the windfall will be enough of a shove for me to meet all of my retire by 40 financial goals. Here they are for a quick review.
- 1 Million dollars net worth Check
- Additional 100k invested in yield producing portfolio Check
- Additional 50k cash Check
- Even cash flow I’m pretty sure this will work.
Only #4 here is questionable. Take a look at my June cash flow report and you can see that we are very close to positive cash flow. We only really need an extra $1,000 in income at the most.
Let’s see what we can do with $1,000,000! Forget about tax right now as long as we are dreaming.
300k in safe dividend paying stocks and mutual funds. We’ll say the yield is 4% which will net us $1,000 cash each month.
500k in CD. We’ll put 100k each year into a 5-year CD. This way, we’ll have around 100k available each year with no penalty.
200k left is fun money! We can travel around the world in style and visit all the places we have always wanted to see. We’ll visit the Egyptian pyramids, Inca pyramids, Taj Mahal, and the Maldives to start. Hmm…. actually, this isn’t going to work because we would only get positive cash flow if Mrs. RB40 keeps working!
Can she quit her job too? We’ll have to replace about $2,600 in income + generate the extra $1,000. This is a taller order…
We’ll have to start over and see what to do with the $1,000,000! Goal = $3,600 cash flow.
270k to pay off the mortgage – This will free up about $1,500/month, almost half-way there!
400k in safe high yield investments @4% will give us about $1,300/month.
300k in 5 years CD @ 2.5% will net us another $600 per month.
Well, we are not all the way there. We are at $3,400/month, but I think that’s good enough. I would like to generate $3,600/month, but I think we can make it work. We’ll just save $200 less per month. I think that’s not a big deal at this point. I’m sure I can make $200 a month if I really need to.
All right! We have 30k play money. I’m pretty sure we can go see the pyramids, Taj Mahl, and the Maldives for 30k. We’ll have to stay at our usual 2- or 3-star hotels, but maybe we can book a night at the Four Seasons. 😉 I guess it’s a good thing because we need to avoid lifestyle inflation and stay frugal.
Well folks, there you have it. If a million dollars unexpectedly landed in our laps, you won’t see either Mr. or Mrs. RB40 in the office on Monday. This windfall would free us to explore our passions and enjoy some free time with baby RB40! What about you? What would you do? Can you quit working with only $1,000,000 extra? It’s a lot of zeroes, but it might not last 40 years without good planning.
Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.
Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.