What would you do if you Inherited a Million Dollars?
Here is what it would feel like if you won a million dollars… or at least how I see it going down.
You wake up, turn on the coffee pot, grab some breakfast and flip open your laptop. As you are logging in you decide to grab your phone and look at your checking account because it is payday.
However, when you pull up the account you notice a 7 digit number instead of the normal 4. You spit coffee all over your laptop but who cares, you are officially a millionaire!
After the shock wears off (if it ever does) you are now confronted with one question: what are you going to do with your new fortune? So now what do you do?
Opposing Viewpoints Blog Battle!
Hey, so before you read any further this is a dueling blog post. What do I mean exactly?
Josh from, “MoneyLifeWax” wrote an opposing blog post on the topic of inheriting $1,000,000 dollars. Keep reading to find out what I say then be sure to go to Josh’s blog post here to see what he has to say about the subject!
Receiving an inheritance can be a loaded proposition. Primarily, this was someone else’s money/house/stock portfolio, and because you are inheriting these assets there’s a good chance that person was either your family or a great friend.
The baggage that comes with an inheritance can sometimes be enough to just ignore the cash until “the perfect” moment comes along…
BUT – I’d caution you to think differently and utilize this inheritance to help achieve your goals NOW
When we put our family trust in place we had a litany of thoughts running through our heads. Where should the money go? How should it be transferred? What about the assets? And who in the world would be best to care for our daughter?
All these intense conversations and discussions were centered around one topic: How can we best help our daughter and family with the money and assets we leave them? Not 20-years from the time her inheritance is received, but right then. How can she use it to put herself through college, buy a house, pay off any debts, or take the vacation of a lifetime – on us?
And I would urge you to have the same mindset if you suddenly came into an excess of cash.
Here are the 5 best things you can do when you inherit One Million Dollars:
1- Honor your loved ones and their choice to leave you this inheritance
I once had a grandfather the had taken me golfing more times than I could remember throughout my childhood. The summers were our time to hit the links, catch up, and just get away from the day-to-day for a while.
I cherished those memories always, but especially so after he passed away. The majority of his assets went to my mother but there was a relatively small sum of money that came my way at about age 23. I debated long and hard about what to do with the money he left me and ultimately I settled on using it in a way that would honor him and the time we spent together.
The golf clubs I had been using for nearly a decade were hand-me-downs and frankly were probably a few inches too short since I had grown considerably from 13-23… I chose to buy a new set of clubs that are still with me to this day. Every time I slip away to hit the course, I carry the memory of my grandfather with me… And for that, I think he would be happy.
2- Eliminate interest paid on your debts and the stress that comes with them
Although I argued on Rockstar Finance a few months back that good debt does exist, debt commonly carries additional stress with it. Even if you’re someone who knows what they’re doing with debt and does not absorb stress as a result, we all pay interest just the same.
If you’re fortunate enough to have received an inheritance recently, why would you not use it to eliminate the debt hanging over your head… – “good” or bad? At a minimum, you’re reducing the total interest paid over time. And at a maximum, you’re eliminating debt, stress, and opening up your financial world for the next steps in life (see below).
3- Use it for a down payment on a home
We had about $30k saved up for a down payment on a home in June of 2007. By December of 2008, the economic crash and my lack of experience took that sum down to about $10k… It took us 7 years of hard-fought saving to build that sum back to $30k and as a result, delayed our first home purchase by nearly a decade.
Had we received an inheritance and decided to allocate some of the funds toward a down payment, we could’ve purchased a home much earlier and probably at a lower price. Regardless of which side of the renting/owning debt you’re on: If you choose to buy – the lower the price and the longer you’re paying down principle – the better your long-term financial situation.
4- Start a business
If there’s one thing I know about starting a business, it’s that you probably don’t have enough money set aside for working capital or to just get the thing off the ground. There’s always a more expensive legal bill or random item that breaks down at the worst possible moment. The one constant about any of these scenarios…? They happen precisely when you least expect them.
Using an inheritance to bolster your savings will help you to stay flexible in your business and – most importantly – let you rest a little easier at night. If you’ve been waiting to test your entrepreneurial abilities, receiving an inheritance can be a great catalyst toward this goal.
5- Spring forward toward Financial Independence
If any of the above options aren’t appropriate for your current life situation, there is the option to max out a retirement account or beef up the savings. Or, if you’re on a quest for FI (Financial Independence), the act of receiving this inheritance can spring you a few giant steps forward toward your ultimate goals!
No matter how you decide to put an inheritance to work for you, there’s no time like the present to go ahead and get started. There’s no reason to pay an excess in interest or to further delay buying a home or starting a business if these are things you’re working toward already.
Your loved ones have made a significant and symbolic decision to transfer their assets accumulated over a lifetime – and they’ve decided to trust you with them. Honor their decision and memory by putting this gift to work now so that you can advance toward your goals!
To see the counterpoint to my argument, head over to Josh’s site and let him know why I’m right? And then let us know who’s side you’re on in the comments below!
Thanks for reading!
If you’re interested in discovering a better version of yourself – whether with fitness, finance, or family – then subscribe below to MikedUp Blog’s FREE newsletter and let’s improve together!