Windfall Lump Sum

[AnIntentionalRoad]

Thanks to all for the great ideas and interesting comments! Keep them coming!

Quote:

Originally Posted by luckydude So my recommendation to OP is if you're going to have some fun with the money or give it away, it's better to do it earlier rather than later, because once you get used to see that bigger number on the spreadsheet, you will be reluctant to see the number go down.

Yes! This was my motivation for the original post. I know this will happen to us as we are financially conservative and like seeing our "number" get bigger, like most people. It feels like we need to use this moment to make a couple of decisions on how to use the money and even maybe our free time other than to increase our portfolio, which in reality, I'm afraid if we just increased our spending another 15k per year, it wouldn't affect our happiness.

Some ideas we've had for a significant portion of the windfall (keep on mind we are mid-40s with school aged kids and both fully retired):
- Create our own non-profit that we would use to actively improve things important to us (instead of just handing it out to charities);
- Pay off one of the two mortgages (which would be better, rental or primary?);
- Invest in a non-owner-operated franchise, like a set of 3 Sports Clips stores (we don't want to be active operators) where the cash flow could pay for FT management;
- Buy a nicer boat; :-)
- Invest in other fledgling businesses (we have 3 private holdings in startups and this windfall came from a 4th one that was just sold);
- Make improvements to our vacation rental.

[rodi]

Quote:

Originally Posted by luckydude One thing I noticed about getting a windfall is how quickly one gets used to the new "number". It's similar to getting a raise---you might be happy for a few weeks, but before long you mentally adjust to that new number and that becomes the baseline. It's the same thing with getting a windfall. It took me about a year to get used to the idea of having the extra money, but once I mentally adjusted to the new "baseline" number, I became much more reluctant to do much of the planned spending that I thought I would do with this extra money. In other words, the LBYM mentality kicks in. So my recommendation to OP is if you're going to have some fun with the money or give it away, it's better to do it earlier rather than later, because once you get used to see that bigger number on the spreadsheet, you will be reluctant to see the number go down.

In my case - getting a windfall (inheritance) moved my ER date closer by about 2 years. It was added to my nest egg and allowed me to reach the goal sooner. I actually increased my frugality because it made things more real and less fantasy... This increased frugality also helped move the ER date closer since it drove my spending numbers down...

Rather than spending the $$ we ended up saving more.

[dallas27]

Quote:

Originally Posted by rodi I actually increased my frugality because it made things more real and less fantasy... This increased frugality also helped move the ER date closer since it drove my spending numbers down... Rather than spending the $$ we ended up saving more.

I totally get that. Once i had enough cash that calculating retirement actually was plausible, i suddenly became much more of a tightwad and much more attuned to financial opportunities. I have a motive now , i guess. Funny how that works.



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[springnr]

Quote:

Originally Posted by AnIntentionalRoad Thanks to all for the great ideas and interesting comments! Keep them coming!

In the case of excess funds, music therapy/palliative care, is an area of interest I would explore. I have not been to a film this year, but am anticipating the arrival of Alive Inside at local theaters.

Rose Theatre · Alive Inside: A Story of Music and Memory

[Meadbh]

Quote:

Originally Posted by rodi In my case - getting a windfall (inheritance) moved my ER date closer by about 2 years. It was added to my nest egg and allowed me to reach the goal sooner. I actually increased my frugality because it made things more real and less fantasy... This increased frugality also helped move the ER date closer since it drove my spending numbers down... Rather than spending the $$ we ended up saving more.

Same here, except that it moved retirement closer by about 10 years. Without the inheritance, ER would not have been possible. It was a real motivator to LBYM.

[meekie]

Invest some, travel more, splurge more would be my quick answer.

Realistically, how I spent it would depend on where it came from. I would want to honor the memory of who it came from. Were they passionate about family? arts? living in the moment? saving for a rainy day?

Also, after seeing my younger friends struggle making ends meet once they're out of college, I would really consider investing in something that I could pass on to my kids. (not that I have any). I have one friend whose parents invested in some real estate for her. It doesn't give her enough to live on, but it helps enough with the bills that she can work at her dream job (special ed for preschool), instead of having to get a good paying job.

[ivinsfan]

You are planning hopefully a 45 year retirement. I know with that timeline a least a few posters on this board suggest a 2-3% WD rate. You are sitting at 3.25... granted a higher annual spend that might have room for some budget cutting.
Out of the list you suggested, I'd probably pay off one mortgage, buy a bigger boat and put anything extra into my portfolio. I'd probably hold off on the franchise thing until I saw that one of my kids would be interested or I felt I wanted a little more to do myself, as even a managed franchise requires a time and hassle commitment. With your improved cash flow you can probably still buy a business .