Jan
9
Written by:
Amanda Wall
1/9/2009 11:22 AM
Have you ever wondered what you would do if you won a million dollars playing the lottery? The first thing that comes to my mind is to have some fun and spend it. Before getting a check, however, the government takes out taxes. Federal tax would be about 35%, and New York State income tax would be about 6.85%. That adds up to $418,500 in taxes. But there is still $581,500 left! What could I spend it on?
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Spending $1,000,000
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$ 1,000,000.00
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$ (418,500.00)
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Taxes
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$ (120,000.00)
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2 new luxury cars
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$ (365,000.00)
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New upscale home
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$ (20,000.00)
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Vacation cruises
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$ (10,000.00)
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Paying off old bills
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$ (20,000.00)
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Shopping at the Mall
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$ (28,000.00)
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New furniture for new home
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$ (12,000.00)
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Property and school taxes for new home
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$ (6,500.00)
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Utilities, insurance, etc on new home
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0.00
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Total left
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The good news is that I have no unpaid bills, and am not paying any interest on car loans, home mortgage, or credit cards. I bought a home that may increase in value. The bad news is that all of the other things I bought are now “used” and worth less than what I paid for them. I still have to pay about $18,500 a year to live in my new home.
Managing money is always about personal choices, so your list would be different from mine. Most of the things on my list are “wants”, not “needs”. I could have done many different things with my imaginary winnings. I could have saved some money for an emergency, or children’s education, or retirement. Because there are so many choices for saving or investing I would have probably talked with several financial planners. They might suggest investing in rental property for a monthly income of several thousand dollars. Some money could be deposited in an IRA or college savings account. What would you do?
Judy Linder, Instructor
Financing Your Independence*
* more than 840 EOC students and community members have enrolled in this course over the last three years.
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