A million dollar question?

A million dollar question?

How often have you daydreamed about winning Lotto? What would you do with it? I seem to spend most of my imaginary win rebuilding my daughters school as the government seems to be taking its own sweet time about fixing the place up. Having worked in the building industry for quite some time, even though I have in my imagination allowed a big contingency for cost overruns, it’s tricky to keep it within budget because the principal always has some pretty wild ideas and so do the kids, so before I know it my imaginary Lotto win has been gobbled up. OH well, back to the drawing board.

Next thought was that I would pay off the mortgages of all of my friends and whanau, but have you heard the size of a mortgage these days?! Cripes, once again I’ve spent my entire win.

I recently received a great email from a woman called Jo asking a question, along the same lines of “what would you do with a Lotto win” that really got me thinking.

She said: I she talking to some folks in her Mothers' Group the other day and this question was posed by another Mum, apparently they had heard the question posed on the radio -

"Would you prefer to get $1,000,000 today, or $1,000 each week for the rest of your life?"

She went on to say that her group had the following range of answers:

“At least with $1,000 a week you wouldn't have to worry about paying your mortgage repayments and you could just live off your own wages"

"I'd probably just blow the $1,000,000 straight away and it'd be gone"

"$1,000 a week would be loads more than $1,000,000 in the end."

Jo asked if I could write a blog post about it so she could collect a wider range of opinions. So, we would love to hear YOUR comments below.

Firstly Jo, what an awesome group that you get together and talk about the money topic! And that you drink coffees on a weekday and wine of a Friday. My daughter is 10, is it too late for me to join your group???

I went back to Jo and asked her what would SHE do?

She WOULD take the $1,000,000 and pay off her mortgage, whose pay off date kept getting extended when she reduced her hours of work to have children and then those children started daycare which attracted other costs etc. Then she would invest the rest and hope for a decent return. She and her partner would continue working and continue paying into KiwiSaver and they would pump money into the investments they had created. Oh, and they “might one day have a decent holiday that doesn't involve staying on a family member's sofa but maybe DOES involve some cocktails by a pool. I may have spent too much time daydreaming about winning the lotto…” she said.

Now, I’m not sure what competition I have to enter to win this money but I’ll give deciding what to do with it a RED HOT GO! And I’m making the assumption that tax has already been paid…

$1,000,000 now or $1,000 a week for life?

Either would work for me. You’ve seen how excited I get by a small dividend payout, imagine if I received EITHER of the above. Oh My, Exciting! But if I had to choose, I would probably take the $1,000 a week for life. And I made that decision before I googled the question above or got my calculator out and did some math AND before I worked out my life expectancy!

If I/we had an extra $1,000 a week coming in this would be the CREAM on the top. We already have no debt and we are already part time workers and we already live well below our means and spend less than we earn (which is not much). We have absolutely nailed delayed gratification and have developed the patience to wait and save up for something we think we might want.

So each Tuesday when the $1,000 hit my bank I would do the following:

$100 - To a ‘giveaway’ account

$450 - Into investments that I already have

$450 - Into the Ruth and Jonny Big Adventure Fund

After six months there would be the following amounts saved up:

$2,600 - Giveaway

$11,700 - Added to investments

$11,700 - Ruth and Jonny Big Adventure Fund

Then I would start giving money away to anyone who needed it. To my whanau, a family at school, a uni student who was struggling, a person who just needed something nice to happen, random acts of kindness. I have a very long list. Sometimes people just need some extra money with no strings attached. I absolutely trust people to use it for whatever purpose they see fit.

During the six month accumulation phase Jonny the “super researcher” would have been plotting and planning an adventure for us and we would then go ahead and book it, pay for it with cash, pack our bags and hit the road/sky/ocean! And all the while every single Tuesday the $1,000 keeps accumulating into my Giveaway, Investing and Adventure funds. Over the years I’m sure that the things we want to give and do will evolve but I’m sure I will always find something constructive to do with $1,000 a week. Fortunately for me I’m young (44) and sensible and although my age will change my sensible approach to money is unlikely to. So, I’d continue more or less to do, slow and steady wins the race, what I do already but with a guaranteed income of $1,000 a week trickling in. Jonny might work a bit less, which WILL be necessary because he will be planning in great detail our amazing family adventures. I will keep working, because I enjoy it. Our daughter will keep going to school because she HAS to. Life continues on but is just that much sweeter.

And for the analytical thinkers who read this blog I quickly ran the (conservative) numbers showing what would happen to:

$1,000,000 if I invested it at 3.5% for 20 years = $2,011,702.03

OR if I invested my

$1,000 each week at 3.5% for 20 years = $1,393,535.59

BUT, these calculations don’t take into account me constantly giving money away, investing some money with varying returns and having fabulous family adventures. So they are a moot point really.

As for life expectancy, if the stats are right and I live till 82 years old, that’s $1,976,000 that I would receive in total. I could see my daughter pumping me full of vitamins in the rest home to keep the gravy train running a bit longer, although what inflation would do to my weekly $1,000 by then does not bear thinking about!

Others may perform all types of mathematical gymnastics to maximise every single cent in the dollar, but not me so much. I’m just about enjoying today and planning for tomorrow because who really knows if I’ll make it to 82, I just want to spend my life enjoying the day I’m in today.

Thanks for the question Jo! Loved it! And let me know if I can join your mothers' group so we can drink coffee/wine and talk about money.

Once I had finished writing this I thought to google where this question might have come from and I found a young Canadian woman who got to make the decision in real life. You can read about it here. What a amazing opportunity: www.theguardian.com

SO, what would YOU do? Throw this question out there at the dinner table this week and share your thoughts in the Leave a comment panel below…

Happy Saving!


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