This post is partially inspired by Give Me Back My Five Buck’s article, What I would do if I won $1 million: 4 years later. I particularly like how she uses it as a kind of financial time capsule, able to reflect on her past wants and needs vs. what she’d do with the money now.
I’ve modified the amount slightly because I wanted to work with a smaller, albeit still quite large, number to see how I’d apply it. I’ll do a follow up post next year around this time to see how it’s changed, and try and make it a yearly tradition.
Car
-I’d immediately pay off the remaining $9,972 on my car loan to become completely and totally debt free.
-I’d also put away $5,000 for maintenance costs, as well as $2,500 to not worry about insurance for a year.
(Amount remaining: $82,528)
Travel
-I’d put $10,000 into my travel fund: $4,000 for Mt. Kilimanjaro, $1,500 towards Costa Rica, and $4,500 towards a Europe trip.
(Amount remaining: $72,528)
Emergency Fund
-I’d deposit $25,000 into my emergency fund (one year of reduced living expenses)
(Amount remaining: $47,528)
Down Payment Fund
-I’d put $25,000 into a down payment fund for my first property. I’d combine this with the nearly $9,000 that I already have saved for $34,000. It’s not much, but considering my age, my downpayment fund isn’t my biggest priority. I understand that home ownership puts you on the fast track to wealth, but once that $100,000 runs out, I won’t be able to quite yet afford a house, so it’s better just to add to the fund until I’m ready.
(Amount remaining: $22,528)
Max Out My TFSA
-I have approximately $10,000 of unused contribution space, so I’d fill that up with stocks. I would diversify and add different investments to my portfolio, probably all bluechip stock, in different sectors.
(Amount remaining: $12,528 - wow, it’s going fast!)
Plump up my Chequing
-Right now, until my raise truly takes its effect, I will continue to limp from month to month while trying to slowly build back my chequing account. It will be slow progress, but it’s coming along. I’d take $2,000 just to increase my chequing account, so that I can pay for everything with cash instead of worrying.
(Amount remaining: $10,528)
Wardrobe Relaunch
-Most of the things in my closet are, frankly, not very good for my professional image. I have a lot of things I bought on the cheap at places like Smart Set, Suzy Shier, etc. The problem with these clothes is that they typically look okay for abot six months, and then they start to lose their shape, fade their colour, etc. I’m also quite tall, so many of the things I bought because they were on sale shrunk over time and look pretty bad because I need a longer length. In the spring, my wardrobe is slightly improved by skirts, but right now it sucks. I would take $2,000 and invest in a nice, quality pieces that I could wear for many years and that would really improve my professional prospects.
Some of the items I’d buy would be: pant suit set, skirt suit set, dark brown leather boots, a nice pair of shiney black kitten heels, short and long sleeve blouses in jewel tones/muted patterns, blazers, nice dress pants in black, grey and tan.
(Amount remaining: $8,528)
Furniture
-Right now, I live in a 300sqft bachelor apartment (which I’m always bemoaning, but it really isn’t that bad). I have a queen sized bed that I bought from the tenant who lived there before, but frankly, it’s a little sketch. I have a desk, a TV stand, a bookcase, and that’s pretty much the entirety of my furniture. Although I wouldn’t use any of this money to upgrade to a nicer rental (because what happens if the money runs out and I still can’t afford it?), for my future apartment, I would set aside $3,000 for a new bed that isn’t scary, a nice couch and coffee table, a kitchen/dining table and chairs, a barbecue, and some accent pieces like curtains, art, lamps, new drinking glasses, etc. It may seem frivolous to set aside money for furniture, but my home is my sanctuary, and I want it to be a refuge.
(Amount Remaining: $5,528)
Charity
-According to my breakdown, I’m currently ignoring the cardinal rule of tithing. Most wealth experts believe in giving away 10% of what you earn. However, at this point I’d only put $3,000 towards a charity (3%). I can give away more when I’m older, but for now, I need the money. The charity of choice I think I’d go for at this time is the Toronto Cat Rescue. A friend of mine volunteers with them, and I had been in contact with them prior to that. They are a non-euthanizing shelter which fosters their cats as opposed to sticking them in cages. They also trap and rehabilitate feral cats. They estimate that there are hundreds of wild cat colonies in the city alone, all of them starving and reproducing at an alarming rate. Cats are seriously great animals that benefit from a loving home, and I’m always horrified how many people abandon such beautiful creatures.
(Amount Remaining: $2,528)
The Rest
-I’d put the remainder of the $2,528 into a savings account to be applied to my TFSA and RRSP in future years. It’s not much, but I figure that with topping up my TFSA, as well as not having to worry about insurance on my car for a year/any debt whatsoever, ALL of my takeaway pay can be applied to retirement savings and my down payment fund.
What do you think you’d do with $100,000?
I think this is a fabulous exercise for you to go through and I think you did a great job at allocating the funds in a reasonable and responsible way. You had good justifications for every category of spending and I especially liked your clothes justification because I too think that for business you do need some quality clothes (especially if you are a woman) that won’t “lose their shape” as you say.
As a man, I hate it when my shirts shrink to be too short and loose their initial appeal and I’m sure the problem is much worse with woman’s clothing.
I hear you about the wardrobe. I’m still transitioning from student to professional, and I’m struggling with finding the right clothes for work. My workplace is pretty casual, but there’s meetings and then on the opposite end, days spent out in the field. It’s really hard to coordinate an outfit with work boots!
I really like how you split up everything into justified amounts – it’s a really financially healthy way to approach something like this. The temptation to go hog-wild with such a big sum of money is pretty tempting. Also, giving to a cat charity – right on!
I actually decided to post my response on my blog, it really made me think about what I would do too. I gave you credit for the idea of course :)
Thanks, Morgaine
Hey Morgaine, I went and checked out yours and it was awesome! Unfortunately, I couldn’t comment as myself on your site, I need to have the Name/Url in order to do that. But I loved what you did with yours … it’s a fun exercise :)
Mine’s pretty simple.
I give $50,000 to my parents to pay their debt.
$10K to myself for vacation.
$40K to put into a down payment fund for house.
That’s it.
Nice! Mine will probably put in an investment like a small business.