I found a great post over on Sick of Being Poor about what you would do if you won the lottery. She wrote a great combination of paying off debt, saving, setting up trusts to help with her family's education and investing in a non-profit community theatre. It prompted me to think about my own plan if I landed such a windfall.
First of all, I totally agree that you would need to get a lawyer and an accountant, most likely someone that has experience with lottery winnings. You read all the time about lottery winners who squander all their money away and wind up in debt. I wouldn't go crazy with expensive houses or toys either. Here is my plan.
1. Pay off all debt. Yay. I'd even make sure my attorney settled my accounts for less than I actually owe.
2. Set up a College Fund for my little sister's education. She's 15 and I'm not so sure if my parent's have ANY money saved for this and I don't want her to wind up in the same situation that I'm in now. I wouldn't want her completely spoiled though and would encourage her to seek on-campus employment the same way I did.
3. Pay off my parent's mortgage. My parents struggle financially as well and the thought of them ever having to sell the beautiful house that I grew up in always scares me. The one condition I would impose, however, is that they would not seek to use the equity in the house for anything else. I've already considered the tax obligations of this gift and have decided I would become a co-owner of the house so they wouldn't need to pay taxes on the windfall.
4. Buy a modest house for my older sister and her husband to be. She's getting married in August and dreams of moving back to the area we're from but the prices are such that it would take them so long to accomplish this. I'd like to see them get started close to home, as my older sister is very close to her family and hates living in a tiny studio apartment.
5. Help my brother attend graduate school if he wishes. My younger brother is a little bit of a lost soul. So smart but utterly directionless. He's taken a few courses towards a Master's Degree in History. We all would like to see him become a teacher but he believes he can get his Phd never mind the fact that he got bad grades in college. I'd prefer him to get his Master's first and then try teaching for a while but either way I would help out a little (though the Army pays for some of his education already).
6. Purchase a brownstone close to where I currently live. Rent out the basement for additional income.
7. Continue working. I have worked hard to establish my career and I wouldn't stop now!
8. Travel! I love to travel and would like to take a major trip once a year.
9. And then, if there's some left over after saving up a sizeable chunk for future expenses, I would like to establish an artist's community of cooperative living. It would be like an apartment building of artists and everyone would contribute what they could to the community in terms of money or services. It sounds a little utopian I realize but I studied a little socialism in college and I would like to see a place where struggling artists could flourish.
What would you do?