Money To Live

August 26, 2009

How would you spend $20 K?

Filed under: Uncategorized — by moneytolive @ 5:00 am

Over the past year, each of my parents independently received about $20,000. This money was not included in their expected income for the year; they already had enough to cover all the monthly bills. They did not discuss their plans for spending the money together, and each  decided to spend (or has already spent) the money in a very different way.

My father received the money in regular intervals throughout the year. He took the amounts in cash and spent the money on groceries, gasoline, spending money on trips, and other household items. And, admittedly, he slipped some money my way, which I spent primarily on groceries and gas.

My mother received the money in a few big chunks and is using it to completely pay off their joint mortgage.

How would you spend an extra $20 K that was not expected and was not a planned part of your budget?



  1. Additional pasture land for my alpacas.

    Comment by Andrew Moroz — August 27, 2009 @ 4:12 am |Reply

  2. It wouldn’t even occur to me to spend it! I would save it. (I wouldn’t spend an unexpected $20K just because it was there any more than I would drain $20K out of my savings.) I feel like saving is what your father did, actually. He may have physically spent the cash on groceries and gas, but that was instead of the regular income he would have spent on those, which was presumably saved.

    And of course if I had debts, like your mother, I would pay them off before applying any money, unexpected or not, to savings. There are some difficult issues here that I haven’t yet had the opportunity to face though. It seems to me that saving, whether in a guaranteed account or an investment with risks, is almost never something you want to do “on margin,” i.e. with money you took out a loan for. By the fungibility of money, this means one shouldn’t save while in any kind of debt. But I’ve heard people say that there are some exceptions: e.g. perhaps the tax break one gets from a mortgage covers enough of the cost of the interest to make it an effective loan rate that one could beat in a C.D. Or perhaps the tax advantages of certain retirement accounts make them worth investing in “on margin.” I have never made these calculations myself though–perhaps you will explore these questions at some point.

    Comment by Melanie — August 28, 2009 @ 9:51 pm |Reply

  3. If I had alpacas…

    Pay off debts faster + save some + spend some (travel or education slush fund).

    Comment by anita — August 29, 2009 @ 1:30 am |Reply

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