What If a $50,000 Pile of Money Fell In Your Lap?

pile of money

It could happen. You could suddenly win the lottery, win over-the-top health insurance money, or any of the other things that could give you a pile of money. I potentially could be put in that situation where I come out $50,000 richer. 

My parents are in another country currently. However, before they left the United States, they left their house behind that they’re using as rental property that’s bringing in monthly cash flow. That cash flow paid for my rent while I was in college. We’ve had a few conversations here and there on what’s going to happen to the rental property once they decide to sell it. 

Pile of Money Falls From the Sky

My parents stated that once they sell the property, they will give my brother and me the cash. Whenever they bring it up, I constantly refuse the cash and tell them to keep it should they decide to sell. What would be great is if they keep the house forever to collect their monthly checks but it’s their property and I have no legal basis of telling them what to do.

I do not want to keep any of the money they give me and will encourage them to use it towards their retirement. However, the laws regarding sending large amounts of cash oversees is complicated. It’s not something that I understand very well.

It could actually be better if the money was kept in the United States. The alternative would be to send the money in small chunks over years and years. Which isn’t the most practical option.

They might very well insist that I keep the money and I won’t have a chance to object. The property is valued at a six figure amount that is split between my brother and I. Without putting exact numbers to keep the privacy of my parents, that means at least $50,000 will go towards me. That’s a huge pile of money.

Defining It Now To Avoid Complications

An extra $50,000 is life changing. That’s almost a year’s worth of work for me. What matters more is defining how I will use that money later on. I have an uncle who inherited a small fortune from my grandfather. My grandfather is still alive and notoriously frugal but gave my uncle the money because he trusted him. It was at least $25,000 that he gave out.

My uncle is a cab driver, which meant that money was a problem solver. Money is tight as a cab driver but he lost every penny of that inheritance playing the stock market. It’s heart-breaking. My grandfather fought and clawed through every single penny he could get his hands on to give back to his child. Now it’s all gone.

My uncle doesn’t usually invest in the stock market. In his normal life, he’s never even thought of investing that money. However, he made a different decision than his normal day-to-day decisions because of the sudden windfall.

Had he defined what he was going to do with the extra cash when his emotions were calm, he wouldn’t have chosen to invest. That’s why defining the intent with the windfall now is life-changing.

Money Influences Emotion

Having a significantly extra pile of money influences emotion. It may or may not change someone’s values or character but emotion will be affected especially if it was an unexpected windfall. Emotion is a hard beast to tame and one that can control every facet of our lives if we’re not careful. That’s what led to his decision to invest. The change in emotion.

I’m afraid that if my parents pass along their house to me, that my emotion will change. I’m hoping the changed emotions won’t affect my financial decisions negatively. That’s why I will be defining publicly (you guys can hold me accountable for this) what I will exactly be doing with the money if I do receive it.

I will be putting every single dollar of that into the stock market. Not like how my uncle was doing, but by putting it in index funds. I’ve mentioned many times in the past I’m confident of America’s productivity. That productivity will be translated to the stock market. I will be putting 100% of that money into the S&P 500 and I will sleep like a baby. 

Practical at Best, Unglamorous at Worst

I have two portfolios, a retirement portfolio and a trading portfolio that I play with. The retirement portfolio is my 401k that I won’t ever touch or do anything with. The trading portfolio is for my enjoyment. I would have a ton more fun putting $50,000 pile of money in my trading portfolio. There’s no doubt about it.

However, I don’t want to be managing my parent’s money that way. Their money means more to me than the money that I earn. The pressure would be too great and volatility is high enough already in the stock market. This newfound responsibility would mean that each unit worth of volatility would feel like it’s worth 10 times more without the extra reward to be compensated. 

That’s not taking on smart risk. It’s taking on bad risk, which is why I want to play it safe. I’m happy with the usual 7% yearly stock market return over the long term. It’s the practical way to manage a sudden windfall at best, and unglamorous at worst. Which means that losing isn’t the worst option that’s out there. I can live with not being glamorous, but I won’t be able to live with losing everything. 

Conclusion

Whether I like it or not, an unexpected pile of money will influence my emotion the day I receive it. That’s why I’m encouraging my readers and myself to define what to do with it in the present to avoid temptation in the future. You don’t want to be my uncle who had a chance to build wealth the patient way and instead blew it all away by trying to go the fast way.

I’m terrified of replicating his mistakes if I have an unexpected windfall headed my way. Especially because the money wasn’t something I earned. Losing money I earned would let me sleep at night because I would be to blame. Losing money that came from family wouldn’t. I would be to blame and then some. 

Readers, are you expecting any pile of money to fall in your lap one day? Is the amount defined? What would you do with this newfound cash? Let me know in the comments below!

Finance Solver

I grew my net worth to $40,000 as a college student through hard work, discipline, and a little bit of luck. I graduated college in 2016 and will be starting to plan for my retirement once I start working.I am planning on reaching financial independence by my early 30's and I will document my moments of inspiration all the way to desperation here.

My goal is to enable your success in personal finance so that you can realize the American dream. The first step is starting today!

Read more about me here.

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8 thoughts on “What If a $50,000 Pile of Money Fell In Your Lap?

  1. Wow, what a sad story about your uncle, but I’ve seen it happen time and time again with people I know too. I definitely think practical is the way to go. Figure out your top three financial goals and put it towards one or all of them. And as you said, make the decision now before you have the money in hand.

    • It really was. He really could have used the money. The upside is that he’s right back to where he was before he had the money, but the downside is that he could have easily been higher up. Practical isn’t fun but it’s practical for a reason!

  2. What to do with a windfall? I think it depends on where you are financially. Lately, we have been splitting any “extra” money into thirds. One-third goes to pay down the mortgage, one-third goes to the kids’ college funds and one-third goes into the bank account for spending on fun things.

    If we came into a lot of money, I would cap our fun money at $10k-$20k, cap the college funds at an extra $100k and put the rest towards the mortgage.

    • That’s a great point. I haven’t really thought of putting a portion of the money into fun things. Financially speaking, I’m in the accumulation phase and I’m focused a lot on accumulating!

      That’s a great allocation of a windfall. I might just steal it when I’m in a better financial position 🙂

    • Nice, that’s very sensible! I say that I will get $50k lightly now, but I’m worried that I might have different ideas when the money is actually in my hands. I’m hoping my mindset won’t change but time will tell.

  3. Right now, I would use $50k to pay off the remaining $60k on our mortgage. With a 3.25% interest rate, many argue it is better to invest but my wife & I don’t like debt. It’s still important to save for the future & make debt payments simultaneously, but as long as someone is in debt they are “slave to the lender.”

    I prefer freedom.

    • I think paying off debt is never a bad idea! I’ve also been told that I should keep my mortgage for as long as I possibly can but I’m still not sure if I want to go that route. I don’t know if I will even have a mortgage because I’ve read all the buy vs rent arguments out there and I’m not sure buying a residential home is the best choice, but I will see later down the road.

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