What would you actually do with Powerball winning? This was bouncing around my head, so I broke it down on paper.
First you gotta pay taxes. To keep this simple, I'm going to assume I won 200 Million dollars, and 50% of that was lopped off for taxes. Now we're at our clean $100 Million, with none of the Wesley Snipes worries.
10% to charity.
I'm big on the give-back. The question here though is am I donating pre-tax, or after tax? I thought on this one about five mins. Since charities are tax free, and the tax man is lopping this off of my winnings anyway, I'm resolved to dole it out post-tax. That's $10,000,000 dollars to charities. I think I'd have to split it up. Actually, from the look of the number, I'd find 10 that I like and drop in a million each.
One million to Coast Guard Mutual Assistance, for sure. A million in support of breast cancer, in honor of a few cherished relatives, and another million in support of testicular cancer just because I really like my pair. One million to Khan Academy because I love their mission. And then I'm liking Teach for America, or the Amgen Foundation. Anything that is promoting literacy, math, and science in under-served American communities. I'll let my wife pick five others that speak to her heart.
We got $90,000,000 left.
Pay off the house, pay off the truck and car, clear any outstanding consumer debt, donate the two vehicles, and buy two new modest vehicles. I really dig the Chevy Colorado lately, and the wife can take her pick, as long as the purchase contributes to our national GDP. Out total debt load, including the house is probably only 400,000. Add in the two new cars, and that brings us up to $440,000 on this transaction. $89,560,000 left. This isn't really going fast.
Off the bat, I'd drop $10,000,000 on the friend that got me interested in Powerball, and inspired this thought experiment.
Alright, this part is key. I'm definitely going to give a ton more away, and then build my investment empire, but lets setup a revolving system of "safe" residual goodness first! There's probably a smarter way to do this, and I'd be sitting down with a trusted accountant, and adviser, no question, but here is my initial thought. CD's and Money Market account interest rates are abysmal right now, so my earlier CD Ladder schemes aren't amazing. What I want is a trust, or ladder of sorts, that will deliver $80 - $100,000 a year indefinitely. Set that up for me and the wife, and then crank away on more donations and investments.
I'm going to call that principal required $5,000,000. Principal stays there, the interest returns are partially re-invested to keep up with inflation, and the rest distributed to the estate.
Right away I want two multi-family homes to manage. I'm going to buy these two outright, just to own the returns free and clear, and help with leverage deals in the near future. Honestly, I could probably buy ten outright, and will quickly build up to that, before tapping into leverage.
I'd scoop up the first two quickly, with the help of the real estate agent I've built a relationship with, and I'd partially mange them at first, before turning it over to her company. I think she can handle 10 on her own, so it would make sense to build to 10 within one to two years. Let's lock down these first two deals though and start learning! We'll call them 600K each, to keep a capital reserve on each estate. I think I can scoop them up here for 500K and less, though.
I want to setup college funds for my nephew, niece, mom's second batch of kids, and my wife's kid-sister, but let's do some giving to those parents first.
I can think of 25 friends and family that I would drop a million on, real quick, not including our parents, which I'd drop 2 million each on, on both sides. I'm sure the wife will have five more friends to add, that I'm not thinking of, so lets call that $38,000,000 doled out. I'm going to have to let them take the tax burden, for the most party, unfortunately.
Down to $35,360,000.
Let's assume I can get my ten other multi-families for 500K each, on average. I'm going to leverage this at 50% while I'm still getting the hang of the margins and associated costs. So we're putting aside half of $5 million.
At this point I want to pay off the debt of some family members. I'm assuming that my grandparents' houses are paid off. At least most of them. I'd buy a house for my mother, one for my dad. I'm sure the wife's parents would want a more suitable one; I can think of a handful of others, debt related, that I can either pay-off, or secure some property for them.
This one is really speculative, and the house are all over the place, so it's hard to estimate costs. I think a million would more than handle it though. We'll call it two, for good measure.
Let's give five million to the Wounded Warrior Project, and five million to the two nearest VA hospitals, split evenly between the two.
I'll give one million each to my two favorite local bar tenders.
I don't know what criteria I'd use for this yet, but I want to host a contest for five high schools and give each winner a free ride to any college he or she chooses, and gets accepted to. I'd like to do this ten years straight, and indefinitely if my enterprise remains solvent...it would be one winner per year, after the first ten.
Based on a quick glance at Yale, I'm going to call that 58K a year X's 4, for 5 kids, for 10 years of winners. That's 11.6 million blocked off.
Hmmm. I don't quite know right now. Let's let one million sit in a plain Jane savings account. Let's see if the wife and I can blow a million on ourselves with absolutely trivial shit. Let's make that a game actually, and see if another couple will do it with us. Three million there.
I'll see what a highly recommended money manager can do with three million.
Ummmm... Let's fund some wishes. A million dollars to cover as many Make A Wish projects as it can.
I'm ok with this in the bank right now while I grow my rental empire, finish my computer science degree, go to grad school for an MBA or MIS degree.
I'd probably keep working at my current job for a while, since I'm learning a ton and the president is an inspiring entrepreneur. I wonder if there is room for investment there actually. Good company.
What does your list look like?