A $1 Million Dollar Windfall
How many of us have thought to ourselves, “if I only had a $1 million dollar windfall all of my financial problems would go away”?
I know I have.
A million dollars is a tricky amount of money to think about. While it can be life changing money, it’s probably not life changing enough to live off the rest of our lives without some work. The reality is that if most people received $1 million dollars, half of the money would be gone to taxes, a few hundred thousand dollars to pay off debt, and the rest spent on expensive cars, vacations, etc.
When I was five years old $5 seemed like a million dollars. As little as $1,000 seemed like a million dollars when I was a teenager. Now that I’m older, a million dollars doesn’t quite seem like a million dollars (if that makes sense).
For the sake of simplicity, we’re going to assume this $1 million dollar windfall is tax-free. Now the question. What would I do with the money? Continue reading “If I Received a $1 Million Dollar Windfall I would…”
The $70,000 House Flip
Around this time last year my wife and I sat down at a restaurant and discussed our goals for 2017. It was the first time we actually sat down and talked about our goals together. While we had discussions in past years about saving money and paying down debt, we didn’t have much focus or direction.
Paying down debt remained a priority in the beginning of 2016. However, I was easily distracted in the pursuit of other interests. For example, even though we started the year focused on paying down the mortgage the focus changed a few times and eventually we found ourselves with a rental property under contract. The plan was to use a combination of savings and home equity to make a “cash” purchase. We’d then refinance after six-to-twelve months.
The asking price of the property was $89,000 and we eventually got it under contract for $65,000. We knew the property needed some work and then the inspection report raised additional concerns. The front porch was separating from the house, there was termite damage in the basement, and siding on the outside of the house needed to be replaced. This didn’t include all of the cosmetic work needed as the house hadn’t been updated in decades. It would have been a huge undertaking for someone like me with little experience fixing up homes.
To Partner or Not to Partner
Due to my lack of experience, I was planning to partner with a contractor I had invested with in the past. A couple years prior I invested $10,000 into a flip project with this contractor. This was a significant amount of money as I still had more than $100,000 in debt and only $20,000 in total savings not including retirement. He purchased two homes using mostly his own money and a smaller percentage of money from a few small investors such as myself. Continue reading “Backing Out of a $70,000 Profit House Flip”