Sep 20, 2010
What Would You Do With a Windfall? (Carole)
But one day she mentioned that they were going to have to borrow most of their down payment from her parents. She was unbelievably embarrassed to do so, because now her parents would know that she and her husband had blown the entire amount! I don't know how they spent all that money. I do recall they had a ski boat and an old truck to pull it with and their kids had a lot of cool toys, but beyond that I couldn't see where it had all gone.
I've often thought of my friend during these past 25 years. What COULD they have done with that much money that would have been smart? In reality, the possibilities were endless, but here are three super frugal choices.
1. Bury it in their backyard or put it in a safety deposit box. In 5 years they would still have had their $50,000.
2. Put it in the bank. In the mid 1980's an average money market account earned 7.71% (these were the high interest Jimmy Carter years -- great if you had money to invest, horrible if you needed to borrow it) and at the end of five years they would have had over $73,000.
3. Buy a house. In the 1980's, $50,000 would have been a hefty down payment on a starter home.
What would you do if you suddenly found yourself with a large amount of money right now?