Continuing the discussion from So if you worked at Mcdonald's , would you recognize the assassin?:
I knew a woman on an actuarial chat site who lost her job, couldn’t make rent, and her car broke, so she couldn’t get to job interviews. A group of posters chipped in and gave her enough money to buy a reliable used car. ($6000 then, maybe $12000 now.) She used it to get a job, which led to getting a home and the other niceties of middle class life. She certainly said it was life-changing money.
It really depends on your starting point, right? If you’re upper middle class living in an expensive suburb in your 40s, and you got $2mm, you’re going to keep working. Use the money to pay off your $1.5mm mortgage and put the remaining $500k into savings and keep going.
So, for someone in that situation, $2mm isn’t life changing. Your monthly expenses are down, and your savings are fatter, but you’re still living the upper middle class life.
Yeah I consider myself middle class, but I live near San Francisco and own my home (albeit still with a mortgage). I don’t consider $2M to be life changing money, like @RitterSport says. Now $10M, that would be life changing.
Elsewhere in the country, say where a house costs maybe $200K, then $2M might be life changing there.
I’d also distinguish between life-changing on a one-time basis, life-changing at a pivotal moment, and life-changing on an on-going basis.
The OP’s friend got a rather small sum, but at a pivotal moment where that small sum set her up on a more successful path. But once she had gotten that new job, to credit everything that followed in her life to that free car seems wrong too. It was on her critical path, but perhaps she’d have gotten the job anyhow. Or perhaps she’d have screwed up that job somehow and ended up just as broke, albeit with a newish used car.
The McDs worker may well use the $50K simply to pad their budget by e.g. 10% for the next few years. And when it’s gone, it’s gone. Which 10% can be the difference between grinding high-stress poverty, skipping meals the day before every payday versus simply being “working poor” and frugally making ends meet reliably month in and month out. Barely. Is that life-changing? It’s sure day-to-day-experience-of-life changing, even though either way they’re still slinging burgers 10 years hence.
Or maybe they go go blow a bunch of it ASAP and then pad their monthly budget by less each month and/or for a shorter time. Or they may do something pivotal with it like pursue the higher education they knew they could never afford.
Which of those are life-changing? Good question.
And of course there’s what the other posters above talked about, money that’s big enough to alter your relationship to working at all, and/or materially alter your life circumstances.
Speaking as a 1-year retiree, it would take a lot of money e.g. >$10M to really alter how I live now. OTOH, a much smaller lump sum delivered 11 years ago might well have led me to retire 10 years sooner and therefore to have had a very different last 10 years.
My bottom line:
I think of “life changing money” as an amount that, regardless of your current economic station or your current phase of life, means that your life afterwards is set onto a trajectory you could never have achieved otherwise.
In one sense, the OP’s friend with the gift car simply went back to the middle class existence she had before some bad luck really knocked the wind out of her sails. So not life-changing, although certainly life-restoring.
Although as our own @Broomstick could attest, once the economic wind has been knocked out of you, climbing back up to where you had been before can be a very arduous and ultimately impossible task without some sort of windfall to carry / push you over the hump. No matter how hard you work and how carefully you budget, sometimes it just can’t be enough to overcome all the obstacles Fate has strewn in your path.
We’ve certainly had threads and threads about the homeless trap. Where the difference between making rent every month and being evicted comes down to $10, but once evicted they’re on a downward spiral from which recovery is borderline impossible. Would a single $20 bill be life changing at that critical moment. Yes, at least until the same crisis occurs next month. So maybe not really.
This exacty.
For some people, one month’s rent payment at the exact right moment can change their lives. For a lot of people, enough to fix the car or to buy a used but reliable model will do it.
50K might get somebody deep in debt who can’t pay their bills because they’re paying interest on the debt out of debt; after which they can pay their bills, and maybe gradually work their way into a better position, instead of winding up homeless. Yes, somebody else might just waste it either all at once or bit by bit. But saying that doesn’t mean that 50K – or in some cases 5K, or even less, and I’m talking about the USA; there are places in the world where a hundred or two might do it – isn’t a life changing amount for some people.
If she’d wound up homeless for an extended period of time, would you not have considered that life-changing?
So if she avoided winding up homeless, why is that not lifechanging?
While $50K could certainly relieve the pressure on a minimum wage worker, it’s not retirement money like winning a major lottery.
I like to feel that I’m helping to change some young lives by assisting my grandkids in their education efforts. Planting a tree that I will never sit under, so to speak. I’m also parceling out cash to my kids each year. We banked all of our house sail proceeds and it’s just sitting there, so why wait until I’m dead?
Is this then your windy day fund?
Or blow it.
Our neighbors two doors down seem to be living in chronic poverty. Neither the husband or wife can keep a job (I strongly suspect they have substance-abuse issues), and they’re always on social media sharing “poor us” stories about how they can’t make ends meet. Earlier this year I was wanting someone to install a gravel driveway to my barn. I knew this neighbor had a skid-steer loader, so I asked him if he could install the driveway. He said, “Yes, for $1500.” I paid him and he did it. Three weeks later he and his wife took a one week vacation to Las Vegas. And then a month later they resumed the “poor us” stories on social media.
It’s what happens when your mind wanders because you took it off-leash.
Somewhere on this board a poster talked about his relatives and how despite the guys good income from a mechanic job, they were always financially struggling. This was because they had absolutely no financial restraint and always blew all the money right away, usually on booze and big boy toys like skidoos and monster trucks. IIRC, he said that they weren’t white trash because they were poor. They were poor because they were white trash.
In 1951, my parents put everything they possessed into their old Studebaker and drove from Wisconsin (my dad had graduated from UW on the GI bill) to California. They had no money, and my father could not find work in the midwest. A friend of his from journalism school, well-off, had agreed to loan my father $10,000 to start his own newspaper in California. It was a heck of a lot of money in those days. He took a big risk. My parents bought an old printing press and started publishing a weekly newspaper, doing everything themselves from writing to delivery, out of the back of their funky rented house (I remember this house as a toddler). They were hardworking, talented, and lucky (mainly, to settle in CA at the beginning of the post war economic boom), and they retired as well-respected newspaper millionaires. That was life-changing money.
I’m not disagreeing with you premise, but in that situation I’m not paying off my mortgage if it’s a reasonable rate (e.g. sub 4%), especially when short term treasuries are paying more than that, and considering I would lose my mortgage interest deduction if I do so.
My mom watches Lottery Dream House on HGTV. Sometimes it’s people who have won multi millions of dollars and are looking for a big place to splurge on. Sometimes it’s people who have won $100k and they finally can stop renting a 1br apartment and buy a little 3br house with a little yard. That downpayment money was well enough to change their lives.
It’s nice that the host gives the same energy for any type of winner looking for a home.
This is basically gone anyway.
A Cadillac was about $3000 in 1950 so that loan was something like a quarter million today. I’m sure dad paid friend back when the press got moving but a nice thing to start with right out of school for sure, pretty much a starter home in a lotbof markets. And the lack of student loan debt, too.
Yes, of course some people will.
That says nothing whatsoever about what other people will do with it. And I don’t see the point of posting such stories in this thread, unless the intention is to imply that all people who are short on money are so because they waste it whenever they get any; and possibly that therefore small to moderate amounts of money can never be life-changing. Which is nonsense.
Depends on how much debt you’re carrying. If it’s more than you can pay off in reasonable time getting debt free is life changing. After that it depends on how much you need to live comfortably with your current income. From that point on the amount skyrockets based on what you need in life that you can’t get on the road you’re traveling on.
TBF, how long is $1,500 going to keep a person solvent?
$2 mil is vastly different. That upper middle class family is freed from sizeable monthly mortgage payments, they can put the $2M to work paying the mortgage, while they sock away money from the job, or just be free to not worry about finances. Even if they still work, their lives are changed.
I don’t know Altoona but $50,000 might be a big chunk of the cost of a new house there.
My monthly expenses are 25 rent, 15 phone, about 40 bus, about 30 toilet paper, and about 40 coffee.
150 gets me through a month.
1800 a year.