# Windfall from Work ー What would you do? **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [February 8, 2011, 8:58am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637 "2011-02-08T08:58:52Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![An\_Arky](https://avatars.discourse-cdn.com/v4/letter/a/87869e/32.png) [@An\_Arky](https://boards.straightdope.com/u/An_Arky)\ **Post date:** [February 8, 2011, 8:14pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/61 "2011-02-08T20:14:31Z")
Take a trip to somewhere you’ve always been curious about, but could never justify the expense just to see it. You may not ever have the chance to do something stupid and get away with it again. ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 8, 2011, 8:36pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/62 "2011-02-08T20:36:25Z")
> [@Superhal](#): > > Probably you want to wait until May or June until November or so. This time of year, there’s lots of rain. I was thinking March or April, that’s if we go at all, but later is fine too. I definitely won’t enjoy a rainy vacation, so I can wait. ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [February 8, 2011, 8:40pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/63 "2011-02-08T20:40:01Z")
I think it’s very important that you treat yourself. And treat your family. Not only as a reward for what you’ve done but as an incentive for next year. I agree with paying down the mortgage, but pay it down in such a way that should trouble strike you could take a payment holiday using your overpayment. Next on the list is college funds for your children. And you should put some funds into that super-secret personal extravagance fund about which your wife pretends not to know. ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 8, 2011, 8:42pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/64 "2011-02-08T20:42:59Z")
> [@An\_Arky](#): > > Take a trip to somewhere you’ve always been curious about, but could never justify the expense just to see it. You may not ever have the chance to do something stupid and get away with it again. I’ve been to most places I’d like to visit around the world, except for some of the dodgier ones. For example, I’ve always wanted to visit the favelas in Rio de Janeiro; I’m fascinated by them. My wife, on the other hand, thinks we’d be risking our lives. ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 8, 2011, 8:56pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/65 "2011-02-08T20:56:48Z")
> [@Quartz](#): > > I think it’s very important that you treat yourself. And treat your family. Not only as a reward for what you’ve done but as an incentive for next year. Remarkably, my wife agrees with you. Also, somehow I’ve gotten more handsome since yesterday. 😃 > [@Quartz](#): > > I agree with paying down the mortgage, but pay it down in such a way that should trouble strike you could take a payment holiday using your overpayment. I live with year’s cushion anyway, so whatever I keep liquid from my payout next week will just allow me to extend that a little. > [@Quartz](#): > > Next on the list is college funds for your children. No children, so that’s not a factor. > [@Quartz](#): > > And you should put some funds into that super-secret personal extravagance fund about which your wife pretends not to know. Yeah. Pretends is right. She knows everything. It’s been many years since I finally came to grips with not having any privacy whatsoever. ---
**Author:** ![norinew](https://avatars.discourse-cdn.com/v4/letter/n/eb9ed0/32.png) [@norinew](https://boards.straightdope.com/u/norinew)\ **Post date:** [February 8, 2011, 9:03pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/66 "2011-02-08T21:03:11Z")
> [@Onomatopoeia](#): > > I’m close to where you are. The return on my investments and the interest yield on my mortgage are just about a wash with my investments winning by a tad, so whether I do or don’t pay down the mortgage, I won’t be in a better or worse situation than I’m in now…other than having a lower mortgage balance that is, which I admit is attractive. Well, I guess you _would_ be worse off, then, by paying down the mortgage, since, as another poster pointed out, if you do that, you _won’t_ have the money as an emergency fund if you should need it. I still think you should take _some_ of it and do something just fun and extravagant with it! ---
**Author:** ![fjs1fs](https://avatars.discourse-cdn.com/v4/letter/f/9e8a1a/32.png) [@fjs1fs](https://boards.straightdope.com/u/fjs1fs)\ **Post date:** [February 8, 2011, 10:07pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/67 "2011-02-08T22:07:05Z")
> [@Enderw24](#): > > I see a small one. It’s this: money spent is money gone. Let me just throw out some numbers. You have $100,000 left on your mortgage and you cut a check to your lender for $50,000. Long term you’ve cut the amount of interest you’ll pay down significantly and you’re really close to owning your house outright. Awesome right? > > Except you no longer have that $50,000 for emergencies. So if, for Devil’s advocate’s sake, you aren’t able to pay your mortgage one month the lender isn’t going to care that you just cut them a check for 50K last month. They care about this month’s payment. Now. Or you’re out of a house. > Or your car breaks down. Or your kid (if you have one) needs braces. Or something else. > > . then you just get a home equity loan. ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 8, 2011, 10:53pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/68 "2011-02-08T22:53:52Z")
> [@norinew](#): > > Well, I guess you _would_ be worse off, then, by paying down the mortgage, since, as another poster pointed out, if you do that, you _won’t_ have the money as an emergency fund if you should need it. > > I still think you should take _some_ of it and do something just fun and extravagant with it! I am with you. I’m also coming off of almost 6 solid months of killing myself for work, so a little break sounds extra good right now. ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [February 8, 2011, 11:39pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/69 "2011-02-08T23:39:36Z")
I had a one-time huge bonus like this a few years ago. So I’ll give you a few words of advice. My windfall was much more than enough to pay off the mortgage on my house. So that’s the first thing I did. Some people think that’s not the best thing to do, but it really gave me a great sense of peace. Especially since there was still plenty of money left over. Be very careful about the tax implications. They withheld about 20% of the total in tax, and that was not nearly enough. I made sure that I put aside a good chunk of the money for what I knew would be a big tax bill the following April, and indeed there was. In fact, I had to pay Alternative Minimum Tax for the first (and hopefully last) time in my life. ---
**Author:** ![norinew](https://avatars.discourse-cdn.com/v4/letter/n/eb9ed0/32.png) [@norinew](https://boards.straightdope.com/u/norinew)\ **Post date:** [February 8, 2011, 11:40pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/70 "2011-02-08T23:40:06Z")
> [@Onomatopoeia](#): > > I am with you. I’m also coming off of almost 6 solid months of killing myself for work, so a little break sounds extra good right now. There’s your answer then; take a vacation! You can be fiscally conservative with the _rest_ of it, but take a _real_ vacation, someplace you can feel totally relaxed, whatever that means to you! ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 9, 2011, 1:01am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/71 "2011-02-09T01:01:22Z")
> [@suranyi](#): > > I had a one-time huge bonus like this a few years ago. So I’ll give you a few words of advice. > > My windfall was much more than enough to pay off the mortgage on my house. So that’s the first thing I did. Some people think that’s not the best thing to do, but it really gave me a great sense of peace. Especially since there was still plenty of money left over. > > Be very careful about the tax implications. They withheld about 20% of the total in tax, and that was not nearly enough. I made sure that I put aside a good chunk of the money for what I knew would be a big tax bill the following April, and indeed there was. In fact, I had to pay Alternative Minimum Tax for the first (and hopefully last) time in my life. My controller did a quick analysis for me in the office yesterday and came up with 32% as a straight deduction that would prevent any negative tax issues but, again, I’m seeing my accountant later this week and this will be definitively addressed then. I have a question since you brought it up. When did the AMT kick in for you, and how did you deal with it? ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [February 9, 2011, 9:40pm UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/72 "2011-02-09T21:40:10Z")
> [@fjs1fs](#): > > then you just get a home equity loan. Not if you’re unemployed - the bank won’t issue you a loan in that situation. Better to apply for a line of credit now while you’re employed. Of course I don’t know where the OP is or whether that’s feasible. Personally, I’d try to follow the advice of Michelle Singletary (personal finance columnist for the Washington Post). Make sure you’ve got an emergency fund equal to 3-6 months of living expenses, in some relatively safe stash (i.e. not the stock market). And pay down all debt other than mortgage. Max out the retirement savings. Then treat yourself to something with a bit of the money. ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [February 10, 2011, 1:16am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/73 "2011-02-10T01:16:40Z")
> [@Onomatopoeia](#): > > My controller did a quick analysis for me in the office yesterday and came up with 32% as a straight deduction that would prevent any negative tax issues but, again, I’m seeing my accountant later this week and this will be definitively addressed then. > > I have a question since you brought it up. When did the AMT kick in for you, and how did you deal with it? About the AMT. It kicked in mainly because I had a huge deduction for state income tax (withheld from the bonus itself), but state income tax is not deductible for AMT purposes. AMT can often be complicated, but in my case it really was simple. Without that deduction, the so-called tentative minimum tax turned out to be higher than my normal income tax, so I had to pay the difference as AMT. It was just part of the overall income tax bill (I guess around 20% of it), so that’s why I said in my message to be careful to put aside enough to pay for contingencies like this. ---
**Author:** ![Rachellelogram](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rachellelogram/32/8689_2.png) [@Rachellelogram](https://boards.straightdope.com/u/Rachellelogram)\ **Post date:** [February 10, 2011, 1:45am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/74 "2011-02-10T01:45:38Z")
> [@Onomatopoeia](#): > > I’m pretty much set for retirement, but paying down my mortgage probably makes sense. I do, however, feel the need to splurge a little on something totally nonsensical. 🙂 I recommend investing in a ball pit room. If there’s a room in your house that you can set aside, buy thousands of balls and install a fun rubbery floor (like that recycled rubber playground material). Optionally with a tall slide down into the pit. Shouldn’t set you back more than a few grand, I wouldn’t think. ---
**Author:** ![bengangmo](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@bengangmo](https://boards.straightdope.com/u/bengangmo)\ **Post date:** [February 10, 2011, 3:19am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/75 "2011-02-10T03:19:20Z")
Personally I would buy an investment house - its not often that you have that much cash in one place at one time, so I’d set up a pte ltd company, and have it buy a house. All sorts of tax deductions can then be made, particularly if you buy the house in a “holiday-ee” area that you like. Run the company at a loss for many years, getting tax deductions all the way… You’ll also be saving for your retirement via the rent you’ll be getting and the capital gains. ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 10, 2011, 4:34am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/76 "2011-02-10T04:34:02Z")
> [@Mama\_Zappa](#): > > Not if you’re unemployed - the bank won’t issue you a loan in that situation. Better to apply for a line of credit now while you’re employed. > > Of course I don’t know where the OP is or whether that’s feasible. It’s feasible, but I don’t need it. > [@Mama\_Zappa](#): > > Personally, I’d try to follow the advice of Michelle Singletary (personal finance columnist for the Washington Post). Make sure you’ve got an emergency fund equal to 3-6 months of living expenses, I have at least a year’s cushion to maintain my lifestyle at current levels. Check. > [@Mama\_Zappa](#): > > in some relatively safe stash (i.e. not the stock market). In a savings account, contrary to my accountant’s wishes, plus a little that I’m playing around with in Lending Club. Another check. > [@Mama\_Zappa](#): > > And pay down all debt other than mortgage. No debt other than mortgage. Checkamundo. > [@Mama\_Zappa](#): > > Max out the retirement savings. Done. Checkarooni. > [@Mama\_Zappa](#): > > Then treat yourself to something with a bit of the money. On the to do list 🙂 ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 10, 2011, 4:41am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/77 "2011-02-10T04:41:05Z")
> [@rachelellogram](#): > > I recommend investing in a ball pit room. If there’s a room in your house that you can set aside, buy thousands of balls and install a fun rubbery floor (like that recycled rubber playground material). Optionally with a tall slide down into the pit. Shouldn’t set you back more than a few grand, I wouldn’t think. Just the thought of those e-coli and staph factories gives me the heebie-jeebies. {shudder} ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 10, 2011, 4:45am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/78 "2011-02-10T04:45:50Z")
> [@suranyi](#): > > About the AMT. It kicked in mainly because I had a huge deduction for state income tax (withheld from the bonus itself), but state income tax is not deductible for AMT purposes. AMT can often be complicated, but in my case it really was simple. Without that deduction, the so-called tentative minimum tax turned out to be higher than my normal income tax, so I had to pay the difference as AMT. > > It was just part of the overall income tax bill (I guess around 20% of it), so that’s why I said in my message to be careful to put aside enough to pay for contingencies like this. I’ll mention this to my accountant tomorrow. Thanks for alerting me to this potential horror. ---
**Author:** ![Onomatopoeia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/onomatopoeia/32/4145_2.png) [@Onomatopoeia](https://boards.straightdope.com/u/Onomatopoeia)\ **Post date:** [February 10, 2011, 4:51am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/79 "2011-02-10T04:51:14Z")
> [@bengangmo](#): > > Personally I would buy an investment house - its not often that you have that much cash in one place at one time, so I’d set up a pte ltd company, and have it buy a house. All sorts of tax deductions can then be made, particularly if you buy the house in a “holiday-ee” area that you like. > > Run the company at a loss for many years, getting tax deductions all the way… > > You’ll also be saving for your retirement via the rent you’ll be getting and the capital gains. Your scenario screams ‘potential audit’ to me. ---
**Author:** ![bengangmo](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@bengangmo](https://boards.straightdope.com/u/bengangmo)\ **Post date:** [February 10, 2011, 6:03am UTC](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637/80 "2011-02-10T06:03:00Z")
> [@Onomatopoeia](#): > > Your scenario screams ‘potential audit’ to me. Well my laws are different to those in the US but if I was the owner, I could claim a portion of the house dedicated to the office for the business as a tax deduction, I would be able to claim the expenses involved in going to view the house as a tax deduction, need a car to get there? Can claim the sales tax (12.5% of purchase price) as an outright deduction. So its a pretty good gig…just don’t get greedy about it and you are fine… [Previous page](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637.md?page=3) [Next page](https://boards.straightdope.com/t/windfall-from-work-what-would-you-do/570637.md?page=5)