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How To Spend $1,000,000 Thumbnail

How To Spend $1,000,000

This is Jonah. 

He is my oldest son and is about to turn 13 (where does the time go???).  He’s a good boy and a wonderful big brother to Oliver and Everett.  He’s super into baseball, loves the Dodgers, and is even starting to appreciate 90’s rap music(which reserves him an even more special place in my heart than he already had).

Jonah is also very interested in money. This could be due to the aforementioned rap music to which he listens or it could be some of my influence on him. Either way, the kid likes his bread (yes, he asked me for a cut of any proceeds from this blog post in exchange for using his likeness above).

Actually… it’s none of that. I’m pretty sure his fascination with cash is due to the gift that some unknowing family member gave him when he turned 10.

It was a pretty simple gift… three blocks stacked on top of each other labeled “save”, “spend”, and “share”. The idea is that every time he gets some money, he puts a little bit in each block to either save for a rainy day, spend on something he needs to buy now, or give away to a cause he supports. It’s a great way to teach kids about money.
It also pretty much sums up all you need to know about financial planning.
Divvying money up between the three blocks is incredibly simple and endlessly complicated. Getting the split right is basically impossible but it’s why a whole profession exists in the first place.

I get paid to do that for a living.  Here’s the story about how I made those decisions for myself.
Last week’s post about winning $1,000,000 was by far the most popular one I’ve ever written. Page views are roughly 8x their normal level one week in and the feedback has been great.

Anyway, the post ended up generating a huge number of questions but the most common one was, “what did you do with the money?” It’s an interesting question since it’s pretty rare that money falls from the sky the way it did for me in late 2016.

So…here’s my explanation on how to allocate $1,000,000:




The first thing you need to understand about winning $1,000,000 playing fantasy football is that it’s not really $1,000,000.

That’s because I had two silent partners in the win: the IRS and the California Franchise Tax Board.

Yes, tax rates are high here in California.

No, I’m not complaining about having to pay taxes on money that fell into my lap. Not one bit.

The total tax burden associated with this windfall was somewhere around $450,000 so let’s start there.
$550,000 left to burn…
About eight years ago, I made a decision to go back to school to get my MBA. When evaluating the different program options available to me, UCLA Anderson seemed like a good choice because of the program’s reputation(Best in the west! Ok, fine other than Stanford.), location, and flexibility for working students.  The downside?  The program was really expensive.  I estimate that it cost me somewhere around $130,000 after all costs were considered.  I used a 40/60 split between cash and debt to finance the cost.  Hence, when I graduated from the program, I was saddled with $75,000 in student loan debt.  I had no debt from my undergraduate education owing to a partial golf scholarship and super generous parents, so taking this debt on seemed somewhat reasonable.  At 5% interest, though, it represented fairly high hurdle rate to earn on taxable investments (had to earn 8% annually just to break even!) so paying the loan off made good financial sense.
Another $75,000 down and $475,000 to go…
When trying to figure out how to best allocate this money, I spent a lot of time thinking about saving and investing. I didn’t spend a whole lot of time thinking about spending because I sort of figured that part would take care of itself.

It didn’t.

Being the careful financial planner that I am, I really didn’t see much use for spending.  That’s when Uncle Bud entered the picture.

Uncle Bud is my dad’s first cousin (which technically makes him my first cousin once removed but I call him “Uncle Bud” because, trust me, you would want this guy as your uncle). He’s the one in the family that everyone has always turned to for financial advice. He’s about as knowledgeable and straightforward a human being as ever existed. When I won the money, I called Uncle Bud to tell him the story and bounce some ideas off of him. We discussed all of the grand ideas I had about saving, investing, and sharing. We got to the end of the conversation and he asked me a question that surprised me…

“What are you going to blow some of the money on just for fun?”

I didn’t see that one coming.

Uncle Bud was the one that taught me to spend less than you save.

Max out your 401(k).

Watch every penny.

Blow some of the money just for fun??  That was heresy.

Uncle Bud was right.

My wife and I went to New York a few weeks later.

We flew first class and stayed at the St. Regis.

I bought a Rolex because I was walking by a jewelry store and it caught my eye.

We bought 4th row center Hamilton tickets at the peak of its run on Broadway… and then went to see Ben Platt’s performance in Dear Evan Hansen the next day for good measure.
$25,000 more down the drain.  Left us with $450,000…



Education has always been pretty big in my family. My mother holds two Master’s degrees and a PhD. She and my father raised us with the belief that if you worked hard and took education seriously, anything was possible.

But I was a terrible student in high school. I ditched school most days (I actually set a school record at the time by being absent more days than I was there my senior year), played golf, aced every test I took, but still barely got by with a 3.0 GPA because I never did much else.  Honestly, I was lazy and entitled… a typical suburban kid that didn’t understand the value of education.  I’m not proud of this but it’s true.  The fact that my parents stuck with me through all of those years is a testament to not only their steadfast belief in me (seriously, they are the best) but also their belief that education could open new opportunities for me that I otherwise may not have considered.

Once I got to college, my study habits didn’t change a whole lot but I started showing up to class more. Learning became more interesting to me because college offered me different ways of doing things on my own time and at my own pace. My grades improved substantially, I made the honor roll for every semester I was enrolled, and I graduated with a much healthier appreciation for the value of education. I then went on to get an MBA from a top ten business school… I don’t think mom and dad saw that one coming back in 1999.

I want my kids to have this same belief around the value of education but my hope is that they learn it sooner. I’m planning on all of them becoming doctors, lawyers, or superheroes (Everett is convinced he will grow up to be Spider-Man… not sure if that requires a graduate degree but I need to plan for it anyway).
$100,000 toward the kids’ 529 plans.  $350,000 to go…

Homeownership is the American dream. In 2015, Jenny and I got our own little piece of that dream when we purchased our first house together. It was a perfect three bedroom, two bath house on a quiet cul-de-sac in the neighborhood we wanted. We dreamed of raising our kids there and growing old in that house. Our neighbors had lived there for over 50 years and we thought maybe one day that would be us. Raise the kids, send them off, stay there forever.

That was the plan.

Then Jenny got pregnant with Everett and suddenly that house didn’t look so perfect anymore. Now, four bedrooms seemed more appropriate than three. There was no real play space for the kids. The small cracks in the sidewalk out front, which gave the house character when we first looked at it, now just looked old and dirty.

It was time to move.

Houses in California are expensive. Hence, when you move, you often make some money selling but then it gets rolled right into the next home. We made money, never saw it, and rolled it right into the down payment for the next house.

We were still short though.
An extra $250,000 towards the down payment and we were there.  $100,000 to go…



Both Jenny and I have written a lot about our experience with our middle son, Oliver.  Ollie was born with a vanishingly rare and serious health condition known as a lymphatic malformation. Oliver’s particular condition was more acute than most as it presented at birth as a previously undiagnosed 12 ounce mass across his chest and back. It represented over 10% of his body weight. We thought he would have an uneventful birth and we weren’t prepared for what life threw us.

Oliver’s life wasn’t in danger once we left the hospital but as new parents to a child with a rare condition, we were understandably uneasy about what the future would hold. There were the big questions like “will he continue to look different than other kids?” or “will people stare and wonder what is wrong with him?” Then there were the logistical constraints to deal with of finding clothes that would fit or figuring out how to get him into a car seat. It was incredibly overwhelming.

As a result, we spent the months after Oliver’s birth in a state of panic, confusion, and dysphoria. We sought the advice of family, friends, clergy, and medical professionals. None of the medical professionals we consulted with had any experience with lymphatic malformations.

None of them, I should add, until we walked into Children’s Hospital Los Angeles. It was there that we met two doctors that would irrevocably alter the course of Oliver’s life and, without question, save mine.

Dr. Chadi Zeinati and Dr. Dean Anselmo are my heroes. They have become close friends and partners to us in our fight to raise badly needed funds for rare childhood diseases and conditions. They are world-class doctors but even more amazing people.

It was Drs. Zeinati and Anselmo who co-founded the Vascular Anomalies Clinic at CHLA to help children like Oliver.

It was Drs. Zeinati and Anselmo who would use that clinic to give hope to our family and families like ours across the country.

It was Drs. Zeinati and Anselmo who would perform five surgeries on Oliver in the first 15 months of his life, helping him turn into the perfectly healthy and precocious kid he is today.

I don’t know where my life would be had it not been for the life-altering procedures that CHLA and these amazing doctors offered my son.

I know one thing for sure though: it wouldn’t be the life that it is now.

I’m fond of saying that CHLA is as much an idea as it is a place. That idea is that all children, regardless of their who they are or where they come from, deserve expert medical care.  

CHLA is able to deliver on this idea by offering the same care to all of the families they serve, regardless of their ability to pay for that care.

They are only able to do this because of the donations they receive from the communities they serve. They do it one family at a time and one check at a time. Trust me on this… it’s painstaking work for their extraordinary fundraising team.

That’s why when we were evaluating our “share” dollars, there wasn’t even a moment’s hesitation as to where that money should go. That was actually the easy part.

(I’d be remiss if I didn’t include at least one link to support CHLA.  Please click here and help us further our mission to help kids in need).


Check written.  $0 left.

There have been a lot of studies done over the years on lottery winners and the horrible fortunes that befell them shortly after they received their windfall. Many of them ended up broke and destitute within a fairly short period of time due to poor financial decision making.

Like them, none of the money that I won is sitting in my bank account. It now belongs to my kids, sits in my house, and benefits the hospital.

What this whole exercise underscored for me was the messiness of financial planning. I still don’t know that I did the right things. I could have put the whole thing in Amazon stock and quadrupled my money. I could have stayed in my first house and lived with it. I could have played the game not paying down the debt and shooting the lights out on returns.

Ultimately, I did what I thought was right at the time and a lot of it is hard to measure, even given the benefit of hindsight.

That’s because I’m not sure how you can measure the value of seeing Leslie Odom, Jr. and Lin-Manuel Miranda sing “Dear Theodosia” live on stage and not on Disney+.

It’s because I’m not sure how you can measure the value of a sidewalk without cracks.

It’s because I’m not sure how you can measure the value of helping the most vulnerable in your community.

But those are the things I did… and now there’s both a lot and nothing to show for it.