What to do — or not to do — with my windfall?
Allan Ripp runs a press relations firm in New York.
Have you ever received a financial windfall – say, a winning lotto pick or an inheritance, or an inside score on an initial public offering?
I’ve never hit any of those jackpots – even my tax refunds have always been measly. But I did collect an unexpected insurance settlement with a bunch of zeros. Now, with the world turned outside-in and my priorities thrown in the wash-and-spin cycle daily, I’m having trouble figuring out what to do with my windfall.
Here’s the back story.
In 2016, a Golden Retriever bit off the top of my right middle finger. It was as gruesome as it sounds, but fortunately I had outstanding medical treatment and never missed a day of work or push-ups. At first, I wanted no part of a lawsuit that would necessitate revisiting the trauma. I changed my mind after considering the long-term effects of my injury – including not returning to the piano. Even my rabbi urged me to bring a case. “Of course you sue,” he said. “The dog owner bought homeowners insurance to cover your pain and suffering.”
My first lawyer was an obnoxious bully, despite his background as an emergency room physician. He wouldn’t return our file until I paid his meager xeroxing. My second lawyers were terrific, though I never had chance to tell my full story – they advised me to limit my answers at deposition and to save the drama for friends and family. The litigation seemed endless and dragged for several years as my stumpy finger healed as best it could (except for the constant cold and tingling). After a while, I almost forgot about the case and figured a few dollars would come in someday and pay for my bottomless supply of hand-warmers. And then one random afternoon last fall my lawyers called to say the other side’s insurer had thrown a serious offer on the table, much more than we’d projected. All I could say was, “Really?”
It wasn’t enough to retire, or win one of those auction lunches with Warren Buffett (more than $4.5 million!). But even after the lawyers’ cut, it was the biggest check I’d ever seen, and tax free. I opened a dedicated account so my finger money wouldn’t have to co-mingle with business or household expenses.
My wife Sarah and I considered how we might splurge – a round-the-world cruise (my idea), a 40-foot gunite lap pool at our house (ditto), or trade-up to a house in the Hamptons (Sarah’s). Should I finally play the stock market? Start a foundation? Dare I buy a Bentley? Book a seat on Richard Branson’s Virgin Galactic moon shot? Just spinning the wheel of fortune was pleasure enough to take my mind off what I’d lost.
But then my Robin Leach plans were dashed by the pandemic. A cruise to foreign ports? Not on your life. Forget about finding a pool contractor until 2022. And exurban getaway home prices jumped so much from city flight that the Hamptons beach house would cost another two fingers at least.
Gradually, a new set of practical uses came into view, like expanding our modest house so our daughter’s family of four could move in full-time. Or covering our son’s medical school tuition. Or paying off our mortgage so we could live debt free. Now that my business had taken a Covid hit, might the windfall have to become a backstop?
The irony of my indecision is not lost on me. Before Covid, it was the abundance of choices that made me hold off making a big-ticket purchase. The newfound play money gave me a sense of power and freedom separate from the rest of my finances. I enjoyed the imagined spree knowing it had no impact on my family’s needs.
Now, in a world of constant danger and uncertain future, the same asset feels like an emergency bunker, to be accessed only “in the event of….” That may reflect why, even with so much stimulus money flowing through the economy in recent months, many Americans are saving more than spending – no matter the size of their own personal windfall.
Of course, I still want to have fun with my funds, but the idea of fun has gotten more serious. Given everything she’s done to take care for our family in the past eight months, I wonder if I should just buy Sarah a giant diamond necklace and be done with it. And philanthropy is beginning to sound more fulfilling in an era where so many are facing monumental challenges.
Every few weeks I log into our bank to visit my finger money. It’s still there, earning virtually nothing in a money-market account. I think of the rewards that might have been and those that still could come. And yes, I still dream of the Bentley. Then, in a fit of pique as a I log out, I flip off the dog that bit me and those who brought us the coronavirus. Even half a finger works.
Read more information and tips in our Planning section