To follow up on my post regarding Bing.com, I would like to mention that right now this site is running a promotion called “Double Savings Days.”  During this time, cashback at most stores will be doubled!  Thus, you can potentially receive up to 50% cashback on your purchases before it ends on September 1st. 

After some investigation, I have found that there is some significant cashback to be had in with this promotion.  For example, last time I checked Footlocker and Eastbay were offering 50%!

For more information on Double Savings Days, visit the FAQ page at Bing.  If you find any great deals, please post them below to share with the group.  Happy hunting!

On July 20, 2009, investors in pharmaceutical company Humane Genome Science (HGSI) woke up to a shock when the price of their shares opened about 400% higher than the previous close.  The boost came from the unlikely success for of the experimental drug  Benlysta, which met its goals in a late-stage study in treating Lupus. 

The sudden and unexpected breakout of HGSI generated  a lot of unanticipated wealth for its shareholders.  I heard one story of a guy making $2.5 million that day and another hitting the $1.8 million mark.  Handfuls of individuals proclaimed to have made thousands of dollars from the surge.  Even, I got a piece of the action.

Back in February I purchased 100 shares of HGSI for $2.34/share.  On July 21, 2009, I sold those same shares for $14.23 each, netting $1,164.00 in profits after brokerage fees.  Although the $1,164.00 was not a “life-changing” amount, in my situation, it was definitely a windfall.  Thus, I was inspired to write about how to deal with a windfall.

Below are some of my thoughts on windfalls and how they should be dealt with.  Given that I am a firm believer in building wealth slowly through saving, it may come as no surprise that I don’t advocate going a shopping spree.  However, I do believe in living a little every now and then, so don’t go putting all your winnings in the sock drawer just yet!

Windfall sources

You don’t have to take the risk of buying and selling stocks to receive a windfall.  Accumulated wealth is all around you.  You just have to be lucky enough (or smart enough) to be its recipient.   Just look at these examples:

• Inheritance
• Sale of a home, property, or business
• Settlement of a lawsuit
• Collection of a life insurance policy (heaven forbid!)
• Work bonus
• Winning the lotto!

What constitutes a windfall?

The question above is a bit of a personal one.  One man’s windfall may be another man’s pocket change.  I’m sure many consider my earnings to be meager, but to me, they were very substantial.

I personally place windfalls fall into four different categories: small, medium, large and retirement!

• Small – $100-$1,000
• Medium – $1,000-$10,000
• Large – $10,000-$100,000
• Retirement – >$100,0000

Although I admit they may appear a bit arbitrary, there is a little reasoning behind the values I used.  A windfall under $1,000 is nice, but somewhat commonplace.  Between $1,000-$10,000, there is a bit of excitement, as the cash influx starts to open up opportunities.  Receiving over $10,000 at once, will definitely change your fortunes, allowing you to pay off debt or make a down payment on a house.  Greater than $100,000, you have a life-changing event.  You may not be able to retire as my label implies, but you can definitely think about major career and/or lifestyle changes at that point.

Why you should have a windfall plan

Biggie Smalls once said, “mo’ money, mo’ problems.”  Now, I don’t think this is entirely true.  In fact, unlike popular belief, it is my opinion that money actually solves a lot of problems.  However, Biggie has point.

Even the smallest of windfalls can be emotional events.  Being unprepared for one leads many to seek immediate professional help.  Well at least the smart people do, as the media is full of tales about individuals acquiring a large chunk of change only to be unprepared and uneducated about financial matters.  Purchasing cars and homes, most of them are back to where they were in only a couple of years - their money spent (unwisely) on depreciating assets.

Thus, its crucial to plan ahead now before your ship finally comes sailing in.  Consider the following suggestions:

• Pay taxes:  I will have to pay capital gains taxes on my $1,164.00.  It won’t be too bad given the small amount I made; however, if you receive over $100,000, the IRS is going to be looking for their cut.  Thus, pay the taxes first to avoid major headaches down the road. 
• Pay down debt:  If you have debt, it makes the most financial sense to pay it off after you have paid taxes.  Think of it might as a once in a lifetime opportunity to get yourself out of the hole
• Treat yourself:  You gotta have a little fun in life.  Given the joy and stress new-found wealth will likely give you, I would suggest using a small percentage of it to relax.  However, I would stick to <3% and not to exceed a few thousand total. 
• Take a cooling off period:  After getting over the initial shock, the next thought to go through our minds would likely be what we would spend it all on!   However, resist the temptation and revel in the moment, rather than new toys. 
• Get professional help:  One thing every fat wallet needs is a good accountant.  Do not visit a broker!

Final thoughts

In the end, I left my $1,164.00 in my brokerage account.  I figure another opportunity to reinvest it is always around the corner.  However, if it would have a life-changing amount, things would have been different.

My plan for any windfall over $100,000 starts with paying taxes.  After taxes I plan on treating myself first and then immediately putting 85% into long-term savings.  The remaining 12-13% will go into a liquid account waiting for me to “cool off.”  After I have settled down, who knows?  All I really know for sure is that I won’t go and blow it!

For August, I want to know more about your saving habits.  In particular, I’d like you to tell me how much of your gross income you save. 

Anyway, please take the time to participate in this new poll.  Have a great weekend!

If you get a chance a chance, you should give Brad a visit.  He seems to know his stuff!

Odd or not, Daniel Suelo is doing  just that.  That’s right, this white, middle-aged college graduate decided that one autumn day in 2000 he had had enough.  Fed up with money’s control of his life, Suelo headed for the outskirts out Moab, Utah 9 years ago and hasn’t turned back.  Instead of living in a house full of manufactured goods, he now calls a cave his home and dines on whatever he can scavenge.

Below I have included some excerpts from Suelo’s story.  Please take the time to read the full article about his life, because this guy’s existence is pretty amazing.  He kinda reminds me of a modern-day Chris McCandless.  Enjoy!

On why he left:

“When I lived with money, I was always lacking.”  “Money represents lack. Money represents things in the past (debt) and things in the future (credit), but money never represents what is present.”

About food:

He sautés the watercress, mustard leaves, and wild onions, mixing in fresh almonds he picked from a friend’s orchard and ghee made from Dumpster-dived butter, and we eat out of his soot-caked pans.

His former life:

HE WASN’T ALWAYS THIS WAY. SUELO graduated from the University of Colorado with a degree in anthropology, he thought about becoming a doctor, he held jobs, he had cash and a bank account. In 1987, after several years as an assistant lab technician in Colorado hospitals, he joined the Peace Corps and was posted to an Ecuadoran village high in the Andes.

What his future holds:

Suelo is 48, and he doesn’t exactly have a 401(k). “I’ll do what creatures have been doing for millions of years for retirement,” he says. “Why is it sad that I die in the canyon and not in the geriatric ward well-insured? I have great faith in the power of natural selection. And one day, I will be selected out.” Until then, think of him like the raven, cleaning up the carcasses the rest of us leave behind. 

Like me, Ben is a personal finance blogger who operates the site Banker, Saver.  You can visit his blog by clicking on the link in my blogroll.

With Ben, our network has grown to 5 members strong!  Thank you everyone for your continued support of Milking the Dollar$ and its affiliate blogs!

• New Honesty Policy:  If you look at the top-right portion of the site you will notice I added another page titled “Honesty Policy.”  In the coming months, I will be recommending a lot of products, so I wanted it to be perfectly clear beforehand that this site only gives honest, accurate reviews of financial products and tools.
• Blog Roll:  At the bottom of the site, please take note of the blog roll.  Recently, I have been collaborating with other up and coming financial bloggers to organize our own personal finance network.  This is a mutually beneficial arrangement for all parties involved, with the purpose of helping our blogs  grow and attract more traffic.  If you have a moment, each is definitely worth visiting.
• New Design: I have been experimenting with various themes for this blog, and it will eventually take on a more professional look.  Thus, don’t freak out if you visit one day and everything is different.  We will still be the same old Milking the Dollar$, but hopefully a lot sexier!

Although $0.41 is a meager amount of money, I’m actually not disappointed.  Reason being is that traffic here has been  pretty much non-existant.  For example, I had just under 400 page impressions during this same time period.  Thus, I think I’m going to be sticking with it for awhile and hope you do the same!  Have a great 4th!