This week, I’m letting myself be inspired by some of my favorite bloggers. Today’s inspiration originally comes from Yes, I Am Cheap, but I got it via Jana at Daily Money Shot.

The theory isn’t that I win the lottery (you have to play to win, after all), but instead get an unexpected inheritance.

1) Set aside 25% for taxes. This is not exciting or anything, but I don’t want a surprise bill coming early next year. If we owed less, then great, but I would want to be able to pay. Given current CD rates, I’d still probably be better off stashing this in my high yield savings account (a whole 1.25%APR, but better than most things out there), and at least I’d get some interest out of it. Plus, if taxes are less than that, we’ve added to our emergency fund.

2) Pay off all our debt. Right now that’s about $260,000 and includes house and my student loans.

3) Set aside $100,000 for education. My husband is currently back in school and will have his BA in a little over a year. We’re currently set up to be able to pay for all of his schooling out of pocket. But he is considering getting a BS afterwards and possibly going to grad school. That’s expensive.

Plus, I’d like it if my cousin could get out of school without loans. So if there was money left over, it would go help pay for her schooling

4) Buy a new house. The deals you can get in our area in the current market are amazing. A home I LOVE** is on the market for $220,000, but we’ve got the money, so we could dream a little bigger. I’m thinking $300,000 for a house. I figure since we’d be bringing cash to the table, we could get one that was listed for a little bit more, or even use it on a down payment and get a 10 year mortgage for someplace like this**.

5) Remodel our current house. I don’t think it will take all $90,000, but you should always over budget for remodels. And you may be wondering why I’d remodel if I’ve bought a new house. Right now, in our neighborhood, landlords are getting rents that rival mortgage payments. I would like to rent out our current house, but it needs some work done so that it can command the higher rents.

That, and the nicer I make it now, the easier it will be to sell later, if I need to.

If any money is left over, it gets shuttled in to savings to cover property taxes.

Now, you may think, I didn’t do any long term planning here- I haven’t bumped up my retirement savings. I haven’t invested in the stock market, etc. And that’s true, but what I have done is cleared my budget of $2,100/month in debt payments and set myself up for having an income property that could easily generate $1,750/month. Even setting aside ½ of the rental income to cover property maintenance and taxes (which is a really high estimate considering we just would have had $90k worth of work done on the house), I’ve essentially increased my monthly income by about $3,000.

Now, maybe I’ve taken out a 10 year mortgage on a small balance on a house, but that’s still going to take less than $1k/month, and I’m still up $2k/month. That’s $24,000 per year- its like the take home pay on any job the husband would get.

And this is all over and above what we live on now, so it can be funneled in to investment accounts and savings for some great trips.

Plus, if we were to want to move, we would no longer be upside down in any house, and would actually have the ability to keep both houses (two rental properties) and still buy a new place where ever we moved to.

**If these links no longer work, its because the house is no longer on the market.