May 23, 2025
Nancy, a senior from Las Vegas, says she recently won $200,000 after an appearance on a game show. Unsure what to do with the life-changing jackpot, she called into The Ramsey Show seeking advice.
“I’m 70 years old, that’s more money than I’ve ever had,” she said in a clip posted May 11.
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But with great winnings come taxes. Nancy says she had about $145,000 left in prize money after paying roughly $55,000 in taxes. Now, the big question loomed: What should she do with this windfall?
Here’s what finance personality Dave Ramsey had to say.
'You don't want to be digging up bushes in your yard for dinner'
Nancy told Ramsey she and her husband are semi-retired, living on about $4,500 a month in Social Security, plus some part-time work where she earns up to $600 per month and her husband brings in a couple of thousand dollars more. They recently downsized their home and owe $85,000 on the mortgage, which runs them $756 per month.
Their total savings? Just over $200,000, including the game show winnings, which they’ve parked in a high-yield money market account earning 5.5% interest. Outside of home equity, that’s their entire financial cushion.
So, the big question was should Nancy pay off the house or keep the cash? Ramsey was quick to weigh in.
“If you had $600,000, I would tell you instantaneously write a check and pay off your house,” he said. “If you had $100,000, I would say don’t touch it, you would be starved.”
In Nancy’s case, Ramsey recommended she pay off the house, but only if she and her husband commit to the following strategy:
- Get on a tight, detailed budget.
- Start investing $1,000 to $1,500 per month in a mutual fund.
- Keep $30,000 in emergency savings
- Invest the leftover funds into a mutual fund as well.
Here’s Ramsey’s logic: Paying off the house would free up $756 per month. If the couple can get on a budget and squeeze about $750 more out of their monthly income, investing $1,500 per month, with an average annual return of 10%, would generate around $85,000 in four years, covering the amount used to pay off the mortgage.
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As for investing the rest of the couple’s savings, let’s say they’re left with $75,000 after paying off the house and setting aside an emergency fund — assuming the same average rate of return as above, that amount would be close to $150,000 by age 77, and around $300,000 by age 84, not counting additional monthly contributions.
“Too many retirees have a paid-off house and no money to live,” Ramsey warned. “You don’t want to be digging up bushes in your yard for dinner.”
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How to smartly plan for a financial windfall
If you suddenly come into a life-changing amount of money, you might be tempted to spend it. But you also will want to make sure it lasts so you don’t end up going broke.
Before making any major financial moves, make sure you understand the tax hit. Many windfalls aren’t tax-free, so it’s a good idea to get in touch with a licensed accountant. Figure out how much you’re really walking away with before you start writing checks.
Next, take a look at your debt. Any high-interest debt, from credit cards to personal loans, should be on the chopping block. That said, not all debt is created equal. Got a mortgage under 4%? It might be worth keeping for now, depending on your broader financial picture and how much you’ve got to work with. After all, you don’t want to end up house-rich and cash-poor.
Don’t forget about safety. Boosting or building your emergency fund with three to six months’ worth of expenses, parked in a high-yield savings account, can protect you from going further into debt in case your car breaks down or a pipe in your home bursts.
Retirement accounts may also be top of mind. Consider setting one up, if you don’t have one yet, and contributing the maximum amount yearly. A financial advisor can help set you up and invest for long-term growth so you can enjoy your golden years.
At the end of the day, a financial windfall with the right plan can set you up for stability, freedom and maybe even a little fun.
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Jessica is a freelance writer with a professional background in economic development and small business consulting. She has a Bachelor of Arts in Communications and Sociology and is completing her Publishing Certificate.
