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For some lottery winners jackpot is a 'nightmare'

Insider BuzzInsider Buzz: For some lottery winners jackpot is a 'nightmare'

Winning the lottery turned life into a nightmare

For a lot of people, winning the lottery is the American dream. But some say the reality is more like a nightmare.

"Winning the lottery isn't always what it's cracked up to be," says Evelyn Adams, who won the New Jersey lottery not just once but twice (1985, 1986) to the tune of $5.4 million. Today the money is all gone and Adams lives in a trailer.

"I won the American dream but I lost it, too. It was a very hard fall. It's called rock bottom," says Adams.

"Everybody wanted my money. Everybody had their hand out. I never learned one simple word in the English language -- 'No.' I wish I had the chance to do it all over again. I'd be much smarter about it now," says Adams who also lost money at the slot machines in Atlantic City.

"I was a big time gambler," admits Adams. "I didn't drop a million dollars, but it was a lot of money. I made mistakes, some I regret, some I don't. I'm human. I can't go back now so I just go forward, one step at a time."

Living on food stamps

William "Bud" Post won $16.2 million in the Pennsylvania lottery in 1988 but now lives on his Social Security.

"I wish it never happened. It was totally a nightmare," says Post.

A former girlfriend successfully sued him for a share of his winnings. It wasn't his only lawsuit. A brother was arrested for hiring a hit man to kill him, hoping to inherit a share of the winnings. Other siblings pestered him until he agreed to invest in a car business and a restaurant in Sarasota, Fla., -- two ventures that brought no money back and further strained his relationship with his siblings.

Post even spent time in jail for firing a gun over the head of a bill collector.

Within a year, he was $1 million in debt.

Post admitted he was both careless and foolish, trying to please his family. He dventually declared bankruptcy.

Now he lives quietly on $450 a month and food stamps.

"I'm tired, I'm over 65 years old, and I just had a serious operation for a heart aneurysm. Lotteries don't mean [anything] to me," says Post.

Deeper in debt

Suzanne Mullins won $4.2 million in the Virginia lottery in 1993. Now she's deeply in debt to a company that lent her money using the winnings as collateral.

She borrowed $197,746.15, which she agreed to pay back with her yearly checks from the Virginia lottery through 2006. But, when the rules changed allowing her to collect her winnings in a lump sum, she cashed in the remaining amount. But, she stopped making payments on the loan.

She blamed the debt on the lengthy illness of her uninsured son-in-law who needed $1 million for medical bills.

Mark Kidd, the Roanoke, Va., lawyer who represented the Singer Asset Finance Company who sued Mullins, confirms. He won a judgment for the company against Mullins for $154,147 last May, but they have yet to collect a nickel.

"My understanding is she has no assets," says Kidd.

Back to the basics

Ken Proxmire was a machinist when he won $1 million in the Michigan lottery. He moved to California, went into the car business with his brothers and within five years, Ken had filed for bankruptcy.

"He was just a poor boy who got lucky and wanted to take care of everybody," explains Ken's son Rick.

"It was a hell of a good ride for three or four years, but now he lives more simply. There's no more talk of owning a helicopter or riding in limos. We're just everyday folk. Dad's now back to work as a machinist," says his son.

Willie Hurt of Lansing, Mich., won $3.1 million in 1989. Two years later he was broke and charged with murder. His lawyer says Hurt spent his fortune on a divorce and crack cocaine.

Charles Riddle of Belleville, Mich., won $1 million in 1975. Afterward, he got divorced, faced several lawsuits and was indicted for selling cocaine.

Missourian Janite Lee won $18 million in 1993. Lee was generous to a variety of causes, particularly politics, education and the community. But according to published reports, eight years after winning, Lee had filed for bankruptcy with only $700 left in two bank accounts and no cash on hand.

One Southeastern family won $4.2 million in the early '90s. They bought a huge house and succumbed to repeated family requests for help in paying off debts.

The house, cars and relatives ate the whole pot. Eleven years later, the couple is divorcing, the house is sold, and they have to split what is left of the lottery proceeds. The wife got a very small house and the husband has moved in with the kids. Even the life insurance they bought ended up getting cashed in.

"It was not the pot of gold at the end of the rainbow," says their financial advisor.

Luck is fleeting

These sad-but-true tales are not uncommon, say the experts.

"For many people, sudden money can cause disaster," says Susan Bradley, a certified financial planner in Palm Beach, Fla., and founder of the Sudden Money Institute, a resource center for new money recipients and their advisors.

"In our culture, there is a widely held belief that money solves problems. People think if they had more money, their troubles would be over. When a family receives sudden money, they frequently learn that money can cause as many problems as it solves," she says.

Craig Wallace, a senior funding officer for a company that buys lottery annuity payments in exchange for lump sums, agrees.

"Going broke is a common malady, particularly with the smaller winners. Say you've won $1 million. What you've really won is a promise to be paid $50,000 a year. People win and they think they're millionaires. They go out and buy houses and cars and before they know it, they're in way over their heads," he says.

Are you really a 'millionaire'?

Part of the problem is that the winners buy into the hype.

"These people believe they are millionaires. They buy into the hype, but most of these people will go to their graves without ever becoming a millionaire," says Wallace, who has been in the business for almost a decade.

"In New Jersey, they manipulate the reality of the situation to sell more tickets. Each winner takes a picture with a check that becomes a 3-foot by 5-foot stand-up card. The winner is photographed standing next to a beautiful woman and the caption reads: 'New Jersey's newest millionaire.'"

Winning plays a game with your head

Bradley, who authored "Sudden Money: Managing a Financial Windfall," says winners get into trouble because they fail to address the emotional connection to the windfall.

"There are two sides to money. The interior side is the psychology of money and the family relationship to money. The exterior side is the tax codes, the money allocation, etc."

"The goal is to integrate the two. People who can't integrate their interior relationship with money appropriately are more likely to crash and burn," says Bradley.

"Often they can keep the money and lose family and friends -- or lose the money and keep the family and friends -- or even lose the money and lose the family and friends."

Bill Pomeroy, a certified financial planner in Baton Rouge, La., has dealt with a number of lottery winners who went broke.

"Because the winners have a large sum of money, they make the mistake of thinking they know what they're doing. They are willing to plunk down large sums on investments they know nothing about or go in with a partner who may not know how to run a business."

What if you get so (un)lucky?

To offset some bad early-decision making and the inevitable requests of friends, relatives and strangers, Bradley recommends lottery winners start by setting up a DFZ or decision-free zone.

"Take time out from making any financial decisions," she says. "Do this right away. For some people, it's smart to do it before you even get your hands on the money.

"People who are not used to having money are fragile and vulnerable, and there are plenty of people out there who are willing to prey on that vulnerability -- even friends and family," she cautions.

"It's not a time to decide what stocks to buy or jump into a new house purchase or new business venture.

"It's a time to think things through, sort things out and seek an advisory team to help make those important financial choices."

As an example, Bradley says that on a list on 12 things people who come into a windfall will spend money on, buying a house is at the top of the list while investing is number 11.

"You really don't want to buy a new house before taking the time to think about what the consequences are.

"A lot of people who don't have money don't realize how much it costs to live in a big house -- decorators, furniture, taxes, insurance, even utility costs are greater. People need a reality check before they sign the contract," she says.

Evelyn Adams, the N.J. lottery double-winner, learned these lessons the hard way.

"There are a lot of people out there like me who don't know how to deal with money," laments Adams. "Hey, some people went broke in six months. At least I held on for a few years."

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53 comments. Last comment 12 years ago by Maverick.
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United States
Member #5122
June 18, 2004
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Posted: November 17, 2004, 11:42 am - IP Logged

Luck and total incompetence are the two things all these people have in common. Most lotteries advise winners to seek financial counselling from the outset. These people are ignorant and it is clear they never had any notion of financial discipline long before their wins. If they did they wouldn't have gone crazy when they were lucky enough to win. No one should have any sympathy for them. When people say money is a curse they speak only of their OWN inability to handle it.

    Todd's avatar - Cylon 2.gif
    Chief Bottle Washer
    New Jersey
    United States
    Member #1
    May 31, 2000
    23261 Posts
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    Posted: November 17, 2004, 12:00 pm - IP Logged

     

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      Avatar

      United States
      Member #972
      December 30, 2002
      465 Posts
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      Posted: November 17, 2004, 12:18 pm - IP Logged

      Everyone should have a copy of this article so that if you do win, you can hand it out to family and friends when you say "no" to their requests.

        fxdwg's avatar - animal bear.jpg

        United States
        Member #2870
        November 25, 2003
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        Posted: November 17, 2004, 12:21 pm - IP Logged

        Not being the brightest bulb in the pack. I hope should lady luck ever shine on me that I have a simple plan in place. 1 would be to contact my lawyer and financial planner ( both of whom I do know and trust) 2 I have little need for phone (other than one does need one for verification purposes) I would cancel my land-line and just go with my wireless ( only a handful of people know this number) Not being one who is wanting any media coverage I would set up a trust(things get a little fuzzy here as I am unsure of just how a trust would work and not something I need worry about unless I would win then I would know ) My needs are very simple as I would only want very little a nice (not huge) home somewhere down in a warmer climate. I would want to set up a federal tax exempt Municipal bonds Acct. enough to keep the wolves away. And I like that fellow who won a few weeks ago would have no problems telling those who came to me wanting a handout telling them they wanted nothing to do with me before now that I have a few bucks you come go to h E double toothpicks. I do have a few friends and family members that I would dole out the 11k allowed but other than that nothing much would change. I don't play when the lotto gets large ( again my needs and wants are simple) but the media feeding frenzy is just to overwhelming when it gets high. I have no real expectations of ever winning but "hope springs eternal" just the same. The odds are so much against one "hitting the big one" We had a hard luck story around here about twenty years ago a very nice person hit for 5 mil. this was before the days of lump sum. It took him and his then fiancée later wife and then later ex-wife about 3 years to go though it. They did  all the wrong things bought a huge home even paid more than the market value was just to be able to have this home. They later opened a restaurant ( a sure failure) and later still a bar both of which went under. they borrowed on the future payout and lost it all. Hopefully I would be able not to fall into this trap and be able to slip away like a thief in the dark of night and barely leave a ripple.


          United States
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          June 29, 2003
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          Posted: November 17, 2004, 12:49 pm - IP Logged

          Money does solve your problems (FINANCIAL)if it's used responsibly and properly,I've read just as many "GOOD" stories about lottery winners as "BAD".I've always been responsible with money since being in the Military in my early 20's so a "JACKPOT" win would be very easy for me to handle considering that I've already made plans on how to use and manage the money.People who were never responsible with money are the cause of there problems not the money.If you gave 2 people 1 million dollars and in 5 yrs only one of them had any money left

          then it's quite obvious one of them made some mistakes and was irresponsible while the other one managed his money the right way.


            United States
            Member #1759
            June 29, 2003
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            Posted: November 17, 2004, 12:54 pm - IP Logged

            Oh by the way when I got out of the Military in 1990 I had $10,000 saved that I lived off of for about 2 yrs.

            so if I just had $1 million dollars I could make it work for me and live off it for 5 yrs or more easily.

              DoctorEw220's avatar - alien helmet.jpg
              Yinzer Country, PA
              United States
              Member #4067
              March 18, 2004
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              Posted: November 17, 2004, 1:32 pm - IP Logged

              some people just let money go to their heads.

              I've redone my website.  Go to www.dr-ew.com.  I kept a lot of the old stuff, and I've added some new stuff.  Look for more new stuff in the coming weeks.

                Avatar
                New Member
                New Jersey
                United States
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                November 17, 2004
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                Posted: November 17, 2004, 1:58 pm - IP Logged

                I agree that these people were probably not the most responsible BEFORE they won the money.



                My husband and I also have a detailed plan of what we'd do should we win - first being contact our financial advisor and create a trust and don't tell ANYONE that we won. Not   a single soul.

                  twisted's avatar - underground
                  New Jersey
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                  Posted: November 17, 2004, 2:10 pm - IP Logged
                  Quote: Originally posted by Phokas on November 17, 2004



                  Luck and total incompetence are the two things all these people have in common. Most lotteries advise winners to seek financial counselling from the outset. These people are ignorant and it is clear they never had any notion of financial discipline long before their wins. If they did they wouldn't have gone crazy when they were lucky enough to win. No one should have any sympathy for them. When people say money is a curse they speak only of their OWN inability to handle it.




                  .  Well put.
                    four4me's avatar - gate1
                    MD
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                    June 18, 2003
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                    Posted: November 17, 2004, 2:39 pm - IP Logged

                    Lottery tickets should come with a disclaimer advising people to realize the consequences of the actions should they win the big one. Many people play hoping they might win and if they do sometimes they go berserk loose all track of the consequences of their actions. Some people think because they are suddenly millionaires that they will always be millionaires even if they spend like crazy. Many people who win probably feel as if they are somehow immune to problems and can buy their way out of any circumstance they get into.

                    When you win a million dollars and you never had that kind of money before it does something to you. And many people can't handle it. I know people who hit for 500,000 and spent it in six months. Another person got 125,000 and spent 300 dollars a day until it was all gone. Never realizing that they would be broke. And I've seen them say where did it all go so fast. Out of control spending I said. You never had that kind of money before or the responsibility that goes with it and once you got it you wouldn't listen to your advisers and you blew it all. Now they are working two jobs to make ends meet. Sad! 

                      urbossmanpimpin's avatar - batman49
                      Dallas, Texas
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                      September 28, 2004
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                      Posted: November 17, 2004, 3:36 pm - IP Logged

                      articles like these are mind blowing to say the least. . . . but very true. Reguardless of the winfall I cant say that I would trust alot of people with that information.  I guess I am in a good position right now in my life so those things won't happen "WHEN" I win.  I would just say that I got a good job and depending on how much money it was I could probably do it with a job.

                      The thing about it is this.......you have to remember that not everyone is going to be happy for you when you win. Ex.....2 brothers, 1 has been playin the lottery since he turned 18 and is now 30 and hasn't won but the other brother decides to buy a ticket on a whim and wins.  The possibility of the 1st brother being a bit jealous is going to be high.  Especially if the amount won was only 3mill and he decides to use a majority of the money to buy a better house and the rest for retirement instead of spliting it equally with is brother. I keep things like this in mind like how a cousin or an uncle can be jealous of you because you have better credit or a better job or even a better car.  I just don't think I could trust everyone with that information about winning the lottery.  The one story where the brother hired a hit man was horrible. 

                        Avatar
                        Columbia City, Indiana
                        United States
                        Member #2978
                        December 9, 2003
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                        Posted: November 17, 2004, 4:39 pm - IP Logged

                        What most Americans don't understand is that money is not an end in itself, but a means to an end. In any capitalistic society, the amount of money a person has access to directly corresponds to the amount of freedom that person has to move about within that society. The Robber Barons of the early 20th century understood this principal, and exploited it without shame.

                        Steal a loaf of bread to feed your children, you go to jail because you don't have enough money to pay for the bread. Steal millions from the federal treasury, then loot the coffers of your railroad or your newly-formed corporate trust, and you're a brilliant capitalist and a role model for the community's children. Massive fortunes were forged on the backs of the poor working class and were founded by a handful of men (with the notable exception of Hetty Green, there just weren't any female business tycoons back then). For the most part, these fortunes were severely depleted or wiped out by the subsequent generations of their founders.

                        Some, though, such as the Vanderbilt (railroad and shipping), DuPont (explosives and chemicals) and Rockefeller (oil and transportation) fortunes, survive to this day. However, all of these men brought their sons into the fold long before they retired from active service to their companies. Each taught his son the business from which they made their living, so the knowledge was there; they were taught how these various enterprises wrung enormous amounts of money from the sweat of their low-paid employees. If costs rose, the magnates would just cut wages to make up the difference.

                        Jay Gould made a very good living speculating in railroads and commodities. When he died in 1892, he left most of his $100,000,000.00 fortune to his son, George. George, apparently, believed that ability, like wealth, was inherited. So when he tried to wrest control of the Union-Pacific Railroad from Vanderbilt, it cost him about twenty million dollars to learn that ability comes from experience. When George died in 1923, he left only $5,175,590.00. By 1933, the estate had shrunk to just $324, 630.00. A few years later, it was all gone. A fortune that had taken a lifetime to build was spent in a few years.

                        Spent. That's the word of the day, and serves to illustrate my point, provided I have one. I began this little essay by stating that money is not an end in itself, but a means to an end. Most people live paycheck-to-paycheck. They see their money as a means to get from this Friday to next Friday. When they get their next paycheck, it will sustain them until next week, and the cycle continues. 90% of the population believes that money is something one uses to pay his bills.

                        When I was in the Navy, one of my favorite things to do was to watch what the young recruits spent their money on. Most of these young men and women had never had a paycheck before, so when they were paid, they didn't know what to do with the money, except to spend it. I was standing a quarterdeck watch one payday when this kid from my barracks shows up with his arms full of shopping bags. "Look, Pappy," he says, "I bought nine different Elvis records! And look at this!" He held out his wrist to show me a knockoff Gucci watch. "Ninety dollars; I bought two of 'em!" Crackerjacks cleaned their barracks every morning at three AM, so as I was rubbing Johnson's Paste Wax into the tile, this same kid comes up and asks to borrow fifty cents for a Pepsi. Maybe it was lack of sleep but, for some reason, my behavior at this point was a little hostile. I scowled at him and said, "You want a Pepsi? Go stick one of those $90.00 Gucci watches into the slot and see what it gives you!" He drank from the water fountain that night, as I told everyone in the barracks not to loan him any money. After that, he saw the light, and became the picture of financial responsibility.

                        Money is a means to an end. If he hadn't spent all his money on Elvis and Gucci, he would have been able to buy a Pepsi. In economics, it's called "Opportunity Cost;" for everything you have, there is something else you could have done with the money.

                        So what does all this have to do with a bunch of people who essentially wasted millions upon millions of dollars? Just this: If you can't handle the money you're earning now, you're doomed to join their ranks when you do hit the big one. If you get paid on Friday, and you're always broke by the following Thursday, it's not likely that you'll be able to manage the responsibility that goes with being a millionaire. I can hear it now, someone saying, "That's ridiculous; the reason I'm broke by Thursday is that I don't make enough money." Not true. If you agreed to work for that salary, then it's enough. If you want to earn more money in the workplace, then get an education. Depending on the field, a Bachelor's Degree can be worth an additional twenty or thirty thousand dollars a year. A Master's Degree increases your earning power even more. By choosing not to go to college, your opportunity cost is the money you're not earning without a degree.

                        Regardless of whether you want it, everyone gets an education. Lessons learned; that's education. So, what to do? The answer is simple: Learn your lessons now, while the cost is low. Talk to your banker. Set an appointment with a financial planner, and then go talk with him. Educate yourself on financial issues any way you can do it. Read books and magazines. Have a plan; know what you're going to do before you win the money. Take a course on macroeconomics. When you see how money works in a global economy, you'll gain a more pragmatic perspective on your own finances and how to better manage them.

                        We can all sit back and criticize these people, telling ourselves, "That could never happen to me." Without a viable plan, though, chances are better than average that it will happen to you. Given that money is essential to our very survival in a capitalistic society, the importance of understanding it should be a priority in all our lives. How many times have you told yourself, or a loved one, "We can't go there because we don't have enough money," or, "I can't do that because I can't afford it?"

                        One simple truth has remained constant throughout the history of this country: Rich people need poor people to remain poor. Without definitive separation of the classes, the rich are no longer the noble captains of industry we admire and envy. The rich are buoyed by the lower classes, and will do anything necessary to maintain their lofty positions. Bankruptcy was once a tool used extensively and almost exclusively by the well-to-do. Once the working poor and middle classes figured out they could do it, too, the lawmakers decided to change the bankruptcy code to make it more difficult for working-class people to file. If the rich are going to remain rich, they need the working poor to pay their debts, not discharge them. The changes in the bankruptcy code are due to take place next year.

                        Sick of the ever-rising cost of gasoline? Don't blame Bush, or even OPEC; it's not their fault. Investors and speculators drive the prices, up or down, of any commodity. This is a prime example of the subject here. Most people can't see beyond their next paycheck and, consequently, they likewise can't see beyond the stated price at the pump. So, rather than check into things a little further, they rant about the current administration and the middle east. They don't realize it, of course, but that's exactly what they're supposed to do. As long as those puts and calls are flying around the oil exchange, you'll keep buying gas for your SUV and blaming OPEC for thinning your wallet. Meanwhile, the guy with a December call on light, sweet crude cashes out and has enough money to fuel his limo for a year.

                        Educate yourself. Find out what drives a particular market, and then look for ways you can profit from it. Write down what you would do with the money following a jackpot win, and then keep that paper in a safe place. Don't make the mistake of saying, "I'll cross that bridge when I come to it." Fortune favors those who are prepared to receive it. Success has been defined as that point where preparation and opportunity meet. Of course, luck is an important mitigating factor but, as we all know, it can't be depended upon. If we all didn't believe that, how can we explain all those charts, graphs and software we use to figure out which number is likely to hit in tonight's drawing? We educate ourselves by charting past results and studying them.

                        I feel safe in saying that this forum is a gathering place for lottery experts from all over the world. Some members here don't have the experience that others do, so they ask for help from those who have been successful. They educate themselves with the experience and wisdom of people who have gained insight and the understanding of how things work in the numbers games. Then, when they begin to have some success, they relate their experience to those who follow, and so on. 

                        Predicting the winning numbers is only part of the equation, albeit an important one. Equally critical is knowing what you're going to do once you have the million-dollar check in your hands, and having the ability to act on that knowledge responsibly and successfully throughout the coming years.

                        Come, Pinky; we must prepare for tomorrow night...

                        Jim


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                          June 5, 2002
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                          Posted: November 17, 2004, 5:13 pm - IP Logged

                          All (or almost all) the wins in the article were annuity-only.

                            RJOh's avatar - chipmunk
                            mid-Ohio
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                            March 24, 2001
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                            Posted: November 17, 2004, 9:47 pm - IP Logged

                            That article proves you don't have to be smart to win a lottery, all it takes is a little luck and enough smarts to buy a ticket.  Players like myself like to think if they play smart they will get lucky, but I'm beginning to think that not true either.

                            RJOh

                             * you don't need to buy more tickets, just buy a winning ticket * 
                               
                                         Evil Looking