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."
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.
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.
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.
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.
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.
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!
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.
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.
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.
exactly. a lot of lottery winners are uneducated, and have not learned the value of a dollar. even the oldestm lottery winners can be darn near braindead, or will pass the money onto their braindead kids. either way, the money will be spent in a short time. unless the winner has understood the value of a dollar, they are doomed to being broke within a few years.
I am a financial advisor and the saddest thing I have ever seen was regarding a lottery winner. A bartender used to have a BUM(really a BUM) by his lottery ticket and told him that if we win I'll split it with you. He won about $2,000,000 and split it with the BUM. He go about $650,000.
He comes in my office, wearing the Lottery t-shirt they gave him, ripped dirty pants, greasy hair, no teeth, and a wife to match. They smelled. The sad part is that when they recieved the money they were no longer eligable for welfare, medicaid, food stamps, section 8 housing allowance. His increase in expenses blew his new found wealth almost immediately.
All the other BUMS were begging from him, he bought a car full list price, he started showing up everyday looking for cash. WHen I pleaded with him to stop spending and invest the money, he turned like a pitbull. WIfe got nasty and they moved everything to a bank where the guy killed him. The BUM is broke and back cleaning up bottles at the Bar.
I think's that if stupid people win they are still stupid.
After blowing 16k I won awhile ago I can definately say that watching where your money is going is the big first step. If you can't handle a credit card and want a new car when you dont have the money then you are doomed if you win to be in poverty soon.
The lottery is a game of chance. It offers a chance to win a lot of money. All the rest of the things that people usually associate with winning the lottery are just hype. There are no guarantees about financial independence, fame, happiness, power, lasting material wealth, or peace of mind. Whatever any person does with his or her lottery winnings - wisely or unwisely - is entirely up to that individual.
Good luck to anyone who might be lucky enough to win big,
I totally agree with the above post-These stories are about people who "NEVER" knew "HOW" to manage money in the first place. If your bad with cash from your job then you'll only get worse once you win. I already know what I'd do if I won
1. Get the money thru a lawfirm
2. Make sure to setup a limited trust for myself and my brothers(2) so we can take care of our children.
3. Pay off all imediate bills and go with a major accounting firm on any future taxes on the interest from my accounts.
I have always thought what I would do if I won. I think a lot of people assume that if they win the lottery that all their troubles are over. Not true. Winning the lottery should secure your financial future for retirement and a comfortable living. Pay a few bills and invest the rest. I know a couple that won $25,000.00 on a $2 scratch off. Within a few weeks, both were broke (from buying even more scratch offs and one was dead within 6 months. So winning is not always a good thing. If I were to win the lottery, I would ask to remain anonymous. I would pay off my bills, give 10% to the one who made it possible, keep the house I live in cause I like it and it is comfortable, I would not tell my family other than my spouse and one very special friend that I would help because I know she would never tell anyone and would invest the money and give myself a yearly bonus to buy little extras and when I am no longer in this world my family would inherit what is left that would be set up in a trust that could not be borrowed against so that they may have a little financial help thru out their lives. The main thing is to get smart if you are not smart already and plan, plan, plan, not spend, spend, spend.
One way to look at it is to think of how hard it is to save money right now, as a working stiff. Open up a savings account and see how long it takes you to save $20,000. 2-4 years, maybe, if you live frugally? That's a lot of work, sacrifice, it's tough to do. Think about that when you have that check for $100,000 or whatever it is. If you have a real appreciation for how tough it is to make and save money, you'll be careful with what you have. It's not "found money" to be blown...it's a chance to be free. If you spend until you are broke, you are a slave again.
Quote:Originally posted by waynr on November 18, 2004
Money money money. Decisions decisions. They made bad choices, probably out of stupidity. If only money could buy a cure for stupidity.
Even if there was a cure for stupidity, these people would still be too stupid too look for it. (i'm just trying to make a joke) I personally think that everyone has the ability to be smart or stupid. But sometimes, due to your mental state, you just cant avoid being "stupid". Right now I have exhausted my mind by learning from their experiences and thinking about what I would do if I win. But who knows what my mental state would be when I win (maybe 25 years from now). I just hope that I'm at the right place at the right time. Hopefully soon.
HOLY SHYT !!! is all I can think of here! Now this is more interesting than the topic of lottery rigging lol. I can understand how this can spiral and have a certain amount of money loss, but DAMN, losing it all?! Yes my mind would be full of flowers, but whatever spending/giving I make, I would at the same time watch "money coming in & money coming out" very carefully within my bank account... & I suck at math LOL... but watch it I would!
Quote:Originally posted by twisted on November 18, 2004
Quote: Originally posted by waynr on November 18, 2004
Money money money. Decisions decisions. They made bad choices, probably out of stupidity. If only money could buy a cure for stupidity.
Even if there was a cure for stupidity, these people would still be too stupid too look for it. (i'm just trying to make a joke) I personally think that everyone has the ability to be smart or stupid. But sometimes, due to your mental state, you just cant avoid being "stupid". Right now I have exhausted my mind by learning from their experiences and thinking about what I would do if I win. But who knows what my mental state would be when I win (maybe 25 years from now). I just hope that I'm at the right place at the right time. Hopefully soon.
I really don't know why they made the choices they did. Obviously they either didn't have a plan or didn't stick to the one they had. Maybe you've heard the saying about the best made plans colliding head-on with some guy named Murphy. Musta been against some Law. Maybe that was it. If so no one is immune to losing it all. So a big win is just the beginning of luck. More luck is needed to keep it.
I also think when people win a lot of money they get intoxicated by it's effect on them being able to buy whatever they want and do things they only dreamed about.
And some who win smaller amounts might spend it all trying to win again. Like if you win 2,000.00 on a scratch off for a buck. You might pay off a few small bills with it. More likely you'll spent twice the amount you won trying to win again. Common sense doesn't fit into the equasion when the effect of winning takes over. People say well if I won once maybe I can win again so they go out a buy all different kinds of scratchers trying to win a bigger prize.
Quote:Originally posted by four4me on November 19, 2004
I also think when people win a lot of money they get intoxicated by it's effect on them being able to buy whatever they want and do things they only dreamed about.
And some who win smaller amounts might spend it all trying to win again. Like if you win 2,000.00 on a scratch off for a buck. You might pay off a few small bills with it. More likely you'll spent twice the amount you won trying to win again. Common sense doesn't fit into the equasion when the effect of winning takes over. People say well if I won once maybe I can win again so they go out a buy all different kinds of scratchers trying to win a bigger prize.
exactly. money goes to people's heads and the first thing they think about is how they can buy their dream everything, be it car, house, spouse (it happens. think donald trump; sebastian bach- the guy from skid row, not the composer; oprah- do you see stedman working at all?). i've seen several people spending their small (yet profitable) winnings trying to win the big one. people with money don't want to have to live with the fact of being broke, and therefore they do whatever they can to increase their money supply. they wind up spending more than they will ever make attempting to do so, and will wind up having to realize the hard truth that they will have to live with the fact that they are broke.
If more states would allow the option of total anonymity for jackpot recipients, it would give them the cushion of protection they need following the life-altering dvent. Anonymity would provide one with the time to carefully make decisions and seek prudent advice in many areas including long term finances.
Since this basic privacy option is not given by most states, I agree that one who happens to match the numbers must make every effort to protect themselves with the first and most important step being an unpublished phone number. Also, immediately following ticket validation, consider taking an extended road trip for a week or two. I like the idea posted earlier of going exclusively with a new cell phone account and completely eliminating your home phone access except for internet use. This will allow you to contact the people you choose for financial advice. For the time being, give the new cell number to only those who must have it.
The reason they give for not giving anonymity is the public would suspect an inside job or scam in winning, which is reasonable especially in a state where gangster Whitey Bulger "won" the lottery. But I don't see why they have to announce the name the second the person claims the prize, except for their own selfish publicity purposes. Why not give 2 years before making the name public, and then only giving the name and location where the ticket was bought, with no current address or other information given. This would give people a chance to get used to the money and move, get unlisted and have everything set up. And it would still let the public know a real person won it.
Quote:Originally posted by golotto on November 19, 2004
If more states would allow the option of total anonymity for jackpot recipients, it would give them the cushion of protection they need following the life-altering dvent. Anonymity would provide one with the time to carefully make decisions and seek prudent advice in many areas including long term finances.
Since this basic privacy option is not given by most states, I agree that one who happens to match the numbers must make every effort to protect themselves with the first and most important step being an unpublished phone number. Also, immediately following ticket validation, consider taking an extended road trip for a week or two. I like the idea posted earlier of going exclusively with a new cell phone account and completely eliminating your home phone access except for internet use. This will allow you to contact the people you choose for financial advice. For the time being, give the new cell number to only those who must have it.
I agree with everything I've read but what should be addressed is when most people purchase lotto tickets some use monies they cannot spare in hopes of "winning the big one" and become addicted to the game and lose everything even BEFORE they win! These are some of the same people who have won the lottery! I think if you purchase tickets wisely that you can manage the money wisely and have the foresight to hire the right people to insure your future.You are dicussing cases where only the ones that fail are addressed,What about the rest? Not everyone who has won has done so terrible and most people are not so foolish.It's all about gambling addiction and it's aftermath.
From what I seen in NY I notice the winners are not in a pic holding that giant check until say about 6 months after the ticket was brought in. I look at www.nylottery.org.
i've noticed that as well, with a few exceptions (phin suy- won $128 million mega millions jackpot). a lot of them choose to wait a while before claiming the ticket. also, new york has had 2 mega millions jackpot-winning tickets that have gone unclaimed. some people take too long, or lose the ticket.
Quote:Originally posted by DoctorEw220 on November 20, 2004
new york has had 2 mega millions jackpot-winning tickets that have gone unclaimed. some people take too long, or lose the ticket.
Now that is a topic even better than lottery rigging & losing your winning millions. If thats not from merely losing the ticket, then i say those people are simply fools. But one should not even get close to losing a ticket as it is... NEVER NEVER NEVER.
You know i wonder if maybe they figured they'd cash it in when they REALLY needed it, & then after the deadline lo and behold, they find out theres a deadline lol... omg!
I don't know but when you win a lot of money on that 1 dollar purchase. It's like common since goes out the door. The high you get from winning all that money can drive people to do the strangest things. I imagine many people get very buy happy. They start buying everything they never could afford. Many people might think of buying things as an investment. Thinking that if for some reason they needed money they could sell off the stuff they bought. If you never invested in a portfolio before you won you probably won't after you won. Surprisingly a lot of people don't trust banks or the people who might handle their money. And since they won a lot of money for only the one buck the say what the heck it's only money. And end up blowing it all.
I'm fairly sure if I won around 10 million clear after taxes. I would spend about 2 million right of the top. New house or houses. One on the east coast one on the west coast New furnishings for those houses. All new clothes and necessary belongings. Upgrade to new transportation. All this would come real close to 2 million. Insurance for everything including the wife and kids. Yea 2 million easily spent. Set up a real good portfolio invest in stocks and bonds. A trust for the wife and kids. Tie up loose ends. Then an all expense long term paid vacation.
I hope you will accept this in the spirit in which it's intended, and the following should not be construed as a personal attack.
The scenario you've outlined for yourself is doomed to fail from the outset. Let me explain what I mean:
You've won an 18 or 20 million dollar jackpot (depending on the state's tax structure), and now you have a cashier's check for 10 million and change. You've already planned to spend $2 million on houses, cars, clothes and insurance for your family, so now your win has been essentially reduced to $8 million in cash.
Let's say, by some miracle, you don't have any cost overruns in constructing your new homes, and that no family member suffers any catastrophic illness, so you now invest the remaining $8 million in tax-free municipal or government bonds, which currently yield about 1.8% (if any investment counselors or brokers are reading this, please correct me if this is not the current yield). This will pay you roughly $144,000.00 per year, every year that you leave the principal (the original $8M) intact.
After spending two million dollars in the first year, will you have enough left over to live for one year while your investments mature, without having to dip into the principal again? Will you be able to pay your living expenses, insurance premiums and property taxes and still have enough left over to maintain your new lifestyle on $144,000.00 a year for the rest of your life?
This is the point I was trying to make in my last lengthy post:
Don't spend - invest.
Let's look at the same scenario, but with one minor change. Let's say everything happens as outlined above, except that you DON"T spend $2M. Instead, you decide that, since you've never had that much money before, you're just going to sit on it for a year and then decide what to do. So, you put all ten million into the same municipal bonds and, at the end of the 12-month period, you now have $10,180,000.00. That extra $2M just earned you another $36,000.00, tax-free, which is more than many people make slaving away at their jobs for a year. See? The more you spend, the less you make in interest; when you spend a million, you're actually spending (one million) + (eighteen thousand) x (the number of years you have remaining in your lifetime). If you live another forty years, that $2M you spent could have earned you another $1.44M in capital gains. Now, you realize that you can take the $180k, buy a pretty decent house AND a new car, and you still have all of your $10M, so you can do it again next year. And the year after, and the year after that...
Provided that you don't spend a dime of the principal, you'll always have that money. I think that's what happened to these "stupid" people (I used the quotes because that word seems to come up a lot in the responses to this thread); they decided to spend "just a little," and then again, "it only costs $25k," and so on, until it was all gone. Personally, I would stop short of any name-calling, because one of the names in that article could easily have been mine. Actually, I'm thankful that I didn't win a jackpot when I was 25 or 30 years old, because I would probably have been in the same boat as these people. Back then, I didn't have the experience or discipline, nor the understanding of finance and global economics I enjoy today. I still have a great deal to learn, but writing government manuals, booklets, reports, pamphlets and brochures for various agencies gives me the opportunity to study figures and stats that ordinarily would never occur to me.
Ironically, it was while preparing an outline for a pamphlet about problem gambling that I stumbled onto this:
In order to attain a minimum personal income of one million dollars per year, after taxes, you'll need to win a jackpot of roughly $80M. Here's how it breaks down:
If you choose the cash option, you'll receive approximately 55% of the advertised jackpot, which comes to $44,000,000.00. Regardless of your state's withholding (Indiana withholds 28%), you'll end up paying 30% to 32% in federal taxes on your original win. Incidentally, the reason most states require you to claim your prize within 180 days is because, that way, you don't qualify for the lower, (federal) long-term capital gains rate. However, during the second and subsequent years, you will qualify for the lower rate, which, if I'm not mistaken, is now capped at 15%. Okay, back to our story. We'll use the lower tax rate of 30%, so the government will take $13,200,000.00, leaving you $30,800,000.00 (Depending on whether you see the glass as half-full or half-empty, you've either been ganked out of fifty million dollars, or you've just won thirty million). Now, you either earmark the $800k for living expenses, or leave it with the principal and invest it all in boring, dividend-paying stocks. Blue-chips usually pay a good dividend, and you're looking for one that yields at least four or five percent. If you keep the $800k and invest the remaining $30M at 4%, you would receive $1,200,000.00 per year before taxes. You can do the math for your state taxes, but the federal long-term capital gains tax, at 15%, would leave a net income of $1,020,000.00, or one million, twenty-thousand dollars per year, and you still have your original thirty million, so you're now making a million a year.
It's fun to dream, and who among this motley group hasn't fantasized about what it must be like to pay cash for a new house and car? Sometimes dreams come true, but the problem is that a reality check soon follows. Speaking for myself, I have only empathy for the people who lacked the skills to hold onto their new-found wealth. Their financial misfortunes cannot be construed as a measure of their intelligence since, without sound planning, the same could easily happen to any of us. To be perfectly honest, I don't know that it couldn't happen to me; I've never won that much money, so how can I possibly know how it would affect me, or my judgment?
"There but for the grace of God go I..." John Bradford wrote these words, sometime around 1510, on seeing a group of prisoners being led away to their executions. He was a 16th century holy man, but he was saying that any one of those men could have been him, had his own life taken a different course. He compared himself to criminals, realizing all the while that his life, or anyone's life, might easily have come to the same end as the condemned, had circumstances been just a little different. Back then, most men of the cloth believed they were chosen by God Himself to preside over their congregations; it was a calling, not a conscious choice, to enter the church.
We can all take a lesson here. Rather than saying, "Boy, those people really define stupidity," let's all have the good sense to realize that we have no clue what it's like to have that much responsibility. We won't know until and unless we win a jackpot. If it was only one person who lost his millions, I would gleefully join you in calling him Stupid. But the fact that there were several, indeed many, people who suffered the same fate, I consider the story a warning to be heeded. It's easy to speculate on what we think wewoulddo while we're still dreaming of instant wealth, but then, we don't have a check in our hands.
If you need some technical data written up and organized in a dry, boring but concise manner, then sure, I'll work for you. If, on the other hand, you're looking for someone to clean your pool or to give you financial advice, then I'll have to pass, since I'm not qualified for either position.
Although I haven't broken it down as well as you have. I thought about this scenario on more than one occasion. And since I'm approaching my mid fifties. I opted in my mind to go the route I stated above. If it were any less than 10 million. I would possibly take 250,000 to 500,000 and make some living changes. Then invest the rest, while it matures and live off the principal. Not to difficult a task for me since I live on a fixed income anyway. If I were to win big I would definitely sit down with some money pros and go over every possible money making possibility. Including investing in some small franchise that would bring in some extra capital to work with.
Having seen and known some of these blankety blank lottery winners in my area I kinda got some ideas not to go the route they did. Some are back to work a few are on skid row. Having spent till it was all gone.
Some are doing ok others continued working for a few years while there investments grows. Waiting for the ultimate vacation of a lifetime while enjoying an early retirement. It helps to know the value of money and what it can do for you if invested correctly.
Thanks for your reply you gave everyone something to think about including myself
Well, I dunno if its a nightmare BUT If they let me win a couple of millions then I will come back on this forum in a couple of months and let you guys know how everything is going. lol
Consider what it means to live within your means, then plan on extending that into retirement... doing that could set you up for life as you know it minus a job... Also consider retirement, and healthcare... I had looked into comprehensive plans that would run you 1,600 a month as a family, but would be 100%, not the 80/20 split most employers offer.
Once you have been around the block, you can ask yourself how much fun it would be to have to clean a 10 bedroom mansion... don't get more house than you need, and it doesn't have to be "NEW" to make you happy... I have my eye on a really nice lakefront nearby that is well under even a half million...
I base my strategy on the base PB jackpot, anything else is extra that can be invested long term because it wasn't planned for. I like the idea of tax free municipal bonds... just watch the rating for the particular municipalities you plan to invest in.
There is really no desire for me to have a new car, 1 or 2 years old would be fine if it was in great shape... you would save a bundle.
The big shift will be from Making money to Keeping money... no need to alter your frugal ability to live on your current salary, you would just be given all that time that you would spend working. Of course there would be extra money, but it doesn't need to be spent.
My goal is simple, secure income for 35 years then secure retirement and security for the kids... I can pull that off with the base PB jackpot (lump sum after taxes)...
gotta have a plan and the discipline to stick to it. Also the freedom to go about life without hounding... MUST establish that personal property trust to claim anonymously... or buy tix in delaware ;-)
I'm happy to see that someone understands that winning a jackpot and then managing that wealth has less to do with knowing "the value of a dollar" than living within your means.
Your two-step plan, while simple, embraces the millionaires' code of frugality; millionaires don't become millionaires by spending money. That's not meant to suggest that all wealthy people are tight-fisted, but the majority will complain about the price of almost anything they buy. Ask any waitress, and she'll tell you that most of her income comes from the people who can least afford it (generally speaking, the working poor tip more often, and better, than rich people do).
Like you, I would be just as happy with a two-year-old car as I would with a new one, since the older model would get me from point A to point B and back again. It just wouldn't be as impressive to the pedestrian traffic, but then, I don't care to impress them. I don't need a mansion, nor the enormous responsibility that comes with such an ostentatious purchase. Living in a mansion advertises the fact that you have a lot of money, so unless you win enough to cover the cost of round-the-clock security, in addition to property taxes, upkeep and maintenance, staff salaries (gardeners, housekeepers, etc.), insurance (homeowners' and general liability), bodyguards and a battery of lawyers, you're much better off buying an existing home in another city, state or, at the very least, a different neighborhood.
You've obviously put a lot of thought into your plan but, if I may take the liberty, I'd like to point out that Step One will involve many sub-steps, such as speaking with a financial planner or investigating and keeping current on the ever-changing rates of various investment vehicles (municipal bonds, CD's, commercial bonds, REITs, mutual funds, etc.). You'll need this knowledge when you win, so it makes sense to acquire this information before you need it.
Studying this now will give you the confidence to rely on your own knowledge, without being at the mercy of some attorney who's going to try to get every dime you have anyway. Unfortunately, you'll need an attorney, because when word gets out that you've won the jackpot, some people will want to sue you for any reason they can think up. Given the litigious attitude that's prevalent in America these days, you could find yourself in court if your girlfriend breaks a nail while opening your beer, or if your dog chews up your boyfriend's favorite Levi's (these are real lawsuits, although I have no idea who won in either case).
So, where does this leave us? Should you be afraid of winning an obscenely large amount of money? I wouldn't think so, provided you've properly prepared for it. What should scare you is the likelihood that you won't be able to hold onto your money if and when you win the jackpot. Having more money than you've ever seen fall into your lap can be very intimidating, but it doesn't have to be that way. Spend some of your spare time studying your current finances. Figure out, to the penny, how much it costs you to live week-to-week, month-to-month, year-to-year. When I did this, I discovered I was spending over $1700.00 a year on cigarettes, and another $1430.00 a year on Starbuck's coffee. That's $3130.00 a year, or nearly $261.00 a month on coffee and cigarettes. I quit smoking, and now I drink Folger's, so I have an extra two hundred bucks a month in my pocket. For those of you who care to indulge, I think you'll find some similar surprises.
Hypersoniq, it appears that you've prepared yourself for the big win. Now all you need is the jackpot, and I believe your preparation in that area is probably quite substantial as well. I'm sure you've spent several hours, if not days, in selecting your numbers for tonight's drawing. I've said before (actually, someone else said it first) that luck is the point at which preparation and opportunity meet. You've taken care of the preparation, and I have no doubt that opportunity will find you soon.
Thanks for an outstanding commentary, and the best of luck to you in the upcoming draws.
Quote:Originally posted by hypersoniq on November 27, 2004
ask yourself how much fun it would be to have to clean a 10 bedroom mansion... don't get more house than you need, and it doesn't have to be "NEW" to make you happy. I have my eye on a really nice lakefront nearby that is well under even a half million. The big shift will be from Making money to Keeping money.
Quote:Originally posted by jim695 on November 27, 2004
I don't need a mansion, nor the enormous responsibility that comes with such an ostentatious purchase. Living in a mansion advertises the fact that you have a lot of money, so unless you win enough to cover the cost of round-the-clock security, in addition to property taxes, upkeep and maintenance, staff salaries (gardeners, housekeepers, etc.), insurance (homeowners' and general liability), bodyguards and a battery of lawyers, you're much better off buying an existing home in another city, state or, at the very least, a different neighborhood.
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.
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.
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.
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.
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.
some people just let money go to their heads.
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.
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!
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.
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.
All (or almost all) the wins in the article were annuity-only.
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
exactly. a lot of lottery winners are uneducated, and have not learned the value of a dollar. even the oldestm lottery winners can be darn near braindead, or will pass the money onto their braindead kids. either way, the money will be spent in a short time. unless the winner has understood the value of a dollar, they are doomed to being broke within a few years.
I am a financial advisor and the saddest thing I have ever seen was regarding a lottery winner. A bartender used to have a BUM(really a BUM) by his lottery ticket and told him that if we win I'll split it with you. He won about $2,000,000 and split it with the BUM. He go about $650,000.
He comes in my office, wearing the Lottery t-shirt they gave him, ripped dirty pants, greasy hair, no teeth, and a wife to match. They smelled. The sad part is that when they recieved the money they were no longer eligable for welfare, medicaid, food stamps, section 8 housing allowance. His increase in expenses blew his new found wealth almost immediately.
All the other BUMS were begging from him, he bought a car full list price, he started showing up everyday looking for cash. WHen I pleaded with him to stop spending and invest the money, he turned like a pitbull. WIfe got nasty and they moved everything to a bank where the guy killed him. The BUM is broke and back cleaning up bottles at the Bar.
I think's that if stupid people win they are still stupid.
After blowing 16k I won awhile ago I can definately say that watching where your money is going is the big first step. If you can't handle a credit card and want a new car when you dont have the money then you are doomed if you win to be in poverty soon.
The lottery is a game of chance. It offers a chance to win a lot of money. All the rest of the things that people usually associate with winning the lottery are just hype. There are no guarantees about financial independence, fame, happiness, power, lasting material wealth, or peace of mind. Whatever any person does with his or her lottery winnings - wisely or unwisely - is entirely up to that individual.
Good luck to anyone who might be lucky enough to win big,
aye'
I totally agree with the above post-These stories are about people who "NEVER" knew "HOW" to manage money in the first place. If your bad with cash from your job then you'll only get worse once you win. I already know what I'd do if I won
1. Get the money thru a lawfirm
2. Make sure to setup a limited trust for myself and my brothers(2) so we can take care of our children.
3. Pay off all imediate bills and go with a major accounting firm on any future taxes on the interest from my accounts.
I have always thought what I would do if I won. I think a lot of people assume that if they win the lottery that all their troubles are over. Not true. Winning the lottery should secure your financial future for retirement and a comfortable living. Pay a few bills and invest the rest. I know a couple that won $25,000.00 on a $2 scratch off. Within a few weeks, both were broke (from buying even more scratch offs and one was dead within 6 months. So winning is not always a good thing. If I were to win the lottery, I would ask to remain anonymous. I would pay off my bills, give 10% to the one who made it possible, keep the house I live in cause I like it and it is comfortable, I would not tell my family other than my spouse and one very special friend that I would help because I know she would never tell anyone and would invest the money and give myself a yearly bonus to buy little extras and when I am no longer in this world my family would inherit what is left that would be set up in a trust that could not be borrowed against so that they may have a little financial help thru out their lives. The main thing is to get smart if you are not smart already and plan, plan, plan, not spend, spend, spend.
Money money money. Decisions decisions. They made bad choices, probably out of stupidity. If only money could buy a cure for stupidity.
One way to look at it is to think of how hard it is to save money right now, as a working stiff. Open up a savings account and see how long it takes you to save $20,000. 2-4 years, maybe, if you live frugally? That's a lot of work, sacrifice, it's tough to do. Think about that when you have that check for $100,000 or whatever it is. If you have a real appreciation for how tough it is to make and save money, you'll be careful with what you have. It's not "found money" to be blown...it's a chance to be free. If you spend until you are broke, you are a slave again.
HOLY SHYT !!! is all I can think of here! Now this is more interesting than the topic of lottery rigging lol. I can understand how this can spiral and have a certain amount of money loss, but DAMN, losing it all?! Yes my mind would be full of flowers, but whatever spending/giving I make, I would at the same time watch "money coming in & money coming out" very carefully within my bank account... & I suck at math LOL... but watch it I would!
Amen
I really don't know why they made the choices they did. Obviously they either didn't have a plan or didn't stick to the one they had. Maybe you've heard the saying about the best made plans colliding head-on with some guy named Murphy. Musta been against some Law. Maybe that was it. If so no one is immune to losing it all. So a big win is just the beginning of luck. More luck is needed to keep it.
I also think when people win a lot of money they get intoxicated by it's effect on them being able to buy whatever they want and do things they only dreamed about.
And some who win smaller amounts might spend it all trying to win again. Like if you win 2,000.00 on a scratch off for a buck. You might pay off a few small bills with it. More likely you'll spent twice the amount you won trying to win again. Common sense doesn't fit into the equasion when the effect of winning takes over. People say well if I won once maybe I can win again so they go out a buy all different kinds of scratchers trying to win a bigger prize.
exactly. money goes to people's heads and the first thing they think about is how they can buy their dream everything, be it car, house, spouse (it happens. think donald trump; sebastian bach- the guy from skid row, not the composer; oprah- do you see stedman working at all?). i've seen several people spending their small (yet profitable) winnings trying to win the big one. people with money don't want to have to live with the fact of being broke, and therefore they do whatever they can to increase their money supply. they wind up spending more than they will ever make attempting to do so, and will wind up having to realize the hard truth that they will have to live with the fact that they are broke.
jim695 you made some very very very good points. Thank you for your reply. I have new insight on what to do with a winfall.
If more states would allow the option of total anonymity for jackpot recipients, it would give them the cushion of protection they need following the life-altering dvent. Anonymity would provide one with the time to carefully make decisions and seek prudent advice in many areas including long term finances.
Since this basic privacy option is not given by most states, I agree that one who happens to match the numbers must make every effort to protect themselves with the first and most important step being an unpublished phone number. Also, immediately following ticket validation, consider taking an extended road trip for a week or two. I like the idea posted earlier of going exclusively with a new cell phone account and completely eliminating your home phone access except for internet use. This will allow you to contact the people you choose for financial advice. For the time being, give the new cell number to only those who must have it.
From what I seen in NY I notice the winners are not in a pic holding that giant check until say about 6 months after the ticket was brought in. I look at www.nylottery.org.
i've noticed that as well, with a few exceptions (phin suy- won $128 million mega millions jackpot). a lot of them choose to wait a while before claiming the ticket. also, new york has had 2 mega millions jackpot-winning tickets that have gone unclaimed. some people take too long, or lose the ticket.
Now that is a topic even better than lottery rigging & losing your winning millions. If thats not from merely losing the ticket, then i say those people are simply fools. But one should not even get close to losing a ticket as it is... NEVER NEVER NEVER.
You know i wonder if maybe they figured they'd cash it in when they REALLY needed it, & then after the deadline lo and behold, they find out theres a deadline lol... omg!
I don't know but when you win a lot of money on that 1 dollar purchase. It's like common since goes out the door. The high you get from winning all that money can drive people to do the strangest things. I imagine many people get very buy happy. They start buying everything they never could afford. Many people might think of buying things as an investment. Thinking that if for some reason they needed money they could sell off the stuff they bought. If you never invested in a portfolio before you won you probably won't after you won. Surprisingly a lot of people don't trust banks or the people who might handle their money. And since they won a lot of money for only the one buck the say what the heck it's only money. And end up blowing it all.
Thats true. I guess some people just dont think of protecting themselves & their winnings. Well i hope we at least learn from their loss.
I'll be a cheap-ass now, & a cheap-ass when i win a jackpot lol!
if you won $10 million,you'd spend $2 million right off the top paying the taxes.
I won around 10 million clear after taxes. open eyes first please
Four4me:
I hope you will accept this in the spirit in which it's intended, and the following should not be construed as a personal attack.
The scenario you've outlined for yourself is doomed to fail from the outset. Let me explain what I mean:
You've won an 18 or 20 million dollar jackpot (depending on the state's tax structure), and now you have a cashier's check for 10 million and change. You've already planned to spend $2 million on houses, cars, clothes and insurance for your family, so now your win has been essentially reduced to $8 million in cash.
Let's say, by some miracle, you don't have any cost overruns in constructing your new homes, and that no family member suffers any catastrophic illness, so you now invest the remaining $8 million in tax-free municipal or government bonds, which currently yield about 1.8% (if any investment counselors or brokers are reading this, please correct me if this is not the current yield). This will pay you roughly $144,000.00 per year, every year that you leave the principal (the original $8M) intact.
After spending two million dollars in the first year, will you have enough left over to live for one year while your investments mature, without having to dip into the principal again? Will you be able to pay your living expenses, insurance premiums and property taxes and still have enough left over to maintain your new lifestyle on $144,000.00 a year for the rest of your life?
This is the point I was trying to make in my last lengthy post:
Don't spend - invest.
Let's look at the same scenario, but with one minor change. Let's say everything happens as outlined above, except that you DON"T spend $2M. Instead, you decide that, since you've never had that much money before, you're just going to sit on it for a year and then decide what to do. So, you put all ten million into the same municipal bonds and, at the end of the 12-month period, you now have $10,180,000.00. That extra $2M just earned you another $36,000.00, tax-free, which is more than many people make slaving away at their jobs for a year. See? The more you spend, the less you make in interest; when you spend a million, you're actually spending (one million) + (eighteen thousand) x (the number of years you have remaining in your lifetime). If you live another forty years, that $2M you spent could have earned you another $1.44M in capital gains. Now, you realize that you can take the $180k, buy a pretty decent house AND a new car, and you still have all of your $10M, so you can do it again next year. And the year after, and the year after that...
Provided that you don't spend a dime of the principal, you'll always have that money. I think that's what happened to these "stupid" people (I used the quotes because that word seems to come up a lot in the responses to this thread); they decided to spend "just a little," and then again, "it only costs $25k," and so on, until it was all gone. Personally, I would stop short of any name-calling, because one of the names in that article could easily have been mine. Actually, I'm thankful that I didn't win a jackpot when I was 25 or 30 years old, because I would probably have been in the same boat as these people. Back then, I didn't have the experience or discipline, nor the understanding of finance and global economics I enjoy today. I still have a great deal to learn, but writing government manuals, booklets, reports, pamphlets and brochures for various agencies gives me the opportunity to study figures and stats that ordinarily would never occur to me.
Ironically, it was while preparing an outline for a pamphlet about problem gambling that I stumbled onto this:
In order to attain a minimum personal income of one million dollars per year, after taxes, you'll need to win a jackpot of roughly $80M. Here's how it breaks down:
If you choose the cash option, you'll receive approximately 55% of the advertised jackpot, which comes to $44,000,000.00. Regardless of your state's withholding (Indiana withholds 28%), you'll end up paying 30% to 32% in federal taxes on your original win. Incidentally, the reason most states require you to claim your prize within 180 days is because, that way, you don't qualify for the lower, (federal) long-term capital gains rate. However, during the second and subsequent years, you will qualify for the lower rate, which, if I'm not mistaken, is now capped at 15%. Okay, back to our story. We'll use the lower tax rate of 30%, so the government will take $13,200,000.00, leaving you $30,800,000.00 (Depending on whether you see the glass as half-full or half-empty, you've either been ganked out of fifty million dollars, or you've just won thirty million). Now, you either earmark the $800k for living expenses, or leave it with the principal and invest it all in boring, dividend-paying stocks. Blue-chips usually pay a good dividend, and you're looking for one that yields at least four or five percent. If you keep the $800k and invest the remaining $30M at 4%, you would receive $1,200,000.00 per year before taxes. You can do the math for your state taxes, but the federal long-term capital gains tax, at 15%, would leave a net income of $1,020,000.00, or one million, twenty-thousand dollars per year, and you still have your original thirty million, so you're now making a million a year.
It's fun to dream, and who among this motley group hasn't fantasized about what it must be like to pay cash for a new house and car? Sometimes dreams come true, but the problem is that a reality check soon follows. Speaking for myself, I have only empathy for the people who lacked the skills to hold onto their new-found wealth. Their financial misfortunes cannot be construed as a measure of their intelligence since, without sound planning, the same could easily happen to any of us. To be perfectly honest, I don't know that it couldn't happen to me; I've never won that much money, so how can I possibly know how it would affect me, or my judgment?
"There but for the grace of God go I..." John Bradford wrote these words, sometime around 1510, on seeing a group of prisoners being led away to their executions. He was a 16th century holy man, but he was saying that any one of those men could have been him, had his own life taken a different course. He compared himself to criminals, realizing all the while that his life, or anyone's life, might easily have come to the same end as the condemned, had circumstances been just a little different. Back then, most men of the cloth believed they were chosen by God Himself to preside over their congregations; it was a calling, not a conscious choice, to enter the church.
We can all take a lesson here. Rather than saying, "Boy, those people really define stupidity," let's all have the good sense to realize that we have no clue what it's like to have that much responsibility. We won't know until and unless we win a jackpot. If it was only one person who lost his millions, I would gleefully join you in calling him Stupid. But the fact that there were several, indeed many, people who suffered the same fate, I consider the story a warning to be heeded. It's easy to speculate on what we think we would do while we're still dreaming of instant wealth, but then, we don't have a check in our hands.
That makes a big difference.
jim695, can i hire you when i win a huge jackpot?
Maverick:
If you need some technical data written up and organized in a dry, boring but concise manner, then sure, I'll work for you. If, on the other hand, you're looking for someone to clean your pool or to give you financial advice, then I'll have to pass, since I'm not qualified for either position.
lol@clean the pool.. nah, a technical data write-up would be nice
Thanx
JIm: I agree with this
Don't spend - invest.
Let's look at the same scenario,
Although I haven't broken it down as well as you have. I thought about this scenario on more than one occasion. And since I'm approaching my mid fifties. I opted in my mind to go the route I stated above. If it were any less than 10 million. I would possibly take 250,000 to 500,000 and make some living changes. Then invest the rest, while it matures and live off the principal. Not to difficult a task for me since I live on a fixed income anyway. If I were to win big I would definitely sit down with some money pros and go over every possible money making possibility. Including investing in some small franchise that would bring in some extra capital to work with.
Having seen and known some of these blankety blank lottery winners in my area I kinda got some ideas not to go the route they did. Some are back to work a few are on skid row. Having spent till it was all gone.
Some are doing ok others continued working for a few years while there investments grows. Waiting for the ultimate vacation of a lifetime while enjoying an early retirement. It helps to know the value of money and what it can do for you if invested correctly.
Thanks for your reply you gave everyone something to think about including myself
Not a nightmare for the newest Mega Millions winner-reports say he chose CASH...
Well, I dunno if its a nightmare BUT If they let me win a couple of millions then I will come back on this forum in a couple of months and let you guys know how everything is going.
lol
It really would be simple...
A. Have a plan beforehand
B stick to it.
That's it.
Consider what it means to live within your means, then plan on extending that into retirement... doing that could set you up for life as you know it minus a job... Also consider retirement, and healthcare... I had looked into comprehensive plans that would run you 1,600 a month as a family, but would be 100%, not the 80/20 split most employers offer.
Once you have been around the block, you can ask yourself how much fun it would be to have to clean a 10 bedroom mansion... don't get more house than you need, and it doesn't have to be "NEW" to make you happy... I have my eye on a really nice lakefront nearby that is well under even a half million...
I base my strategy on the base PB jackpot, anything else is extra that can be invested long term because it wasn't planned for. I like the idea of tax free municipal bonds... just watch the rating for the particular municipalities you plan to invest in.
There is really no desire for me to have a new car, 1 or 2 years old would be fine if it was in great shape... you would save a bundle.
The big shift will be from Making money to Keeping money... no need to alter your frugal ability to live on your current salary, you would just be given all that time that you would spend working. Of course there would be extra money, but it doesn't need to be spent.
My goal is simple, secure income for 35 years then secure retirement and security for the kids... I can pull that off with the base PB jackpot (lump sum after taxes)...
gotta have a plan and the discipline to stick to it. Also the freedom to go about life without hounding... MUST establish that personal property trust to claim anonymously... or buy tix in delaware ;-)
Zzzzzzzzzzz...old news...
Hypersoniq:
Excellent post!
I'm happy to see that someone understands that winning a jackpot and then managing that wealth has less to do with knowing "the value of a dollar" than living within your means.
Your two-step plan, while simple, embraces the millionaires' code of frugality; millionaires don't become millionaires by spending money. That's not meant to suggest that all wealthy people are tight-fisted, but the majority will complain about the price of almost anything they buy. Ask any waitress, and she'll tell you that most of her income comes from the people who can least afford it (generally speaking, the working poor tip more often, and better, than rich people do).
Like you, I would be just as happy with a two-year-old car as I would with a new one, since the older model would get me from point A to point B and back again. It just wouldn't be as impressive to the pedestrian traffic, but then, I don't care to impress them. I don't need a mansion, nor the enormous responsibility that comes with such an ostentatious purchase. Living in a mansion advertises the fact that you have a lot of money, so unless you win enough to cover the cost of round-the-clock security, in addition to property taxes, upkeep and maintenance, staff salaries (gardeners, housekeepers, etc.), insurance (homeowners' and general liability), bodyguards and a battery of lawyers, you're much better off buying an existing home in another city, state or, at the very least, a different neighborhood.
You've obviously put a lot of thought into your plan but, if I may take the liberty, I'd like to point out that Step One will involve many sub-steps, such as speaking with a financial planner or investigating and keeping current on the ever-changing rates of various investment vehicles (municipal bonds, CD's, commercial bonds, REITs, mutual funds, etc.). You'll need this knowledge when you win, so it makes sense to acquire this information before you need it.
Studying this now will give you the confidence to rely on your own knowledge, without being at the mercy of some attorney who's going to try to get every dime you have anyway. Unfortunately, you'll need an attorney, because when word gets out that you've won the jackpot, some people will want to sue you for any reason they can think up. Given the litigious attitude that's prevalent in America these days, you could find yourself in court if your girlfriend breaks a nail while opening your beer, or if your dog chews up your boyfriend's favorite Levi's (these are real lawsuits, although I have no idea who won in either case).
So, where does this leave us? Should you be afraid of winning an obscenely large amount of money? I wouldn't think so, provided you've properly prepared for it. What should scare you is the likelihood that you won't be able to hold onto your money if and when you win the jackpot. Having more money than you've ever seen fall into your lap can be very intimidating, but it doesn't have to be that way. Spend some of your spare time studying your current finances. Figure out, to the penny, how much it costs you to live week-to-week, month-to-month, year-to-year. When I did this, I discovered I was spending over $1700.00 a year on cigarettes, and another $1430.00 a year on Starbuck's coffee. That's $3130.00 a year, or nearly $261.00 a month on coffee and cigarettes. I quit smoking, and now I drink Folger's, so I have an extra two hundred bucks a month in my pocket. For those of you who care to indulge, I think you'll find some similar surprises.
Hypersoniq, it appears that you've prepared yourself for the big win. Now all you need is the jackpot, and I believe your preparation in that area is probably quite substantial as well. I'm sure you've spent several hours, if not days, in selecting your numbers for tonight's drawing. I've said before (actually, someone else said it first) that luck is the point at which preparation and opportunity meet. You've taken care of the preparation, and I have no doubt that opportunity will find you soon.
Thanks for an outstanding commentary, and the best of luck to you in the upcoming draws.
the problem is not people who choose to take thre anuity. it's those who take the annuity, but consolidate the remaining payments to a lump sum.
Exactly
Yeah easier said than done. Granted these folks have no discipline but how could you not spend money on those around you? That'd be hard...