Like most people, I’ve fantasized about winning millions of dollars in the lottery. Wouldn’t it be nice to have a mountain of money and coast through life, not having to worry about how to pay the bills, and being able to afford new cars, college educations for your kids, and lavish vacations all over the world?
This article from MSNBC’s Money Central reveals that winning the lottery doesn’t always match the fantasy. If fact, it can be worse than losing. The article reports on the sad fates of eight lottery winners who experienced bankruptcy, drug abuse, and sometimes even prison as a result of winning the lottery. Frequently what happens to lottery winners, say financial planners interviewed for the story, is that they are pestered by relatives and friends asking for money to pay off their own debts or to invest in dubious business propositions. One of the advisors interviewed for the story said, “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.”
One typical winner-turned-loser is William “Bud” Post, who won $16.2 million in the Pennsylvania lottery in 1988. His ex-girlfriend sued him and got a share; his own brother tried to have him killed in the hope that he’d inherit the money; and his other relatives convinced him to invest in businesses that failed. After just one year, Post was a million dollars in debt and was being hounded by bill collectors. He was sent to jail for a year for firing his gun over the head of a debt collector.
Today, Post gets by on $450 a month in Social Security and food stamps.
If you are unlucky enough to win the lottery (and I have to admit, I would still take a $500,000 annuity from winning a $10 million lottery, despite the warnings in this article), experts say you should immediately place yourself in a mental “decision free zone” for an extended period so that you can adjust to the idea of having more money than you are experienced in handling.
Mark Frauenfelder Credit.com contributor, editor-in-chief of MAKE magazine and the founder of the popular site Boing Boing, Mark was an editor at Wired from 1993-1998 and is the founding editor of Wired Online. He covers creative DIY projects and how-tos that will help you make the most of your money.
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This sounds more like a case of stupidity than a curse. No amount of money will ever buy common sense.
How eerie, I just found this MSNBC article myself last week and discussed it with some of my students.
Incidentally, William “Bud” Post died in 2006; his obit can be found here: http://www.washingtonpost.com/wp-dyn/content/article/2006/01/19/AR2006011903124.html
I find it incredibly sad that he pawned a ring to buy 40 lottery tickets, one of which won him a fortune although by his own admission he would have been better off not having won anything at all.
People would be a lot more willing to work for a living their whole lives if the American Dream were still a reality.
Check out Act Two from this This American Life episode:
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1235
http://www.rotten.com/library/culture/lottery-winners/
It’s worth noting that the article is mainly giving the advice of financial planners, and is mainly suggesting that lottery winners essentially separate themselves from their money, thus providing more business for financial planners.
That said, the major problem with viewing lottery winnings as being a curse is that it fails to consider what lottery players, and thus lottery winners, are overwhelmingly like. If someone is purchasing lottery tickets repeatedly, their understanding of finances and ability to manage capital are probably very poor. It would be interesting to compare the experiences of lottery winners to the experiences of people who quickly made fortunes in other ways—for example, by starting technology companies. Of the people I know who made fortunes that way, none of them regretted getting the money, and none of them are worse off financially than they were before.
After all, when investing is so low on the list of priorities, what can one expect the result to be? I usually think of capital in terms of income, and major purchases and sales in terms of their effect on investment income. All of this requires that investment be the foremost priority. There’s a major shift in thinking between having savings (which many of these people probably didn’t even have) and depending on assets to generate income.
I’ve given some thought to this. Maybe somebody out there knows more than I do.
Does anyone *have* to know you won? I know it’s public information, but what if the ticket wasn’t turned in by the winner. Example:
I buy a lottery ticket. I win. I hire an attorney to create a trust, then have that attorney turn in the ticket in his/her capacity as attorney for the trust– i.e., the trust is claiming the winnings. Most states (well, my state at least) holds that the person who signs the back of the ticket is the legal claimant regardless of who bought the ticket, so if the attorney’s signature says something like “(Attorney Name) on behalf of” or “as trustee for (trust name)”, wouldn’t that be perfectly legal? The attorney collects a hefty fee, the trust has the lottery winnings, and only myself and the attorney know I now have millions in the bank.
To Bobby: As a former newspaper reporter, people find out. The people from the lottery want to come and take your picture. People start talking. The place you bought it finds out that they had a million-dollar winner, and other people start asking questions to find out who it was.
I’m not saying it can’t be done, but the forces are working against you — the more publicity there is for winners, the more people are going to go out and buy tickets. And that benefits stores and the state alike.
the only people that say that living rich is awful
maybe polinesian islands and a nice villa should help
is who has money .
one chance more then me a rich man has it
for sure to pursue his dreams .
the only error that people who wins often
made is to continue the usual life….
impossible considering that if even you’ll want
people around you will make it impossible .
so change habits change mind and change country
so long
Winning the lottery is not an automatic ticket to go buck wild. You must remain responsible with your winnings, give to charity and invest so you never go broke again.
Winning the lottery is a miracle and people need to remember this when it happens to them.
I’ll gladly take my chances with a lottery jackpot
If you did win the lottery, wouldn’t it be better to just give people like close relatives an annuity rather than bicker about paying bills and such? It’s not like you were doing that before you win. None of us really want to micro manage relatives day to day money woes and concerns. I’d just set them up with a reasonable annuity and let them take care of their own problems. If they want more, too bad. Sounds cold, but money will make people crazy, so why add to the insantiy?
It’s simple…..I’d take attempt to contact the cfo of General Electric. They pay zero taxes, I’d ask for $26,000.000. cash, they take the ticket. Company takes annual payments and make $4,000.000.00 in the process secured.