We all dream of hitting the big one, or wish that we could fall into instant riches by simply choosing the right winning lottery numbers or allowing them to be randomly generated from a computerized lottery machine onto a little piece of paper, but it has often been said that we should be very careful about what we wish for as everything comes with a price, including winning the lottery, especially when it involves winning millions of dollars. The actual chances of becoming a multimillion dollar lottery winner are astronomical to begin with, but when fate intervenes, miraculous things can happen that will forever change a person’s life, for better or worse.
Even though huge winnings can change a person’s life style dramatically, it is said that if you were happy before winning a huge sum of money, then you will be happy afterwards, but if you were an extremely unhappy person to begin with, winning a multimillion dollar jackpot will change nothing except the size of your bank account. In other words the problems that you had are still lying in wait to rear their ugly head, and the lottery money only temporarily covers up the problems for a brief period.
Experts have looked into the lives of past lottery winners and have learned that not all multimillion dollar winners have a happy ending. A common issue within our society is the belief that money solves most of our problems. Another big problem is the lack of financial guidance when being handed over a large amount of money. In fact nearly one third of multimillion dollar lottery winners become bankrupt in just a few short years after they’re big win. If you are not accustomed to having great wealth as many of these big lottery winners were not, then the problems that come with suddenly having a lot of money overnight can be so overwhelming that depression becomes inevitable.
Lottery Nightmares & Curses
William “Bud” Post won $16.2 million in the Pennsylvania lottery in 1988 but now lives on his $450.00 a month Social Security check after relatives, and an ex-girlfriend tormented him until he invested and shared his millions with them.
The 2002, $314.9 million dollar Powerball winner Jack Whittaker was sued by an Atlantic City casino in 2004 for allegedly writing bad checks from a closed bank account in West Virginia.
Evelyn Adams, who won the $5.4 million dollar New Jersey lottery not just once, but twice in 1985 and again in 1986 gambled most of it away, and is broke today.
1993 Missouri lottery winner Janite Lee won $18 million, but was overly generous by giving the money away to a variety of causes leading to her filing bankruptcy just eight years after her stroke of good fortune hit.
Billie Bob Harrell Jr. hit the $37 million dollar Texas jackpot in 1997 only to end his own life less than two years later when he realized that all he wanted his marriage more then the money, but that it was too late to fix the strained marriage. Why was it strained? His spending habits spiraled out of control, and his wife only wanted a normal life which was anything but.
Juan Rodriguez had been thrown out by his wife Iris prior to purchasing a winning New York lottery ticket worth $149 million. She reconciled with him for two weeks, then filed for a divorce taking half of his winnings with her.
The Money Dilemma
Buying a dream house tops the list for new multimillionaires when it comes to big ticket purchases, but more often then not, these people are not prepared to see the whole picture of what the total costs and upkeep entails with owning a larger home or mansion. Bigger utility bills, insurance, and taxes are not usually considered due to the excitement of such a big purchase that is now suddenly within reach due to having cash readily available, and very little experience on how to spend it wisely. Then you have to consider the money being spent on high priced decorators due to the lack of time to do it yourself since you are busy burning money. Then there is the new furniture and gadget purchases that also come into play with this new vulnerability trap that you now own. It also stands to reason that the next thing on your wish list is beautiful, expensive cars to line the driveway as the old clunker you once drove in the pre-millionaire days would never set well with the neighbors or your new lifestyle.
Facts About the Lottery
Many lottery winners claim that winning the lottery was not all that it is made out to be and that winning the lottery is the worst thing that ever happened to them. In fact many of these winners claim to have lost their friends and family due to their large winnings and the circumstances that surrounded their new status in life.
Lottery winners eventually have financial difficulties due to the lack of budgeting and making a solid financial plan with their new winnings.
Americans spend more than $25.1 billion a year on lottery tickets.
A $1 million dollar jackpot is not a $1 million prize by any means. Technically you are only a thousandaire, not a millionaire, thanks to the IRS withholding their 28% each year from your lottery check.
If you purchase a lottery ticket with a group of people, a winning lottery ticket can become your worst nightmare if you solely claim all of the money as the lottery reports only your SSN to the IRS. This makes you liable to pay all of the federal income taxes due on the winnings. If you distribute the winnings among group members, you are additionally liable for gift taxes on amounts more than $10,000 given to each group member annually. To avoid this problem you can draft a simple group partnership agreement using a do-it-yourself legal kit available at office supply stores. You should also request a free SS-4 form from the government that includes a Federal Employee Identification Number for joint winning lottery claims. Call the IRS at 800-829-3676 for the form.
More than $61 million dollars have gone unclaimed as most states require that winning tickets be filed within six months of the winning date, and tickets get thrown away, washed, stolen or misplaced.
Privacy becomes a thing of the past once you become a multimillionaire as you are now considered a celebrity. Getting an unlisted phone number, post office box and a sound security system installed into your new home is important to your sanity.
Scholars disagree on who started the ancient tradition of lotteries, but there are references in the Bible. In Chapter 26 in the Book of Numbers, Moses used a lottery to award land west of the River Jordan. For more information about lottery history, go to: http://www.naspl.org/05/history.html
You Have Won the Lottery, Now What?
First, catch your breath, then immediately hire a qualified and reputable financial planner like a CPA or a CFA. Do not hesitate to ask questions and get several names of other people that they have worked within the past. Do not solely rely on your financial planner as you have to learn how to budget your own money at some point. Purchase secure bonds, and even though they don’t yield as much interest as stocks, they are a safe way to invest your money. Another option is online banking for stashing your cash. Two of the best are citibank or HSBC Direct, simply because they offer a high yield of interest to customers, and they are FDIC insured, have no hidden fees, and come highly recommended by the Wall Street Journal.
