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Old 12-16-2012, 02:21 PM   #21
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The good news (!) about this article is that every parent can use it to justify to their teens why they're not getting a hot car and money from their parents. Ever.

Dawg, I've taken your advice to heart-- I'll try to steer clear of pink ponies... and other boobie traps.

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There are a few of these lottery winners going bust after a few years kind of stories. Those stories feed our envy and our craving for Schadenfreude. But I think those rich to bust stories can be traced to the financial and general cluelessness of some people who play the lottery where the fortuitous win was often the only victory in their lives.
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The story is still purely anecdotal. That guy has a dark side that is just waiting to spring out. I'll be willing to be subjected to an experiment: give me that amount of money and visit with me at whenever interval for whatever length to see if I am broke, and I 'll pay a part of the expanded pot as interest.
Give us long-term posters a little credit, huh?

Over the years on this board, we've already read about 500 "anecdotal" stories of rags-to-riches lottery winners. Ten years ago there was every indication that this guy was a self-made millionaire who would generally do good things for his community and philanthropy. The classic "Millionaire Next Door" stereotype (which has certainly been researched enough to avoid accusations of "anecdotal"). It turned out that this winner's threshold was just a few million bucks higher than the average lottery winner.

Unlike much of today's financial porn media, I think that Bloomberg Business Week is generally a well-respected publication capable of documenting its research. I'm not sure how you've slotted their editorial efforts as "anecdotal".

However if you interpret "anecdotal" to mean "isolated case, not enough participants for an unbiased study" then yeah, I think we'd find a few volunteers on this site ready to help further the scientific pursuit of financial truth.
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Old 12-16-2012, 02:31 PM   #22
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audreyh1
You really cannot and should not generalize an anecdote.
I didn't.

FYI - the thread title was tongue-in-cheek. I hoped that was obvious.
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Old 12-16-2012, 02:46 PM   #23
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Nords, that article is just a recounting of Whittakers' story, it is another anecdote and while Business Week may have been accurate in the reporting the story, it is not meant to be an editorial nor does it qualify as research by any means. My point is more about why the media love to write about the rich to bust story that satisfy some people's sense of envy and Schadenfreude. Midpack had linked to article that document winners who stayed level headed and their lucky winning had not lead to a fall, personal or financial ruin.
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Old 12-16-2012, 02:50 PM   #24
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It's tragic how this man's money destroyed the life of his granddaughter and daughter too.

I am often amazed at how some of the super-rich people were able to raise normal children. I wonder if many of them have to send their offsprings to boarding school, because they realize that they may not be able to educate their kids on their own.
Rule #1 - don't give your kids massive wads of cash to spend each week.
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Old 12-16-2012, 03:07 PM   #25
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Dawg, I've taken your advice to heart-- I'll try to steer clear of pink ponies... and other boobie traps.


Didn't say I've never been in one. Burp............
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Old 12-16-2012, 04:10 PM   #26
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But that was my whole point. Here is a case where it was not the "financial and general cluelessness of some people" nor where "the fortuitous win was often the only victory in their lives."

Here was a successful businessman who had already built a business and considerable wealth through decades discipline and hard work. He must have exercised pretty good judgement and some level of maturity to get where he was. Yet two years after winning a huge lottery, he had completely changed, spending money like a maniac. It's as if all these latent vices jumped out and took over and any maturity or good judgement vanished. All of a sudden he's a drunk driving insane guy who hands his live-in granddaughter $5K in cash weekly even though it must be clear the bad crowd she's running with.
Audrey all excellent points that I was thinking also. I don't get it but I have seen shows on TV and read many articles like this. But usually they are people that had little to nothing and just had no clue how fast they were giving and spending the money, this guy was a millionaire.

When I read this "Whittaker told the biscuit lady at the C&L to pick out a new Jeep, gave her a check for $44,000, and then bought her a house worth $123,000 more" I knew the guy was doomed by his own stupidity!

It's been said many times and I doubt any people here would fall into this trap but give me a fraction of what this bozo won and I guar-RON-tee you I'd be just fine. If I won tens of millions I'd buy some stupid things (I'd buy 1000 acres of land in nowhere and a Cat D9 just to play in my sand box! ), we all would, but I'm just too careful to blow it. I retired with less than 10% of his net check and I have all of it still 5+ years later! What a ma-roon!
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Old 12-16-2012, 04:12 PM   #27
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I wonder if lottery winners who take the annual payment option rather than the lump sum fare any better.
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Old 12-16-2012, 05:41 PM   #28
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No. The book "Money For Nothing" told all about this.

There is a category of shark who hound those winners and buy the periodic payouts for a lump sum. As you would expect, the lottery winners get screwed big time.

People who are so innumerate as to play the lottery have NO IDEA of what "discount rate" or "Present Value" means.
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Old 12-17-2012, 01:21 PM   #29
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Like others here, I figure that a lifetime of LBYM, and more financial literacy than the average American (e.g. I know what "present value" means, and I'm too good at math to play the lottery), would allow me to handle the sudden wealth.

The primary issue would be the kids. This guy ran into that. I can't see completely leaving them out, but they're too young to retire on somebody else's money. It would be easier to deal with them if I won less rather than more. An advertised $10 million lottery prize works out to an annual payment of $100k after taxes. I could tell my kids they each get $15k per year as long as they have paying jobs. That's enough to buy a nicer car, nicer house, or nicer vacation, but not all three. Certainly not enough to quit work.
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Old 12-17-2012, 01:40 PM   #30
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I think lots of lottery winners are doomed because they no longer see the value of money. It's much like gambling in casinos. After playing for couple hours, chips are just that chips and no connection to money. If I have to place bet at blackjack table with money, I most likely think twice before placing $10.00 on the table verse $10 chip. Also, some may be doomed because new founded money is not earned and don't see the real value.

I don't play lottery except once in a blue moon when endless hype of large jackpot. If I did win, I would just retired and live according to my plan that I have been working on for past 15 years except fly first class to travel destination rather than planned coach. I would still eat same think like lunch at 7-11 with super big gulf and dinner at Taco Bell and KFC.
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Old 12-17-2012, 01:54 PM   #31
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I think lots of lottery winners are doomed because they no longer see the value of money. It's much like gambling in casinos. After playing for couple hours, chips are just that chips and no connection to money. If I have to place bet at blackjack table with money, I most likely think twice before placing $10.00 on the table verse $10 chip. Also, some may be doomed because new founded money is not earned and don't see the real value.
Yes, that seemed to be part of what happened. And almost a compulsion to spend like crazy because there was so much of it!
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Old 12-17-2012, 01:59 PM   #32
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Note to self: Accept the wad ananomously ... no one wants to be remembered as the lucky b@stard.
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Old 12-17-2012, 02:28 PM   #33
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Note to self: Accept the wad ananomously ... no one wants to be remembered as the lucky b@stard.
Some states require that the winner be publicly identified. I think that helps spur future ticket sales, as people see what the winner(s) look like and can identify with them. Plus it takes away the conspiracy theory people's arguments that no one is actually winning the lottery.

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Old 12-17-2012, 02:30 PM   #34
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That Edward Ugel book, Money for Nothing, was incredibly chilling. And even more anecdotes than this well-written article. Thanks for the link, Audrey. "Sudden Money" is a particular interest of mine, along with other aspects of behavioral finance.
Rarely does a person come out unscathed from what they come to believe is "unearned weath". A few minutes on Rich Kids of Instagram is even more depressing.

I had higher hopes for this guy, too, but it looks like he couldn't manage wealth he hadn't earned through his own work any better than the typical lottery winner.
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Old 12-17-2012, 02:42 PM   #35
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My stepdad won $1,000 from some Washington DC lottery back in the early 80's. I don't know what he did with it, but he'd just buy a ticket every once in awhile...he never got addicted, and winning never changed him.

I also have some relatives who were addicted to gambling. It got so bad they had to declare bankruptcy. Lost their single family home, and moved into a townhouse. Lucked out and won $100,000 soon thereafter, but managed to blow it in pretty short order. Lost the townhouse, as well. The husband ultimately passed away from poor heath, penniless. The wife and one of her sons went in together on a more modest townhouse in a cheaper area, but she's basically going to be pinching pennies for life. And her two kids pretty much grew up to be spoiled brats.
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Old 12-17-2012, 06:36 PM   #36
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It doesn't take a huge jack-pot to ruin people's lives. A friend inherited a decent amount from his parents in the early 80's (IIRC, something like $200K). From then until it was gone, he basically supported his worthless kids. One kid got two "trades" certificates and then two college degrees on dad. One kid got pregnant and dad set her up with her worthless sperm donor (until the money ran out). So eventually, "dad" ended up broke, divorced and with 3 kids who despised him. The guy had never been much of a money manager, but at least he made ends meet. The relatively small amount of windfall basically ruined an otherwise "normal" American family.

Maybe it's more fun becoming a failure with $200 million than $200 thousand but the result (in this case) was pretty much the same - especially the family tragedy part of the story. YMMV
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Old 12-17-2012, 06:52 PM   #37
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No. The book "Money For Nothing" told all about this.
So did this video

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Old 12-18-2012, 11:40 AM   #38
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There are a few of these lottery winners going bust after a few years kind of stories. Those stories feed our envy and our craving for Schadenfreude. But I think those rich to bust stories can be traced to the financial and general cluelessness of some people who play the lottery where the fortuitous win was often the only victory in their lives.

I do not play the lottery, not did I buy a Powerball ticket in the last big pot, but I am sure that I would NOT have the fate as the people in those stories had I won a large lottery, and I think the same for many people posting on this board.
I would be one of those who would not lose it all if I won. I've been careful with money my whole adult life, and any little extra money I've ever gotten has been used either to eliminate or pay down debt or has gone into retirement accounts. It's pretty easy to create a mutual fund and dump money into it and give yourself a salary based on a percentage draw. How much depends on how long you want it to last and how much you got to begin with. Even with just $5 million, I could invest that and take 3% for a salary of $150,000 per year all the while no longer having to invest and still leaving room for it to grow each year too. That would be more than enough for me. For bigger jackpots, that money would grow more than I would likely use it, so I would have to give to charities, and I might give annual gifts up to the tax limit to my two children. Other than that, they can plan on inheriting what's left...unless I won $100 million or some crazy number...then I'd figure out a way to give them a lot and just pay the taxes.
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Old 12-18-2012, 12:02 PM   #39
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I would be one of those who would not lose it all if I won. I've been careful with money my whole adult life...
+1, except that I had been careful with money even before my adult life.

How could I lose a jackpot of several hundred millions, if what I would do with it is this?

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Old 12-24-2012, 10:48 AM   #40
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Perhaps I'm just young and naive, but I think it would be really cool to decide how to give away much of my lottery winnings to charities and organizations.

I always imagined I'd take about $10m and invest it just it like I am doing with my current retirement funds (buy and hold, mostly Vanguard). Whatever is left over I would spend a few years researching and allocating the funds to various charities, organizations, and people. I think it would be great to find some really fruitful ways to divvy up the money. And perhaps I'd also create some sort of "endowment" fund that I can take the earnings from each year for charitable giving.

I've never played the lottery, but have no problem with it, and may ask my wife to buy tickets every now and then.

Who knows, maybe it'd be awful, but it doesn't mean I don't think it would be fun right now
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