Lottery winners are doomed, doomed I tell ya!

[veremchuka]

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!

 

[GrayHare]

I wonder if lottery winners who take the annual payment option rather than the lump sum fare any better.

 

[rayvt]

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.

 

[Independent]

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.

 

[Sandhog]

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.

 

[audreyh1]

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!

 

[tryan]

Note to self: Accept the wad ananomously ... no one wants to be remembered as the lucky b@stard.

 

[omni550]

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.

omni

 

[Sarah in SC]

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.

 

[Andre1969]

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.

 

[Koolau]

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

 

[Purron]

No. The book "Money For Nothing" told all about this.

So did this video

Dire Straits - Money For Nothing music video (Good quality, all countries) - YouTube

 

[LeavingOhio]

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.

 

[NW-Bound]

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?

 

[studbucket]

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

 

[travelover]

Doomed I tell ya.


Illinois man killed by cyanide poisoning after striking it rich in lottery - CNN.com

(CNN) -- One day, Urooj Khan jumped for joy after scoring a $1 million winner on an Illinois lottery scratch ticket.
The next month, he was dead.
Investigators initially ruled Khan's manner of death natural. But after being prompted by a relative, the medical examiner's office in Cook County, Illinois, revisited the case and eventually determined there was a lethal amount of cyanide in Khan's system.​

 

[JoeWras]

Publicity kills. Especially publicity with the lottery.

Even if you are a LBYMer and want to manage your lottery winnings correctly, the publicity of the lottery will draw hoards of undesirables in your direction. Many of these people have no idea of the value of money. It can eat you alive.

The OP story exposes that Whittaker had some demons that were let loose by the winnings and hoards of hanger ons. The tragic story above about the cyanide exposes what I believe are some of the undesirables who have no idea of just what this fellow really had, which in today's money was not ultimately a lot. But to a crack head, it was a lifetime-plus. (Not saying a crack head did this, but hope you get the drift.)

 

[ERD50]

Doomed I tell ya.


Illinois man killed by cyanide poisoning after striking it rich in lottery - CNN.com

So, if his body had been cremated, there would have been no way to do the forensic work, right?

-ERD50

 

[omni550]

I know that some states require that the lottery winner(s) are made public which opens the doors for 'unsavory types' to pursue the winners.

I wonder if a winner could hire a lawyer or some other representative to be their public "face"? I'm guessing that this would require some sort of a legal document to keep the rep from absconding with the money.

omni

 

[Dimsumkid]

I know that some states require that the lottery winner(s) are made public which opens the doors for 'unsavory types' to pursue the winners.

I wonder if a winner could hire a lawyer or some other representative to be their public "face"? I'm guessing that this would require some sort of a legal document to keep the rep from absconding with the money.

omni

In Illinois, they're required to publicly name the winner. The IL lottery guy talked about it for the last big lottery payout. They provide public proof somebody actually won the lottery and that it isn't a scam. Even if you have an attorney, they still name the winner, you can't stay anonymous, with more information (city name, street name, TV news may even show your house) than necessary too. It makes you want to relocate if you're the "lucky" winner.

So, if his body had been cremated, there would have been no way to do the forensic work, right?

-ERD50

I'm not a scientist, but I think the cyanide would still be traceable in the ashes if analyzed.

 

[Lazarus]

I'm not a scientist, but I think the cyanide would still be traceable in the ashes if analyzed.

Not if you scatter them.

 

[jon-nyc]

I wonder if a winner could hire a lawyer or some other representative to be their public "face"? I'm guessing that this would require some sort of a legal document to keep the rep from absconding with the money.

A friend of mine and his GF won $44MM in the VA lottery a few years ago. They looked into various ways to hide their identities, including selling the ticket, even securitizing it. No deal.

So they hired a PR agent to help them minimize exposure. He gave them interesting advice, for example a press conference and statement was mandatory. But he was advised to dress badly and read from a piece of paper for the statement - local TV didn't run it. They also downplayed their comfortable stations in life to minimize that becoming a story in itself. So he, instead of being an exec at a brokerage firm 'worked for a financial services company' and she, instead of being an oral surgeon 'worked in a dental office'.

 

[omni550]

A friend of mine and his GF won $44MM in the VA lottery a few years ago. They looked into various ways to hide their identities, including selling the ticket, even securitizing it. No deal.

So they hired a PR agent to help them minimize exposure. He gave them interesting advice, for example a press conference and statement was mandatory. But he was advised to dress badly and read from a piece of paper for the statement - local TV didn't run it. They also downplayed their comfortable stations in life to minimize that becoming a story in itself. So he, instead of being an exec at a brokerage firm 'worked for a financial services company' and she, instead of being an oral surgeon 'worked in a dental office'.

Sounds like they're probably smart enough to avoid falling into the same traps as many of the unsuccessful lottery winners do. Would you be willing to give us a brief update on how they've done since winning?

omni

 

[Sarah in SC]

jon, that is interesting! I'd like to know, as well, just for curiosity's sake!

 

[jon-nyc]

Put it in context, they were in late middle age with very successful careers - this wasn't their first million.

Also - $44MM is the headlne number, the sum of all payments if you take it over time. My buddy was 62 then, he was obviously going to take the lump sum.

44MM 'headline' -> $26MM lump sum -> 14MM after tax -> 7MM each.

So good money for sure, but not '44MM' when the rubber hits the road.


They did expand and renovate a townhouse that he was living in. He retired, but he was a year or two away anyway. She quit her practice (probably 10 years earlier than she would have), which took 2 years due to the deal she had with her partners.

I had dinner with him a year or so after he got the money. I asked him what had changed in his life, besides the expansion/reno of the home.

He said 'I still eat out most nights, like I did before, but now when they hand me the wine list, instead of starting at the top and working my way down, I start at the bottom and work my way up'