Lottery winners are doomed, doomed I tell ya!

Be careful of what you wish for, you might get it.
 
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.
 
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We do occasionally buy a lottery ticket for the entertainment value of nice daydreams. But we've talked about it and one of the first stops would be to a fee-only FP to set up a sustainable investment/withdrawal plan. I probably wouldn't even buy a new pickup truck since the one I have runs just fine but might spring for having it detailed.
 
bondi688 said:
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.
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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.
 
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I couldn't help but shake my head when I read about him going to the Pink Pony. You knew the story was headed south at that point. And why would anyone ride around with thousands of $$$ in their car? You are asking for trouble.

I have often thought that if I won such money, I would move into a highly secure gated community. Not to be flashy, but to be somewhat secure. And I too would give lot's of money to programs for the needy. For me, that would be a great feeling knowing that I was doing some good.

But I won't ever have to worry about it. No lotteries to play around here. Plus I'm too cheap to play those odds. ;)
 
audreyh1 said:
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."
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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.
 
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bondi688 said:
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.
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Sure it's anecdotal, but it's an anecdote that busts quite a few assumptions about what might keep a lottery winner from going down the drain. Who among us has a "dark side just waiting to spring out"? We really don't know....
 
Lots of successful lottery winners since December 2002 when Whitaker won. He also says himself at the end of the article, "reports that he was broke were false." He was probably an obnoxious idiot before he won.
 
Audrey, thanks for the link. This story does read differently, this individual appeared to have more of the judgement and attitudes we have (or think we do).

I would imagine even the most steadfast among us would waver after the unending onslaught of people looking for handouts and it shouldn't take too long for some family member or long time friend to find a way in. An urgent medical need or an indisputable worthy cause. Once that first crack in the facade occurs it probably gets more difficult each time, a sort of slippery slope.

This reminds me so much of one principle in the corporate world, which is not to promote someone too rapidly into levels of mega-compensation, because no matter how intelligent or well prepared they are, after dramatic, sudden increases in income they often make poor choices. Athletes face similar outcomes.
 
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.
 
The first time I played, I won in the lottery about 15 years ago. It didn't change my habits one bit. Kept on working and now am happily retired. And I never played the lottery again or even went to Vegas.

Yep, a $1 lottery ticket payed out $9 and I decided I'd quit a true winner. :)
 
Here's an article about 7 lottery winners who managed their winnings successfully, too bad most people aren't interested in their stories. Successful lottery winners I admit I didn't care to read the whole thing myself.

Many members here are managing a largish retirement portfolio prudently, so I'd expect many here to be successful with lottery winnings. Too bad few if anyone here would play - except maybe on an occasional lark... :)
 
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Lsbcal said:
The first time I played, I won in the lottery about 15 years ago. It didn't change my habits one bit. Kept on working and now am happily retired. And I never played the lottery again or even went to Vegas.

Yep, a $1 lottery ticket payed out $9 and I decided I'd quit a true winner. :)
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Same story here! When the state lottery first opened here about 30 years ago, I bought a couple of tickets to see what one looked like, and won something like $15, the first time ever. Beginner's luck! Didn't win any after that, so I promptly quit.

I occasionally played with a couple of dollars when the grand prize got big. However, I am so tuned out of the media that about the only way I know of the megabuck jackpot is from a thread on this forum! And then, it may not be a day for me to make a grocery run, so I may not have a chance to get a ticket.
 
Lsbcal said:
The first time I played, I won in the lottery about 15 years ago. It didn't change my habits one bit. Kept on working and now am happily retired. And I never played the lottery again or even went to Vegas.

Yep, a $1 lottery ticket payed out $9 and I decided I'd quit a true winner. :)
Click to expand...

Similar story here. Never played the lottery but a few weeks ago we went to Las Vegas for the first time. We spent a few days in Death Valley then the weekend in Vegas before flying home.

No way was DW going to gamble, but I wanted to have a go. I handed over $100 at a Blackjack table that had a minimum bet of $10. After 10 minutes I was up $55 so I cashed in. DW was watching from the distance and said she couldn't believe it was all over so quick.

Gambling in Vegas, or any casino, was never on our bucket list, but at least I can say that I have been there and done that.

As for the OP, I knew someone who won £225,000 in the early 80's. (this was in the UK). It didn't ruin their lives but it didn't give them much pleasure for long. He quit his job, they bought a big house, sent their 2 kids to private schools and he bought a milk round. (Back in those days most folks had milk delivered every day). He put the rest in the stock market and lost all of it in the crash of '87. Sold his business and went back to being a plumber after that.

I guess they blew through their winnings in ~5 years, but at least they had a few years experience of living as high rollers.
 
I consider the $300k company stock payout when I left my company in 2008 something akin to a lottery winning. The stock was in addition to our regular compensation, even in addition to our pension (before that got frozen), and our 401(k) matching funds (for a while, until the stock became the matching).

This stock was a key part of my ER plan, as I was able to cash it out at relatively low tax rates (NUA, at 15% LTCG) and keep 75% overall. Simply being able to live off dividends after I reinvested it is a huge, huge improvement to my life.

I have played the lottery only a few times in my life, not counting a few office pools over the years. Already an early retiree, if I won it I'd probably get a bigger place to live and nothing more. My close relatives are fairly wealthy so I would not have a bunch of moochers coming out of the woodwork. I am very good at saying "no" to people. I have a ladyfriend and no kids so nothing to worry about there.

I am stunned at how the people in some of the linked articles simply blew everything they won and are back in the poorhouse again (or worse). Or maybe I shouldn't be stunned.
 
audreyh1 said:
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.
Click to expand...

I think this much money becomes overwhelming and makes people descend into mental illness.
 
The most important thing in winning a lottery is holding on to it. If a person did nothing but put the money in a money market fund that would put you ahead of most people. Many people who win try to invest it and lose it. If it is not spent crazy to begin with.
 
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.

bondi688 said:
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.
Click to expand...
bondi688 said:
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.
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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.
 
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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NW-Bound said:
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.
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Rule #1 - don't give your kids massive wads of cash to spend each week.
 
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