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8 Tips To Help You Stay Rich After You Win The Lottery
Published by Mary | Filed under Loans
Find a way to turn your winnings into hard cash as quickly as possible. Get a wheelbarrow and wheel the money into your bedroom. Lift the mattress and pour the money under. It will be very heavy so you will need the help of someone you can trust. Once you have completed this first mission, wait. Okay, taking time is definitely important but the rest is highly unadvisable.
It is a sad but true story- many of the people who win the lottery, go from rags to riches, back to rags, because they have no idea how to handle such a large sum of money. And who can blame them, really? Winning the lottery is literally like a dream come true. People think with money, all their problems just disappear, but what they don’t realize is that without proper management and financial control, things can get out of hand all too quickly. They’ll quit their jobs; buy a new house; buy family members houses; get new cars; go on extravagant vacations… Estranged family members, financial advisers and charities will come after them with their hands out- and all of a sudden the financial freedom they thought they’d finally attained, turns into an insurmountable and disastrous realm of chaos. The lottery they had won becomes almost an elaborate set of government grants that disappear, drained away by greedy people and bad decisions.
Makes winning the lottery sound pretty scary, doesn’t it? Well, wealth is scary. That is, if you don’t understand how to cope with it wisely. If you or someone you know has recently won the lottery, here are some tips you should consider in order to get the most out of your money and ensure that when you become rich, you stay rich.
Change your phone number
1. Everyone you know and don’t know will be calling you so make sure you get a new unlisted number
Get Advice Before Taking The Lump Sum
2. If you are given the option to take the lump sum of money or the annual annuity payment, be aware that the lump sum will amount to less money after all the applicable taxes are removed. The lump sum is ideal if you have a particular investment in mind. If so, you should definitely speak with a financial adviser to see if this investment has a real potential for growth and revenue in the long term. In most cases though, the annual annuity payment is the most beneficial as it helps you control your spending, while still enabling you to live a more than comfortable lifestyle
Get The Taxes Out of The Way
3. Get an accountant so you can settle any tax issues ahead of time and avoid fines in the future
Pay Your Debts
4. If you have debts, make paying them off your first priority
Be Patient
5. Be patient and sensible with your winnings. Financial experts recommend that upon winning, you should immediately put your money into an interest-bearing bank account, so you can consult with professionals on how to maximize the interest income
Don’t Quit Your Job
6. Or at least, don’t quit your job right away. Think about you and your family’s security in the long term- retirement funds, trust funds, college funds, loans, not to mention a sense of purpose. If you really don’t like your job, consider taking a leave of absence so you can allow yourself some time to really think about what you could do with your new-found wealth. Is there a passion of yours you can finally realize?
Don’t Gamble Your Money Away
7. Don’t gamble. Just because you got lucky once, doesn’t mean it’s going to happen again. The incredible two time lottery winner Evelyn Adams, made the foolish mistake of gambling away almost all her money at the Atlantic City Casino and now lives in trailer park.
Prepare Yourself For Change
8. Be prepared for change. Winning the lottery is going to bring about big changes in dynamics with family, friends and career that you won’t see coming. It might be a good idea to seek some professional advice on how to cope with becoming rich and not letting it take over your life.
March 25th, 2009 at 1:47 pm
The only advantage of taking an annuity rather than the lump sum is stupidity. If you are too stupid to manage your money then take the annuity. But it’s not less money. It’s clearly MORE money if you manage it correctly.
You see, if you take the annuity, the state doesn’t pay you the annuity, an annuity company does. That annuity company gets that exact same lump sum from the state that you would have gotten, and uses that lump sum to pay your annuity. And they still have enough money left over after paying you the annuity for the company to make a hefty profit. But if you made similar investments to that annuity company, you could simply pay yourself a bigger annuity and cut out the middle man.
The question is, can you do that? If you don’t have the wherewithal to get that professional advice, and hold off on immediate gratification by awaiting those personally invested annuity payments, then by all means take the annuity and let someone else manage it. But don’t go away thinking you made out with a larger share of money, for you did not.
March 26th, 2009 at 7:34 am
I definitely think it’s either a Miata or a Del Sol.
March 26th, 2009 at 7:55 am
I totally agree with Mark, dont be a dummy, take the lump sum.
March 26th, 2009 at 11:44 am
Wow, some pretty strong opinions on this post already. Nice post…some very sound advice!
March 26th, 2009 at 7:27 pm
[…] What should you do if you really have a winning ticket in a lottery. If it is a big one, then you should read carefully 8 Tips To Help You Stay Rich After You Win The Lottery […]
April 6th, 2009 at 1:03 am
hmmm….I would just love the chance to prove I could do it - stay rich after winning the lotto that is!! lol
April 10th, 2009 at 6:29 am
Sound advice. But alas,nearly all of us will never have to worry about this. As for me, I would settle for just a nice £50,000. Well, er, no, maybe £100,000. Or perhaps even …[fades off into distance, muttering insanely]
April 17th, 2009 at 4:16 pm
lump sum is the WRONG way to go folk. youre going to pay a per diem fee of roughly 7.5 percent per quarter margin on this. plus the cost of the moderate lenders accounting fees, which in 2009 are around a gross 14.3 percent. so by taking the lump some on a 100 million dollar win, after taxes, youd have roughly 3,199.23 left to spend. im a financial expert in lincoln, ca. jordan horn. 916 412 1180
April 25th, 2009 at 10:11 am
thasmartone,
If you win 100 million dollars, who cares!
So you, as a financial expert, postulate that when you win 100 million dollars there is roughly 3,199.23 to spend. Is that per year, month, week, hour, or are the minutes just passing by. I do not see a whole lot of difference between ‘roughly 3,199.23′, ‘precisely 3,199.23′, and ‘3,199.23′. I certainly would not hire you to represent my future winnings.
And, please use capitals in the right places.
April 25th, 2009 at 2:39 pm
“thasmartone” is obviously not that smart. Why the hell would you pay a “per diem” fee on a lump sum payment? What would that even mean, in this context? Who would you be paying it to? And “per quarter margin”? You are speaking the financial equivalent of technobabble.
On a $100,000,000 win, you might end up with only $31,992,300, but certainly not $3,199.23. You’re off by a few decimal places there.
April 27th, 2009 at 7:04 am
I found this just in time, turns out I won some European lottery I don’t even remember entering. I just send them my bank account and their going to transfer me 10000000 euros! Finally, my luck is turning around. I’m lucky I read all the letters in my spam file, it finally paid off, don’t know why gmail puts some of this stuff in there, they should really work on their sorting, anything that says lottery should go to the top or something
April 28th, 2009 at 11:16 am
OMG I just wn that lottery too Matt… umh maybe you should of checked to see if it was a SCAM first.
Matt come back tommorrow when this blog will show you what to do after you have been scammed.
10 million dollars invested will generate 100,000 yearly.
So if i won 100 million even with over 75% of the earning going to taxes , which isn’t the case. I know people that have won a 25 million dollar lottery and they got 18 million of it after taxes, so not to sure where you getting your information.
April 28th, 2009 at 2:11 pm
Want to hit the lottery? Buy some wampq.pk and some wamuq.pk right away.
Wamu is going to come out smelling like a rose after they win the lawsuits against the FDIC and JPMorgan.
April 28th, 2009 at 9:41 pm
Annuity isn’t always best, Mark. There are a lot of variables (life expectancy, size of the payout, interest rates, tax bracket, etc.) To say that taking the lump sum is the right way to go is inaccurate.
Most experts recommend that you consult with a financial planner before cashing in.
April 29th, 2009 at 3:09 am
mark is an asshole
May 2nd, 2009 at 8:38 am
the problem is: the people who win the lottery are the same people who buy the tickets.
May 10th, 2009 at 6:18 pm
The problem with morons is that you all post comments on this site. That being the case, you’ve forced me become associated with you in order to correct all of your annuity vs. lump sum statements.
A. An annuity is not usually equal to the lump sum. The lump sum is usually smaller.
B. The lump sum is calculated based on a time value of money formula (theories that assume a dollar today is worth more than a dollar tomorrow because of inflation.) Therefore, if inflation is 2%, but the lump sum is calculated at 1%, you’ve just taken a loss.
C. Forget about any money an annuity company is making by investing the annuity dollars, you wouldn’t get that money either way.
D. Even if you make seemingly wise investing decisions with the lump sum, there is unavoidable market risk (i.e. a market crash or depression), which could make you take serious losses in the event that you are the average investor and don’t know how to whether the storm. Conversely, the annuity is guaranteed, regardless of market conditions.
What’s the moral of the story?
Every situation is different and you should do the math to figure out what the value of the total annuity is in today’s dollars and compare it to the lump sum payment. If the present value of the annuity is than the lump sum payment, take the lump sum and vice versa.
Also, to anyone who tries to reply to this post with something along the lines of “If the present value of the annuity is greater, but you could invest the lump….” in general that is a stupid statement because you would theoretically make the same investment choices because the only investment strategy you probably know is ‘buy low, sell high.’ (Which by the way, almost no one does.) If you want to argue that you would make different choices as time would go by based one decision or another, then the discussion has moved from finance to quantum physics and I’m not qualified to debate on that subject.
P.S. sorry for the rant, but most of you are dumb.
May 10th, 2009 at 11:19 pm
Thank you for this explanation. It’s a pity it’s such a discourteous reply.
May 18th, 2009 at 8:47 pm
It’s okay, Prodnose. Leeroy up there is a college undergrad with a few more years to go before he figures out how to be intelligent *and* bearable. I’m about to graduate myself, and sometimes us upperclassmen have to just remember to keep our hands down, let them keep their teeth, and they’ll grow out of it.
Fortunately I won’t have to put up with guys like this much longer.
On a more positive note, great post!
May 18th, 2009 at 10:45 pm
Thanks, Kairos! Your reply really made me laugh. One of the difficult things about getting older is the difficulty of keeping your big fat mouth shut when you see all these young things doing things wrong all over the place, and the temptation to put in your tuppence worth can sometimes get to be too much, even if you do it through clenched teeth without the obscenities. Other times its like watching a box of kittens learning to put their legs up so they can wahs and falling over because they can’t quite do it yet.
May 21st, 2009 at 6:20 am
I think there is one thing to do that has not been mentioned so far. It’s a quite important thing to do and oh-so-simple. The first thing you should do is simply shut up. Don’t tell anyone. No one needs to know that you won, or at the very least how much you won. I expect you would get all sorts of long lost cousins coming out of the wood work once word got out. Set up a blind trust to collect the winnings anomalously. And for god sakes don’t get your pictures taken with the oversized check at lottery HQ and then get it splashed all over their website. LOL
May 27th, 2009 at 11:48 am
If you won a 100 million dollars and decided to take the lum sum and place it in a interest bearing account how much of that money is protected by FDIC in case the bank folds? Are do you think you shouldn’t store all the money in one bank?
June 17th, 2009 at 6:58 pm
I know from experience. I won $100,000 at a casino. No annuity option. I banked $60,000 after taxes and other fees. Now on the other hand, some lotteries that are in the millions often carry a luxury tax which comes out to about 1M for every 10M won, THEN all fed. and state tax. I don’t know what would actually be better, but I want ALL the winnings, after taxes and fees, in a bank to draw interest. Nothing fancy here either, I just live comfortably. Still pay the mortgage, still drive the same old truck. But I don’t have any other debt, and my family has no need or want that goes unanswered.
June 22nd, 2009 at 2:36 pm
I’m a private financial expert. If you guys are having any problems with money, just send it over and I’ll take a real quick look at it.
June 22nd, 2009 at 10:08 pm
What I have learned by sad experience over the last few years: if approached by a private financial expert assuring you that he will do you good, RUN LIKE HELL.
October 11th, 2009 at 6:06 am
a beggar is a beggar, regardless of how he’s dressed.
March 8th, 2010 at 9:01 am
#1, 5, and 8 are probably the best advice. Many lottery winners get too caught up in the winning and spend before they think. There are also people who regularly call lottery winners with SOB stories hoping to get $50,000 here or there.