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September 18, 2009


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This just makes me blatantly angry. Every time someone wins the lottery and this happens, I think to myself "why does this happen?" There is a fundamental misunderstanding of personal finance in this world, and it is very disappointing. Even with the thousands of personal finance blogs out there, we need more PERSONAL FINANCIAL LITERACY. No on should be saying "I wish I never won the lottery." First of all, I would never play the lottery, but if I did, I would be one happy individual!

How sad...If I had 3 million. I would be living a nice retirement. No fancy cars. No mansion. But maybe a little traveling and the joy of not waking up every morning to an alarm clock. Too bad those folks don't bother to look at the numbers and figure out how to make that money last a lifetime.

Yeah, I won the lottery once. Couple mill as best I can reckon. I let my cousin Bubba be ma financial 'visor. Ain't seen 'em since and don't got no more money. Go figur.

I know a young person who won the lottery - not enough to be truly life changing, but enough. They don't want to listen to their parents and they don't talk to financial advisors, so next thing you know the money is all gone. Very sad.

Playing the lottery doesn't make you bad with money. Its not a 'wise investment', its a game of chance for entertainment purposes.

I sincerely believe if you take any random sample of Americans and hand them $1 million then a significant % of them would be bankrupt 5 years later.

I thought it wasn't legal to buy lottery tickets unless you were 18, or age of majority?

Yes, personal finance literacy is probably the best solution. 3 million bucks is a lot for an individual and anyone who are financially literate can maximize the value of his winnings. It's nice to educate a person as early as possible. A person grows armed with a sound financial knowledge always has an advantage with others.

Even if the lottery organizers will provide a free financial advisors for the winners if most of the winners are not inclined to managed their wealth wisely, it doesn't make any difference. Winners will just dismiss the idea of financial literacy and throw lots of money to buy fancy things...

Matt-- Callie lives in Britain, so the laws may be totally different.

first thought -- in what state is a minor even eligible to play or win the lottery??? second thought -- where were her parents???? third -- i agree with mike on the lack of financial literacy in this country. i think it should be a part of the required high school curriculum so that students are better prepared to be financially responsible adults as they go off to college and enter the workforce.

She was 16. I was a reasonably smart 16 year old so like to imagine I'd have been sensible in her place, but who knows what I'd have done if I came into this sort of cash at that age, especially if the adults in my life were no help and gorgeous young men were turning my head every which way. Definitely a sad story.

(Although if you want to think positive, I suppose the winnings may have enabled a local clothing store owner may have retired early!)

You can lead a horse to water....meaning that you can give someone all the financial literacy in the world and it won't do a bit of good if they are of the "instant gratification" mindset. Personal greed and the ability to get what you want, when you want it in this day and age leads to financial downfall. Having the mindset that savings, providing for a family, and retirement are more important than having that Ferrari and McMansion, is a strong indicator of whether someone will do well with their money.

Well yeah these stories obviously happen, but there are also a number of winners who have been responsible with their money. One particular winner (I couldn't find the story again after a failed attempt at googling it) spends his time investing his winnings. His goal is to turn a couple hundred million into a billion within ten years, and the story highlights his success investing his winnings.

And hey I play the lottery from time to time! I can't help myself - you only live once and even if you never win, you sure as heck can't win by NOT playing.

It kills me to read these kind of stories! When I think about how I could have made that money last my lifetime, it makes me so jealous. She missed out on a once in a lifetime opportunity to make her life and others lives better.

Some people just don't get it. The odd of winning a lottery is smaller than odd of getting struck by lighting. It's a fantasy - but if you do win it, please cherish it.

$730K in designer clothes alone. You really have to be dumb to spend all that much money in clothing. With that money, you would snag two good looking housings in Washington DC area. One for yourself, and one for rental income.

Sure, I wouldn't know what to do with all the money if I've won the lottery. I'd probably buy things I've wanted to buy such as a condo, new car, and maybe a new iPod. That's it.

It's saddening to hear stories like this - why do dumb people keeping winning lotteries when hardworking Americans like you and I have to fight for survival daily?

If I ever win the lottery (I play on occasion), I'm not telling anyone, and I'm going to have a fun time giving it away anonymously.

Drugs, Parties, and Cars? Sounds like a damn good time. And i probably would spend it on something similar. Money is meant to be spent. Who cares about doing what's right, do what you want, just accept the ending result

I wouldn't use the word "lose" to describe what she did, I would use "blow" or "waste" or "consume". I think it's worthwhile to distinguish between them.

A $10 million investment portfolio might lose $3 million in a market downturn, and regain it in a recovery. A badly chosen investment (say, shorting a particular stock) might lose $3 million just by mistiming the market. Money is lost when you buy an investment and the investment drops in value. If the lotto winner had put $3 million into an attempt to, say, build a nightclub or pick up options on a particular set of stocks, I would call that a loss -- $3m turned into $0 with nothing to show for it in between.

In contrast, she didn't try to buy any sort of investments that I can see. She bought consumables, and then consumed them. She got the benefit of her spending, it was just all short-term benefit. She enjoyed a half-million-dollar lifestyle for six years, and then ran out of money.


If someone I knew won the lottery, I'd sit down with them and give them free and direct financial advice, covering the following:

1) You have $x million. What do you want to accomplish with that money? (Ex: early retirement, lifestyle increase, charitable contribution, a single lavish vacation, or some combination)

2) Given that goal and the $x million, let's draw out a simple plan for spending and investing it. When does the money run out? Is that too soon?

3) What are the tax consequences of the above plan?

4) Let's say you decide to splurge on some exotic item or items (sports car, etc.) How many years does that cut off of the money supply from step 2? If certain luxuries are worth that, budget for them and don't be surprised when your $x million turns into half of that.

The idea here is to make a plan and to understand what it costs you to deviate from it in terms that make sense. Most people don't know how to conceive of $3 million or $695,000 easily, but they'll get if you say "if you invest this and keep the same lifestyle, you can retire at age 49. If you buy $695k of sports cars and designer clothes, it costs you 5 years -- you'll have to wait to age 54 to retire. And if you buy that much every year, six years from now you'll be completely out of money."

Whenever the topic of lottery odds come up, I love bringing up the Odds of Death table from the National Safety Council:

My personal favorites include:

Lifetime odds of dying in a three-wheeled motor vehicle: 1 in 762,229

Lifetime odds of dying from fireworks: 1 in 952,786

Life time odds of dying from changes in air pressure: 1 in 423,461

Life time odds of dying from igniting or melting nightwear: 1 in 635,191

And last I checked, the odds of me winning our power ball lottery: 1 in 170,000,000+


You seem to have gotten lost and ended up on a financial responsibility website.

I think you were looking for instead.

Good Luck!

It's really silly what some people do with the money they win. I think everyone should at least put some sensible thought and planning into what they would do if they came into so much money.

Look, let's get real. I think it's as silly as everyone else - why should they win, it'd actually change *my* life etc - but the truth is none of us know what would happen if we suddenly got $3 million.

It's more an existential crisis than a matter of money management.

I's amazing how easy it is to blow money no matter how much you have. What's the old saying... "the more money you make, the more you spend!" I am reading in Jessica V. Psalidas's latest book titled, "Financial Purity," the vices that steal our money, and am learning how to create my own money vision. I may not ever win the lottery, however I do hope that I can keep a better handle on the money I do have and stop buying unnecessary things.

If I won $3 million, I would max out my 401(k) and IRA. Then I'd put some in a 529. I would be extremely conservative with the rest and put them in savings and CD's. Even at 2%, $3 million yields $60,000 a year (that's more than what I'm currently making! And probably most Americans!).

I think it says a lot about receiving such a large amount of money without actually earning it. She was too young, to irresponsible and obviously had no idea what the money was actually worth. A lot of these lottery winners unfortunately go down the same path and end up blowing it all...

$3 million isn't all that much... after taxes it's not a substantial sum. And therein lies the rub- it's easy to squander and fritter away. It may sound like a lot but it's quite achievable by earning- simply, $3 million is $100K salary per year for 30 years.

People who lose this perspective can easily squander this amount.


LOL, that's great! Putting it in a CD is just a start! How about real estate investing or online marketing that will generate much more to live off of. By the way, I thought the legal age for winning a lottery was 18.

What's interesting is you'll probably see that in almost all lottery winners, since most the people that buy tickets are low income households that don't know how to manage money well.

I feel sorry for the people that win dream homes, knowing that they probably don't know they have to get rid of it quick or they'll go into foreclosure because they can't afford the property taxes.

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