We’ve all heard it: Most lottery winners are broke in a few years. I know that it has been true for some, but are there any studies with the actual numbers?
What do you mean by spend? Waste it on non-appreciating assets?
My brother won first division Lotto a number of years ago. He “spent” all the money reasonably quickly by buying a house and investing the rest in various investment portfolios.
Not all the time, but often enough. See the discussion here:
I saw a documentary on TV recently about some of the ways that big lottery winners wasted their money.
There was a hilarious ad on TV here a while back advertising Jim Beam and cola in cans. It featured a young, grungy-looking guy being interviewed, and replying deadpan…
“What would you do if you won a million cans of Jim Beam?”
“Oh… I’d have a big party and invite all my friends, sure I’d do that, But I wouldn’t be silly. I’d give some away to friends and family to make sure those closest to me were set up well, but then of course I’d invest the rest. I wouldn’t want to blow it all. No way.”
I know you aren’t looking for anecdotes but my uncle won $3.5 million in 1985. Everybody made fun of him because his spent his meager income on about $100 in lottery tickets a week. He thought that he was triumphant we had stared at his ticket and realized that he was a winner. He lasted about a year before he was seriously in debt and the payments stopped two years ago. He is on welfare and his wife just divorced him. Like many, he had no money management skills whatsoever and wasn’t equipped intellectually or emotionally to deal with money. The entire family knew what was going to happen form day one and now he doesn’t even have anyone to turn to.
Not all lottery winners are dissolute spendthrifts. According to Powerball records, 10% of the grand prizes awarded in the last four years were claimed by trusts or investment LLCs, which would indicate the money is being invested.
Ya sorta gotta figger, doncha, that the set of people who BUY lottery tix must almost wholly overlap with the set of people with the least developed understanding of money management. So is it any wonder that you get an inordinate number of lottery winners who can’t manage their money?
I am reading a book on wealth and the analogy he uses is that we all have wealth thermostats. Rich people have theirs set higher and poor people less high. Basically he is saying what you are: Rich people know how to manager their money.
He uses the lottery as an example and I was wondering how accurate he was. Not that it would have made the analogy bad, I was just wondering.
I’m thinking, though, that some of that has to do with privacy issues. I’ve heard horror stories about how relatives and total strangers can drive lottery winners nuts.
Taking steps before cashing the ticket, like setting up a blind trust can help curb that.
Holding a press conference and announcing to the world that you just won 100 million is about the worst thing you can do to yourself.
Probably why two of the winners on that page were listed as ‘Anonymous’; apparently that is an option with the Powerball.
Another thread on the topic: Do 95% of all lotto winners go broke? - Great Debates - Straight Dope Message Board
I’d have to check on that. It seems to me that the state would be required to reveal the identity of winners. Which is why it’s wise to set up blind trusts, ficticious business entities, etc… Make it difficult for people to find out who was the name behind the name the state provided.
I can vouch for this. A friend of mine won the lottery (linked to in previous lottery posts) and his lottery advisors (the 3 wise men as he calls them ) prepared him for the troubles of winning the lottery. The main thing they drilled in him was that family and friends by far the biggest threat statistically to lottery winners. As he tells it, it turns out that was very true. He set up his extended family with deferred money i.e. putting money in a trust for their college. In some cases it wasn’t good enough. I can’t imagine. If I had a family member get mad at me because I didn’t give them money RIGHT THEN, but was going to pay for their education a few years later… I know what I’d do…
One interesting thing I found out was that unlisted numbers aren’t really unlisted. They’re available for a fee, evidently.
~I’d still like to have those problems.
e3
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More anecdotal info. Not sure I’d classify as a “winner”, but I went through $160,000 in 2 1/2 years. I’m still OK, and wouldn’t trade those two and a half years for nothing.
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No, they are unlisted. The way people get them is by using investigative services who search as many public resources as they can to find them.
People get sloppy. They have their unlisted number printed on their checks. They give their number out to whomever asks for it. They write it on license applications, housing deeds, etc… All things that leave a paper trail to your number. Not all ways of getting numbers is ethical…like going through someones garbage or mail box. But it’s done. Have your bills sent to a p.o. box, and shred them after they’re paid.
If you must give someone a phone number, use an answering service, or get a voice mail service that uses a different number from your home telephone number.
Changing a voice mail or answering service number is easier, and doesn’t screw you up as much as changing your home number.
I read some years ago about some kid, twenty-one or so, who had won the California lottery and electing the annuity was going to get about 800-grand a year. The first installment was gone in about nine months. It did sound like he had a level head, though. He said (paraphrasing) "Look, I bought a new house for me and another for my parents. I bought new cars for us plus my girlfriend. I partied as often as I liked, paying for my friends too and didn’t worry about tomorrow. Yeah, I have to go back to work for a few months until the next check arrives. It and the next ones are going to be seriously invested but for that first one, I wanted fun and I got it.
I don’t know if he was able to stick to that or not.
Very true. I’ve always wondered why people like playing such terrible odds. Even my father who has a good knowlege of probability and mathematics has wasted god knows how much on these lotteries. Sure he’s not a huge spender like some I know but blowing an avg 20-30$ a week for the last 20 years in order to have a rediculously bad chance at winning something makes me wonder sometimes.
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That’s nothing.
I went through three times that in half the time :smack:
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Some of us are just plain old idiots.
Did you win the lottery?
Heh… no.
But I came into $30k/month pretty much overnight, due to my early insight into internet porno.
Don’t worry, it’s all gone.