About 70 percent of lottery winners go broke

[Weird Tolkienish Figure]

History is replete with lottery winners whose lives have gone sour after becoming rich.

The National Endowment for Financial Education cites research estimating that 70 percent of people who suddenly receive a large sum of money will lose it within a few years.

In 2002, Jack Whittaker - already a millionaire - won $315 million in a lottery in West Virginia. Just four years later he claimed to be broke. Whittaker gave away millions of dollars, but people also stole hundreds of thousands of dollars from him and he lost a granddaughter to a drug overdose.:scust:

Last year, Urooj Khan died just two months after winning $1 million in the Illinois lottery, from what initially appeared to be natural causes. Toxicology tests run at a relative's request found cyanide poisoning. Police are now investigating his death as a homicide. atrice: :mjpls:

Maintaining a stable life such as the Hills are attempting is difficult, said Don McNay, author of "Life Lessons from the Lottery" who has studied winners of big money for 30 years.

"They are beyond exception," McNay said.

Most ordinary people who come into large sums of money become victims of their own lack of financial savvy or discipline, McNay said. People also come under great pressure from friends, relatives and a host of others wanting money.

Missouri Lottery spokeswoman Susan Goedde said the vast majority of lottery winners from the state were "doing great" and if they were good money managers before, they would be after.

"Circumstances may change, they may not work anymore and they have the freedom to travel," Goedde said. "But if they clipped coupons before winning the lottery, they will do it after winning."

[disneysteve]

if they were good money managers before, they would be after.

This is really the key.

The fact is, as we often discuss here, that most people are clueless about money. Very few people have financial difficulty due to a lack of money but rather due to poor money management. More money won't fix their problems, but they think it will. Then when they get a windfall like a legal settlement, inheritance, or lottery winning, they think they're set for life, except they spend it just as poorly as they always have and it's gone before they know it.

[ua_guy]

Money skills and falling victim to drug habit or homicide aside, I think a lot of winners struggle with what kind of lifestyle they can actually afford with the money they have. For example, winning a couple million dollars does not suddenly justify flying everywhere on a private jet. Even millionaires fly commercial airlines in coach, because flying is simply an expense.

Or maybe they go out and buy big houses and don't fully realize the actual cost of owning and maintaining a home that big (or several homes) - with several vehicles.

I think we've had this discussion before about how life would change for us here on the board and I don't think any of us could say with a straight face that we'd carry on exactly the same as before. DH and I were talking about this the other day-- on a 1-2 Million dollar win, we'd probably still be living in the same house (although, hello, new carpet! -and we'd have the master bath redone) -but that is by no means enough money to go crazy/nuts because we know our first cost is to secure our financial future in terms of paying off the house, funding retirement, etc.

[disneysteve]

I think we've had this discussion before about how life would change for us here on the board and I don't think any of us could say with a straight face that we'd carry on exactly the same as before. DH and I were talking about this the other day-- on a 1-2 Million dollar win, we'd probably still be living in the same house (although, hello, new carpet! -and we'd have the master bath redone) -but that is by no means enough money to go crazy/nuts because we know our first cost is to secure our financial future in terms of paying off the house, funding retirement, etc.

$1 million wouldn't change anything in our current lifestyle. $2 million would have me seriously running the numbers to see if I could retire from my career and just take a fun job to help cover costs until full retirement age. $3 million and above would have me leaving my job for sure and relocating south.

[BuckyBadger]

$1 million wouldn't change anything in our current lifestyle. $2 million would have me seriously running the numbers to see if I could retire from my career and just take a fun job to help cover costs until full retirement age. $3 million and above would have me leaving my job for sure and relocating south.

I'm younger than Steve, so my numbers are a little different, but I have the same thoughts as him.

$1-$2 million wouldn't change anything in our day to day life, although we would probably go on a nice vacation, replace the carpet, and get french drains put in the back yard. $3-$5 million might get us to quit our high stress jobs and take something with better hours and less stress, but that still pays enough to cover our fixed costs and provide health care. Over $5 and I think we would definitely seriously consider doing the above but also increasing our standard of living. At 35, it would take quite a bit of money for me to be comfortable to quit working completely. I guess somewhere between $5 and $10 million would be enough to do that.

I'd also pay off my brother's house, buy him and his wife both new cars, and put together an account to send his future kids to college. My parents are good to go and carry no debt or mortgages, but mom has always wanted to fly first class, so I'd send them somewhere awesome and have them do it all top-shelf.

This is fun speculation! Now I see why people play the lottery!

[Singuy]

Spending stupid amount of money on experiences maybe the best way see your millions go down the drain.

Unlike a fancy car/boat/house, those items have substance. You can sell them and they can factor into your net worth.

You can win 30 million and spend 5 million on a huge house, 500k on 3 really nice cars, maybe 800k on a really nice boat on your lake and you'll be FINE.

The rest of the money can go into CDs(at 2.5%) and STILL get you 550k/year which is MORE than enough to pay for your property taxes/services on your car/food/clothing/other expenses.

It gets crazy when you want to snort coke off an escort's ass and gamble a mil away in a round of roulette. You honestly can spend your 30 mil in 5 days without even trying on experiences.

[disneysteve]

Spending stupid amount of money on experiences maybe the best way see your millions go down the drain.

As much as I prioritize experiences over things in my life, I would agree. If somebody gets a windfall and spends it on 50 yard line Superbowl tickets, first class plane tickets, luxury hotels, high end steak houses, and limo service, they can burn through money pretty quickly.

[Reece102]

I agree that it's all about be sensible. I'd almost hate to win through fear of how people change their act towards me though....

[Nutria]

if they were good money managers before, they would be after.

I think that's rubbish. Lots of people pinch pennies just because it's enforced by a lack of pennies.

[dawnwes]

History is replete with lottery winners whose lives have gone sour after becoming rich.

The National Endowment for Financial Education cites research estimating that 70 percent of people who suddenly receive a large sum of money will lose it within a few years.

In 2002, Jack Whittaker - already a millionaire - won $315 million in a lottery in West Virginia. Just four years later he claimed to be broke. Whittaker gave away millions of dollars, but people also stole hundreds of thousands of dollars from him and he lost a granddaughter to a drug overdose.:scust:

Last year, Urooj Khan died just two months after winning $1 million in the Illinois lottery, from what initially appeared to be natural causes. Toxicology tests run at a relative's request found cyanide poisoning. Police are now investigating his death as a homicide. atrice: :mjpls:

Maintaining a stable life such as the Hills are attempting is difficult, said Don McNay, author of "Life Lessons from the Lottery" who has studied winners of big money for 30 years.

"They are beyond exception," McNay said.

Most ordinary people who come into large sums of money become victims of their own lack of financial savvy or discipline, McNay said. People also come under great pressure from friends, relatives and a host of others wanting money.

Missouri Lottery spokeswoman Susan Goedde said the vast majority of lottery winners from the state were "doing great" and if they were good money managers before, they would be after.

"Circumstances may change, they may not work anymore and they have the freedom to travel," Goedde said. "But if they clipped coupons before winning the lottery, they will do it after winning."

I don't see where those deaths were caused by lack of money management though and seem irrelevant to the argument that those who win go broke.

[ua_guy]

Well, I didn't win the Powerball.

So that means I'm less likely to go broke, right?