3 Dumb People Doing Dumb Things After Winning the Lottery
There are two types of lottery winners: smart winners and greedy winners. Smart lottery winners think about how they’re going to use the money and then decide on an acceptable financial arrangement for their winnings. They either get annual lottery payments in the form of a lottery annuity settlement, or they take the big hunk of cash — a lottery lump sum payout — and invest it.
The former is often seen as the smarter choice because less is taken away in taxes. Since the lottery takes 25% off the top for federal tax and between 6 and 9% more for state taxes, most would want to try to recoup that much or mitigate what’s taken. However, with an immediate annuity, you can generally start receiving payments in about 30 days. If it’s an annuity like the Powerball’s, the payments will increase in monetary value over time, too. Selling these structured payments is also an option if you want to begin investing immediately and need money to pay off debt or other expenses right away.
However, there are also greedy lottery winners, who do not make smart choices. Here are just a few stories to help you understand what that means really.
Gambling It Away
Hey, the logic makes sense, right? You won the lottery, why not just keep riding your luck out? Maybe, it’s because you ran out of luck when you won the lottery, perhaps? Just ask Evelyn Adams. She not only won the lottery, but won it twice in 1985 and then again the following year. She took her $5.4 million to Atlantic City, and there she gambled it all away. She was last reported living in a trailer park.
Being Too Generous
There really is such a thing as being nice and being too nice. Billy Bob was a Pentecostal preacher who was working as a stockboy at Home Depot when God answered his prayers, giving him $31 million in 1997 from the lottery. He bought a ranch, six other homes, and a new car with the money. That being said, he wasn’t as selfish as you might think. He gave plenty of help to people, but eventually wound up getting divorced and losing it all.
Spending Too Much Too Quickly
If money has a way of burning a hole in your pocket, then wait until you hear about what happened to Luke Pittard. The Welsh-born man won a £1.3 million jackpot ($1.9 million) in 2006 and used it to buy a trip to the Canary Islands, a wedding, and a house. It was all a little too much though because he wound up having to take a job flipping burgers to support himself. Nevertheless, he still put some of the money away, where it’s now collecting interest.
Be smart. Choose an annuity or a lump sum payout based upon what you want to do, and not out of greed.