What If You Won The Lottery?

[Gennie]

Since this topic came up again, I'll answer.

A lot of it depends on HOW much you won. For instance, winning a one million dollar annuity, as paid out over 25 years isn't even enough to cover what I'm making in employment now. Tomorrows Lotto is about 3.7 million, or about $150,000 a year before taxes. Taking approximately 28% of that leaves you with $107,000 a year. That isn't a whole lot of money.

I would pay off my credit card bill, my loans, and start looking for a small house (which I'm doing already, anyway). I would have a nice, maybe 10% downpayment on a quarter of a million dollar house, and would get a 15 or 20 year mortgage. I would continue to work.

Tonight's MegaMillion is for $81 million dollars, that comes out to about 3.2 million a year, before taxes. Taxes on that would run in the vicinity of 36-40%, so figure you're going to be looking at about 1.8 million a year after that.

Then, I would buy the quarter million dollar home outright, or, more likely, buy a local piece of property that's about 17 acres for about $300,000. Then, since I have connections to the building industry, I would have a house built on there. Total cost of that would be, including land, probably less than three quarters of a million dollars, and I'd have a nice 3,600 square foot four bedroom home. My bills, credit card, loans, etc, all get paid off

I would quit my job, but only after giving notice and getting a replacement trained. Then, after that, back to school. I would spend $50,000 to finish up getting my pilot's ratings and licenses.

Somewhere along the way, I would be purchasing an airplane. Most likely not a new one, since they are so expensive. I'd want one that operates 'economically', and then do some mods to give me more speed on the same power. Burning $50 an hour in fuel is an expensive hobby, and that doesn't include the other $100 per hour for other needs. Probably have to spend $75,000 to upgrade the avionics, interior, exterior, and paint, maybe more. So, airplane comes in about $200,000.

After that, family gets some money, help where help is needed, and if anything is left over, it goes into mutual funds.

After the first year, there will be some purchases, but I think I'd try to help out the family, and keep my hobby going, and add to the mutual funds.

Now, having said all of that, the hardest thing would be not going crazy. My mom knows a couple who won $13,000,000, and every year, they get a check for about $400,000, and by the end of the year, it's gone, and there's nothing to show for it. Totally wasted. They have two or three storage units full of junk they don't use, that they bought. They have a multi-hundred thousand dollar RV that hasn't been started in a few years. Apparently their house looks like white trash.

Yes, I'd like to have the money, but ONLY if I can be responsible with it. Otherwise, just give me the 3.7 mil, and let me continue to work.

Gary

[Valentine]

Since this topic came up again, I'll answer.

A lot of it depends on HOW much you won. For instance, winning a one million dollar annuity, as paid out over 25 years isn't even enough to cover what I'm making in employment now. Tomorrows Lotto is about 3.7 million, or about $150,000 a year before taxes. Taking approximately 28% of that leaves you with $107,000 a year. That isn't a whole lot of money.

Gary

$107,000 not a lot of money? Gee that is only 7 times what I make.

I really don't understand people at times. I don't think I've ever known anyone that makes much more than half that.

Where I live the Lotto pays out as cash minus taxes, the multistate game is an annuity, but starts at $10m or as a lump sum that is around half.

For whomever it was that was talking about Casinos having to have the cash on hand, or at least a check. I believe that some of those Slot Machines pay off in an annuity. As long as the terms are spelled out beforehand and follow the law, payment can be however they payer determines.

For those that wish to remain secret, I believe that most of the states require the winner to allow the state to use their name in future advertising for the lottery.

[Chibiusa255]

If I won the jackpot the first thing I would do is buy a big house out in the country and invite my closest friends to live with me. I'd buy a few nice things for the house like a big tv to play games and watch movies on and maybe a Dance Dance Revolution machine (korean 3rd mix v.2 ). I'd buy my mom a nice little house so that she would have a place that she owned. I'd pay for my SRS and get all that done. I'd buy a decent new car, nothing to expensive, just something reasonable and reliable. I'd like to donate a good bit of money to the local public radio station and maybe to the library. Maybe donate some money to organizations that push for transgendered people to be included in hate crime and anti-discrimination laws. The rest I would try to invest in something that's going to make sure that I eat for the rest of my life without having to pull the 9 to 5 until the day I die.

[Gennie]

Val,

The fact remains that $100,000 is NOT a lot of money in todays world. It used to be, but not any more.

The median income in the United States is currently about $47,000, which is almost the half of what you're talking about. I make more than that, but not a whole lot more. However, I have a technical job and my company pays me well. I do not have a retirement fund, however. I'll work until I die.

When I was in school, we were taught that your housing costs should be no more than 1/4 of your monthly income. I've always found that to be a reasonable guideline to follow. However, if I were to follow that, I'll be stuck in my apartment the rest of my life. By those 'rules', I can afford about $100,000 in a house. Out here, in the Pacific Northwest, that won't even buy me an acre of land, let alone the house. Recently listed, a manufactured house, called 'mobile homes' elsewhere in the country, on .4 acre of land...$230,000! It's almost 10 years old!!

While I can 'afford' it, my car cost me almost a third of what I make a year, and I had to take out a six year loan to pay it off. I still pay $400 a month for it...and it was used....and it's a Chevy Malibu!

Now, on the other hand, I have money. I don't have a whole lot of savings, and I could really cut down on my luxuries, like the $2,000 I just spent for a new music keyboard, the couple of thousand dollars I spent last year on guns, and the computer stuff I buy. I could also eat in a LOT more (and should) and start putting away a few hundred dollars a month for retirement.

However, the sad truth is that for a family of four, the 'middle class' usually requires a two income household. In the US, Middle Class is divided into Upper Middle Class, and Lower Middle Class, and is the combined income of all wage earners in the household. Upper middle class is often in excess of $100,000 and is usually comprised of management, consultants, engineers, and skilled, 'professionals.' The Upper Middle class lines start somewhere around $60-65,000. On the other hand, 'Lower Middle Class' may earn between about $32,500 and $60,000.

In 2004, the bottom 25% of the country (income wise for a household) made less than 22,500, while the middle 50% of the country made between 22,500 and $75,000, with the top 25% of the country making over $75,000 a year. Overall the median personal income of a male, age 25 or older was $33,517, while that for a female was $19,679. The median income for a similar male with a college degree was $55,751; $73,853 for those with a PhD. The median household income for a household with two income earners was $67,348, roughly twice the overall median personal income of an American male over the age of 25. The overall median household income in the country was $43,318.

This last bit of information simply proves that if you wish to succeed in the U.S., you must have a college degree. I don't have a degree, and I'm below that median level. However, it took me a long time to get there.

Now, the other point I want to make is that this is an annual income, but that's only part of the issue. Cost of living has risen sharply. Right now, we're well on our way to paying $4 for a gallon of gas. In the Pacific Northwest, we're close to $3.50 a gallon for REGULAR! My fill ups usually are about 14-15 gallons, so I"m paying well over $45 to fill my gas tank, every week! A four bedroom house built in 1986, 1800 square feet is listed at $320,000! Three years ago it sold for $215,000! It isn't WORTH any more than $190,000, or $200,000. This house would cost me over $2,000 a month to purchase, well over that. That's more than half of my pre tax income per month, violating the previously stated rule of 'no more than 25%.'

I spoke earlier of my car, I have a 2005 Malibu LT, I bought it used with about 8,000 miles on it, and I've had it about 17 months now. I paid more for that car than my parents did for their first HOUSE! I admit, I make far more than my father did at that time, and he was one of those 'professional' Upper Middle Class guys. But, this house I used as an example, is no larger than the one they bought. It's priced close to 18 times the cost of my parents original house, and I'm not making 18 times what my father did. Not anywhere close.

While $100,000 may seem like a lot of money to the person making $30,000 a year, it's a matter of perspective. With that $100,000, I could afford this house, and I could afford some nice stuff, but it doesn't make me 'rich', it puts me right at the bottom part of the upper 25% of the country.

Gary

[runaway]

I haven’t bought a lotto ticket in a really long time, but I don’t think I’ve ever bought one for myself. When I was younger and didn’t have much money to spend on gifts, a lotto ticket was a perfect solution. It always gave people (like those in this thread) something to dream about. I think I like giving people dreams better than money, because dreaming makes most people at least think about being generous (after thinking about the ‘stuff’ they want for themselves). The intent on being generous sometimes fades once they have the money in their account.

As a kid, I never went hungry because of lack of money, but deprivation of other sorts did occur. I think I would rather be poor with kind/caring/understanding people around me, than to have money to spare with only dreams (and the internet) to keep me company.

For those that have just enough to live on and have people around them that love and care about them … I think they are already rich.

When you have money, family and ‘friends’ think it is okay to depend on you to pay part of their bills when they are short, or expect you to buy them big holiday presents just because you can. There is someone I know that put a lot of time and thought into her sister’s birthday gift, but because it wasn’t as expensive as the year before, she looked practically disappointed when she opened it.

If you don’t think your family and friends will act this way if you suddenly came into a lot of money, well, you are undoubtedly are already blessed (as an agnostic, I don’t use this term lightly).

Just be aware that you sometimes have to trade poor happiness in for comfortable loneliness when money is involved.

[Valentine]

Gary,

I understand what you are saying about money, but the problem is that people want more than they can afford.

I have a friend that is a collections officer for a bank, and he sees it all the time. People look at what they can just afford right now and buy that, then interest rates went up a just a small amount and now they can't make their payments and it won't get better.

I don't know your situation, but do you need a four bedroom home? My parents raised 7 children in a small 4 bedroom home.

There is a difference between a manufactured home and a mobile home, manufactured homes are generally set permanently on a foundation, mobile homes aren't. In the case of that manufactured home, you aren't paying much for the home, it's for that .4 acres of land.

Right now if got $500,000 clear, I would seriously consider retiring, $750,000 or more I would without consideration.

Also remember that $107,000 you mentioned was each year for 25 years.

And no, I would not call that $100,000 rich, but if it's hurting you need to look at your spending.

[Gennie]

Gary,

I understand what you are saying about money, but the problem is that people want more than they can afford.

I have a friend that is a collections officer for a bank, and he sees it all the time. People look at what they can just afford right now and buy that, then interest rates went up a just a small amount and now they can't make their payments and it won't get better.

I don't know your situation, but do you need a four bedroom home? My parents raised 7 children in a small 4 bedroom home.

There is a difference between a manufactured home and a mobile home, manufactured homes are generally set permanently on a foundation, mobile homes aren't. In the case of that manufactured home, you aren't paying much for the home, it's for that .4 acres of land.

Right now if got $500,000 clear, I would seriously consider retiring, $750,000 or more I would without consideration.

Also remember that $107,000 you mentioned was each year for 25 years.

And no, I would not call that $100,000 rich, but if it's hurting you need to look at your spending.

Hi Val,

I completely agree with almost everything you said. The only thing I disagree with is the definition of a 'mobile home' and 'manufactured house.' Both can either be set on a permanent foundation or set on blocks. It's the 'modular homes' that can't be set on blocks, and those are a form of 'manufactured house.' The term 'mobile homes', at least on the west coast, has gone out of favor, because most of them, once set, don't ever move again. Having spent a cold winter in Rantoul, Ill., I know what they consider 'mobile homes' out there. Check out

Silvercrest Homes. Even this home, one I've been looking at, is near to $100,000 for the home alone, and would, after finding land, foundation, well, septic, and other considerations, be well in excess of $250,000!

As to the money, people do live beyond their means. Do I need a four bedroom home? No, a three bedroom would do me just fine, one for me, one for guests and family, and the third gets turned into my studio/den/computer room. If it had a basement, I wouldn't need the third bedroom. Of course, I'd like to have a family, so three is nice, anyway.

Your collections friend is probably seeing more and more of it, too. When this housing market went crazy a few years ago, and a lot of people got into the ARMs (Adjustable Rate Mortgages) they didn't bother to consider that at some time in the future, their plans may have changed, and all of a sudden, they're going to be into a mortgage that they can't afford. My sister just did that. I asked her what she was going to do in five years when the mortgage payment doubled, and her comment was 'we'll deal with that then.' No foresight!

I'm almost 50, and I'm 'young.' I plan on living a long time. However, if I had that $100,000 a year for the next twenty five years, I could easily consider retiring now.

When I said that $100,000 isn't a lot of money, I wasn't thinking about me. I could easily maintain my current lifestyle, get a nice place to live, and be very happy on that amount of money. However, it was a more general statement that, say a family of four, living like many do today, it isn't a whole bunch of money...at least not where I live.

Yes, if you and I are both single...I am...then $100 grand is an easy yearly income, and I could live on it quite well, thank you.

Gary

[Red Barchetta]

Actually collecting the money. First thing would be to zero out all credit accounts, then who knows.

But just winning a lottery - well if you are gelable enough to believe E-mail sent to a address that is not an ISP provided account, and coming from a "Free" E-mail service (like hotmail, yahoo, exc.) I actually win all kinds of lotteries that I never even entered! (UK national lotto, Irish Lotto, Australian Lotto, exc.) all for vary large amounts. Of course they all end up filed under "G" (for Garbage).

[Guest diamondback688]

yea...me too...if i bothered to keep track, i could probably quit working with all the money ive "won"...LOL...