Winning large lottery sums takes less skill than spending it. Here’s some advice. PHOTO: Cindy Yamanaka, The Press-Enterprise/SCNG
Seems so simple, doesn’t it? Win a large sum, pay off debts, help out your family with houses and cars, trip no-expense-spared travel, and indulge all your fantasies at once.
Jon C. Ogg of 24/7 Wall St wrote about things not to do if you win the lottery, and it’s good advice:
Here’s what NOT to do after you win:
1. DON’T forget to sign a ticket or report it to the state. After doing some research, we find this is apparently the simplest and easiest error to make. Can you imagine losing a lottery ticket? Then imagine what can happen if someone else snags your ticket and shows up to collect the prize.
2. DON’T tell everyone you know. If you win this much money, chances are high that you will to want to brag about it. How could you not? The problem is that telling everyone you know before you collect puts you in danger, and in more ways that just one. Everyone who has ever done anything for you now may come with their hands out asking for something, or worse.
3. DON’T automatically decide to take the up-front cash. Supposedly some 70% of lottery winners end up broke again, many within a couple or few years. Go see a reputable and visible tax professional and a reputable investment advisor at a top money management firm with a widely recognized company name.
4. DON’T think that you are the smartest person to manage your money and finances. If you go from living paycheck to paycheck, does it sound right that you will know the best things to invest in and the best tax and asset protection strategies? Your drinking buddy might not be the best choice as an advisor and expert. Having a solid and respectable team in place will act as your buffer that protects your assets.
5. DON’T let your debts remain in place. If you get the “I’m rich and don’t have to pay anymore” bug, you might be dooming yourself. One lottery winner in California was reportedly strapped with debt from property purchases. Whether you take the lump-sum or the annuity option, if you have a single penny of debt in the immediate future and distant future, then something is seriously wrong.
6. DON’T become the generous high-roller, living the life. If you go from living a simple life to instantly being able to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more of the same.
7. DON’T buy everything for everyone, or even for yourself. Do not go out and buy dozens of cars, followed by houses and whatever else, for you and your friends and family members. This will start you on a bad path, and you could easily become the next friends and family personal welfare department.
8. DON’T say to heck with a budget. Maybe it sounds crazy that you have to live within means when you get empire-making money. After all, you are now wealthier than everyone you know combined. This also goes back to having advisors and being prudent, but at the end of the day you do still have a finite sum of money.
9. DON’T become the business backer for all your friends and family. One common theme that has come up with lottery winners (and judgment winners) who suddenly get vast sums of cash is that their friends and family start pitching them on endless business ideas.
10. DON’T give away the whole amount. This is probably not the case for the vast majority of lottery players, but some people might want to give away just about all of their money to a charity or to their religious institution. Should you be charitable? Absolutely! Should you give it all away? Absolutely not!
11. DON’T get celebrity and athlete envy. Keeping up with the Jonses is bad enough, but definitely do not try to keep up with the Kardashians or other celebrities. It may seem cool to own a 200-foot yacht. You can go broke real quick. Just ask people like Nicolas Cage, Wesley Snipes, MC Hammer, Evander Holyfield and many other famous people who had it all and ended up broke how they feel about things.
12. DON’T think that laws and decency standards no longer apply. It is true that the wealthier you get, the better attorneys and legal defense you can afford. That being said, living a reckless life without concerns about the laws of the land will not keep you from going to prison (or worse).
READ ARTICLE: 24/7 Wall St
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