At the time of this writing, the Powerball jackpot is at $800 million, with a $496 million cash value.
If you are reading this and you are the winner, congratulations! You can now buy:
992 fully loaded Rolls Royce automobiles
About 70 mega-yachts (“average” mega-yachts, does not include the maintenance cost)
421 of the world’s most expensive Rolexes
4,133 years of Harvard’s current tuition
Hey, what you do with the money is up to you, but a ton of other lottery winners have went from baller to beggar in a freakishly fast amount of time. In a cruel twist of fate, the winners become losers. I guess some people just can’t handle the money.
Some of these points might seem obvious, but there are a ton of pitfalls which snag lottery winners and take them to the poorhouse.
1. Telling everyone.
Whatever you do, don’t tell the whole world you won the lottery. Some states make you announce yourself, but do everything you can to keep your identity a secret. You will become a target for family coming out of the woodworks, every charity in the country, lawsuit-seekers, and gold-diggers.
Try to remain anonymous for as long as possible, and when you get the money, change everything. Get a new address, a new phone number, even a new name if you must. There’s a reason why kidnap and ransom insurance exists. Keep your big mouth shut and avoid becoming a target.
2. Forgetting to sign the ticket.
Oh man, this would suck. Or if you threw your ticket in the trash. Ouch – what a pain in the pit of my stomach. Make sure you sign your ticket, because if you don’t, anyone can turn it in and claim the prize. Lottery tickets are a bearer instrument; whoever shows up gets the money, and it should be you. Sign the ticket!
3. Immediately taking the cash.
This isn’t always a bad choice, but you should consider all of your options and weigh the pros and cons. Taking $496 million up front might seem like a sweet deal (who could spend all of that anyway? Cough, cough… Mike Tyson) but it might make more sense to get the $800 million over a lifetime.
Aside from taxes and other considerations, age also matters when deciding your payout. For example, I am in my 20s. I would probably take an annuity and turn my $800 million into well over a billion dollars. However, an 80 year-old man probably won’t have thirty years left.
4. Not getting the appropriate advisors.
Don’t make the mistake of thinking that you are the smartest person to manage your money, especially if you went from living paycheck to paycheck to vast wealth. Get the most competent attorneys, advisors, and accountants you can find and scrutinize their every move with second opinions.
5. Hooking up your family and friends.
Yes, it’s very noble to help your friends and family, but don’t make them economically dependent. It’s likely that they’ll settle into a sense of expectancy, expecting you to give them a free ride through life. If you want to do this for your spouse, mother or father, more power to you. But when you start paying for your second-cousin’s mortgage, you look stupid.
You don’t have to be a cheapskate, but if you start buying everything for everyone, they’ll probably expect it to last forever. You are not your family’s personal welfare department. Tell those moochers to get a job! Oh, and don’t become your family’s bank, either. Uncle Fred’s “can’t-lose” business idea should find funding someplace else.
6. Giving everything away.
This is noble too, but you can be generous without going nuts. Some people might want to give all of their winnings to a charity or religious institution. Ah, so virtuous. Then, imagine what they feel like years down the road when they face a serious crisis and no longer have the means to deal with it. The best way to help others is by helping yourself.
7. Trying to keep up with the super-rich.
Somewhere, reading a report by a fireplace is Bill Gates. He’s got a television playing in the background and he hears a segment about the Powerball. He thinks, “$800 million? That’s cute.”
Even at $496 million, you cannot keep up with the billionaires, or even the Kardashians, of the world. They can make their money again; you probably can’t. I know it’d be cool to own a private island. A castle in Europe is fabulous and an original Picasso is the cat’s pajamas, but you shouldn’t go hog-wild on these things.
Although it’s not $500 million, here’s a true story reality check. In 2004, Sharon Tirabassi won over $10 million and bought a big house, fancy cars, exotic trips, etc. Now she’s back to riding the bus. Frowny face!
What would YOU do if you won the $800 million Powerball? Tell me in the comments below.