Gone Today, Here Tomorrow: $149 Million Lottery Winner Had Just 78 Cents in Bank

AP ^ | Nov 23, 2004

[Tumbleweed_Connection]

With just 78 cents in his savings account and $44,000 owed to creditors, parking attendant Juan Rodriguez plunked down $1 on a lottery ticket.

Good thing he wasn't pinching pennies: He won a $149 million lottery jackpot.

Rodriguez, 49, of Queens, bought his Mega Millions lottery ticket about one month after filing for bankruptcy.

He stepped forward over the weekend to claim his prize, proving to be a man of many dollars but few words. At a news conference, he wore dark glasses and said he was "excited." Asked what he planned to do with his millions, he said, "I have no idea."

According to court papers, Rodriguez had exactly 78 cents in his savings account and nothing in his checking account. He owed $19,486 on one credit card and $10,070 on another. And he owed the Internal Revenue Service $2,279.

Rodriguez bought his ticket in the middle of a double shift at his $28,000-a-year job as a parking garage attendant. He immigrated to the United States from Colombia in 1982.

There was one clue that Rodriguez wanted his cash fast: He opted for a lump-sum payment of $88.5 million instead of 26 annual installments.

[Tumbleweed_Connection]

What's wrong with lump-sum? He's almost 50yrs now.

[Xenalyte]

He's giving up more than 40% of that prize by taking the lump sum.

[Chad Fairbanks]

Asked what he planned to do with his millions, he said, "I have no idea."

I notice no one asked the obvious follow-up question: "How about paying back people you are in debt to?"

[areafiftyone]

Rodriguez had exactly 78 cents in his savings account and nothing in his checking account.

You know that's not fair that guy had more money in his account than I do right now. I WANT HALF THAT MONEY!

[KoRn]

I love the lottery! It's stories like these that inspire stupid people who don't pay taxes to go out and waste their money on funding the government.

[dead]

A dollar today is worth more than a dollar tomorrow.

[Nataku X]

Not if you invest it, you make more with the lump sum. Then again, I doubt he's investing it.

[Feiny]

He will be broke in 2 years and back in debt soon after.

[anniegetyourgun]

Sounds like a guy who has always had an unhealthy relationship with money. He'll prolly blow all this in the course of a year....AND be back in debt.....

[Reagan is King]

I'm thinking that someone with his lackluster financial management history might want guaranteed annual payments just to keep him from blowing it all in the first year.

[LexBaird]

If he took that lump sum and invested it at a moderate return, he could expect to recoup far more than 40% over 26 years.

[Southack]

8 Lottery Winners Who Lost It All

[Prime Choice]

I love the lottery! It's stories like these that inspire stupid people who don't pay taxes to go out and waste their money on funding the government.

When I was a boy, I thought stupidity should be painful. Then I learned about gambling and discovered it was.

[SF Republican]

My favorite reply was from the winner that said he was going to spend half of it on wild women and waste the rest of it.

[petercooper]

I give him 4 years- and he's broke.

[Gumption]

I didn't know this until today but, I hate Juan Rodriguez.

[Rodney King]

For anyone with a reasonable ability to manage his or her financial affiars, the lump sum is better than the 28 annual installements. In addition, it eliminates the credit risk. Do you really trust the state not to retroactively increase the taxes on your annual lottery installments?

[cripplecreek]

Theres something to be said for earning your money.

[69ConvertibleFirebird]

...his $28,000-a-year job as a parking garage attendant.

Damn! They get paid WAY to much! And to think that I tip them too!!!

[Richard Kimball]

The problem with the annual payments is that you can't bequeath them. If you die, payments stop. The Texas Lottery strongly suggests that anyone who wins a lottery get in touch with a reputable investment and tax lawyer before claiming the prize. One of the reasons that something like half the million dollar+ lottery winners are back where they were within seven years is they screw up royally in managing the money. Too much extravagance, swindled, etc.

[gieriscm]

I give him 4 years- and he's broke.

I'd give him 12 months, max.

[Tumbleweed_Connection]

What if he were to die in 11yrs?

Anyway, how much of the pot does he keep?

[petercooper]

[Tumbleweed_Connection]

I thought this worked like social security.

[Lokibob]

No he isn't.

If he selected 26 annual payments, he would get the full amount.

If he selected a lump sum payment, and put it into interest bearing bonds, at the end of 26 years, he would have EXACTLY the same full amount. WHY??? Because that is exactly what the lottery people do. If a person selects 26 payments, they go out to the bond traders and buy bonds to cover the payments. #2: To determine how much the winner collects, they do exactly the same thing. They go to bond traders and get bids for the full amount, and discount the payoff by that amount.

Collecting the payoff in annual payments is not a smart way to go. The payments are inheritable, however, the IRS wants the full amount of the money remaining in the event of death as one payment. This means that the recipient has to come up with a lot of money to pay the taxes in order to continue the payments.

[Rummyfan]

According to court papers, Rodriguez had exactly 78 cents in his savings account and nothing in his checking account. He owed $19,486 on one credit card and $10,070 on another. And he owed the Internal Revenue Service $2,279.

Rodriguez bought his ticket in the middle of a double shift at his $28,000-a-year job as a parking garage attendant.

Only in America! That is, someone with a $28K annual salary can run up almost thirty thousand dollars in credit card debt!

[Labyrinthos]

He's giving up more than 40% of that prize by taking the lump sum.

A math genius you are not. At a compounded return of a mere 4% per year, the $88.5 million would be worth approximately $250 million at the end of 26 years as opposed to the $149 million that the State pays out under the annuity. The lump sum is a no brainer.

[DannyTN]

"He's giving up more than 40% of that prize by taking the lump sum."

Not really when you count the time value of money.

He would get $5.73 million a year for 26 years. Or he can take the $88.5 million now. If he takes it now and invests it an annuity at 4.5% he gets $4 million a year. If he invests it in the market and earns 10% he gets $8.8 million a year.

The real questions are:

• What are the tax effects of taking it now verses spreading it out?
• What are the inheritance and estate effects of taking it now vs spreading it out?

[Sam the Sham]

Two words for him...

1. Prenup (though in his shoes "escorts" might be a better word. in the long run cheaper than divorce.)

2. No ! Relatives are going to start pouring out of the woodwork.

The truly sad thing about being in his shoes is that a lot of truly predatory people are going to try to enter his life. I don't see anyone in particular having his back.

[DannyTN]

I really think it's false advertising for lotteries to say it's a $149 million jackpot when the present value is only $88.5 million.

[Sergio]

Now is it that winning the lottery makes you do financially stupid things or is it that financially stupid people sometimes win the lottery?

Seems to me that there are a lot more lottery winners than just the folks you hear about that lose it all. Why don't we ever hear about the folks that did good, maybe even great things with their winnings?

Winning the lottery...now there's a problem I'd like to have.

Best Regards

Sergio

[Axenolith]

Lottery = Tax on people who can't do math...

[Husker8877]

What bank/credit card issuer grants credit cards to an applicant like this--one with no cash and a job paying so little? Generally an issuer that was defrauded.

I'd LOVE to take a look at the information this genius used to fool the credit card issuers. Bet every bit of it (tax returns, bank statements, application info) was fake.

$44,000 in debt! No cash! $28,000/year job!!! Chrikey!!!!

[RockinRight]

I would take the lump sum. I am a better investor than the lottery, I could make it into more than 149 million.

Then again, there are some that say if I'm a good investor, I wouldn't be playing the lottery in the first place, which is also true. Other than the occasional scratch off, I don't waste my money this way. I might spend $20-$40 a year on lottery.

[Lokibob]

excellent point, Sergio.

People who go from riches to rags in 2 years make great copy in the MSM. The little old lady that wins $100 million, and sends her grandkids to college, buy homes for her family, and makes a great inheritance for the family never is in the news.

[Anitius Severinus Boethius]

The problem most lottery winners have is that there is a built in cycle of ignorance. If you are bad enough at math to play the lottery, you likely are not going to have a sudden inspiration of how to keep from spending it all.

If Mr. Rodriguez were to invest $5 million into a quiet little 4% APR investment, he could blow the rest of the money and still have over $10,000 a month (after taxes) in interest as income.

[RockinRight]

I see it all the time. I'm in the mortgage industry. I've seen credit reports of people making $65,000 a year with $145,000 in credit card debt!

[AntiGuv]

For the record, I'd rather have won and blown it than never to have won at all.

That said, there's not a chance I'd ever be that stupid. Then again, I've also never bought a lottery ticket..

[RockinRight]

Now is it that winning the lottery makes you do financially stupid things or is it that financially stupid people sometimes win the lottery?

Both. First, the more you spend on lottery, the more likely you are to win. If you spend a lot on lottery you are either not financially smart, or already have a lot of money and blow it on crap. Secondly, a huge sum of money to someone making a 30k salary will do crazy things to the brain.

[Lonesome in Massachussets]

He's winning the lottery that Americans don't want to win.

[Southack]

One of the 7 deadly sins is Wealth Without Work.

[investigateworld]

Good post. Rodney King of the LA Riots fames went broke in a year and "does a time now and then" for non support of his kid.

[Moonman62]

With just 78 cents in his savings account and $44,000 owed to creditors, parking attendant Juan Rodriguez plunked down $1 on a lottery ticket.

His unsecured creditors must have known that he was going to win the lottery. How else could they have loaned this guy $44,000?

[Moonman62]

I wish him luck, but most likely he'll be back in the same situation 10 years from now.

[investigateworld]

Make that: "does a little time now and then for non-support of his kid".

[cmotormac44]

What a bunch of crap--some deadbeat who can't or won't make it on $28,000 salary runs up debts that would scare the s--t out of my wife and I, then is able to spend on lottery tickets, comes out a big winner while decent folk work their a-- off to pay their bills---talk about unfair world--at least his debtors will be able to recover what the deadbeat was gonna rip them off for--

[Rebelbase]

Don't you love getting all these unsolicited lessons in the present value/future value of money?

[yankeedame]

I notice no one asked the obvious follow-up question: "How about paying back people you are in debt to?"

Good point. OTOH my question is: Who'd give a parking lot attendent 40K worth of credit?

[Rebelbase]

You're just cheezed because it wasn't you. :-)