Posted on 12/14/2004 1:08:12 PM PST by paltz
For a lot of people, winning the lottery is the American dream. But for many lottery winners, the reality is more like a nightmare.
"Winning the lottery isn't always what it's cracked up to be," says Evelyn Adams, who won the New Jersey lottery not just once but twice (1985, 1986) to the tune of $5.4 million. Today the money is all gone and Adams lives in a trailer.
"I won the American dream but I lost it, too. It was a very hard fall. It's called rock bottom," says Adams.
"Everybody wanted my money. Everybody had their hand out. I never learned one simple word in the English language -- 'No.' I wish I had the chance to do it all over again. I'd be much smarter about it now," says Adams who also lost money at the slot machines in Atlantic City.
"I was a big time gambler," admits Adams. "I didn't drop a million dollars, but it was a lot of money. I made mistakes, some I regret, some I don't. I'm human. I can't go back now so I just go forward, one step at a time."
Living on food stamps
William "Bud" Post won $16.2 million in the Pennsylvania lottery in 1988 but now lives on his Social Security.
"I wish it never happened. It was totally a nightmare," says Post.
A former girlfriend successfully sued him for a share of his winnings. It wasn't his only lawsuit. A brother was arrested for hiring a hit man to kill him, hoping to inherit a share of the winnings. Other siblings pestered him until he agreed to invest in a car business and a restaurant in Sarasota, Fla., -- two ventures that brought no money back and further strained his relationship with his siblings.
Post even spent time in jail for firing a gun over the head of a bill collector.
Within a year, he was $1 million in debt.
Post admitted he was both careless and foolish, trying to please his family. He eventually declared bankruptcy.
Now he lives quietly on $450 a month and food stamps.
"I'm tired, I'm over 65 years old, and I just had a serious operation for a heart aneurysm. Lotteries don't mean [anything] to me," says Post.
Deeper in debt
Suzanne Mullins won $4.2 million in the Virginia lottery in 1993. Now she's deeply in debt to a company that lent her money using the winnings as collateral.
She borrowed $197,746.15, which she agreed to pay back with her yearly checks from the Virginia lottery through 2006. But, when the rules changed allowing her to collect her winnings in a lump sum, she cashed in the remaining amount. But, she stopped making payments on the loan.
She blamed the debt on the lengthy illness of her uninsured son-in-law who needed $1 million for medical bills.
Mark Kidd, the Roanoke, Va., lawyer who represented the Singer Asset Finance Company who sued Mullins, confirms. He won a judgment for the company against Mullins for $154,147 last May, but they have yet to collect a nickel.
"My understanding is she has no assets," says Kidd.
Ken Proxmire was a machinist when he won $1 million in the Michigan lottery. He moved to California, went into the car business with his brothers and within five years, Ken had filed for bankruptcy.
"He was just a poor boy who got lucky and wanted to take care of everybody," explains Ken's son Rick.
"It was a hell of a good ride for three or four years, but now he lives more simply. There's no more talk of owning a helicopter or riding in limos. We're just everyday folk. Dad's now back to work as a machinist," says his son.
Willie Hurt of Lansing, Mich., won $3.1 million in 1989. Two years later he was broke and charged with murder. His lawyer says Hurt spent his fortune on a divorce and crack cocaine.
Charles Riddle of Belleville, Mich., won $1 million in 1975. Afterward, he got divorced, faced several lawsuits and was indicted for selling cocaine.
Missourian Janite Lee won $18 million in 1993. Lee was generous to a variety of causes, particularly politics, education and the community. But according to published reports, eight years after winning, Lee had filed for bankruptcy with only $700 left in two bank accounts and no cash on hand.
One Southeastern family won $4.2 million in the early '90s. They bought a huge house and succumbed to repeated family requests for help in paying off debts.
The house, cars and relatives ate the whole pot. Eleven years later, the couple is divorcing, the house is sold, and they have to split what is left of the lottery proceeds. The wife got a very small house and the husband has moved in with the kids. Even the life insurance they bought ended up getting cashed in.
"It was not the pot of gold at the end of the rainbow," says their financial advisor.
Luck is fleeting
These sad-but-true tales are not uncommon, say the experts.
"For many people, sudden money can cause disaster," says Susan Bradley, a certified financial planner in Palm Beach, Fla., and founder of the Sudden Money Institute, a resource center for new money recipients and their advisors.
"In our culture, there is a widely held belief that money solves problems. People think if they had more money, their troubles would be over. When a family receives sudden money, they frequently learn that money can cause as many problems as it solves," she says.
Craig Wallace, a senior funding officer for a company that buys lottery annuity payments in exchange for lump sums, agrees.
"Going broke is a common malady, particularly with the smaller winners. Say you've won $1 million. What you've really won is a promise to be paid $50,000 a year. People win and they think they're millionaires. They go out and buy houses and cars and before they know it, they're in way over their heads," he says.
Are you really a 'millionaire'?
Part of the problem is that the winners buy into the hype.
"These people believe they are millionaires. They buy into the hype, but most of these people will go to their graves without ever becoming a millionaire," says Wallace, who has been in the business for almost a decade.
"In New Jersey, they manipulate the reality of the situation to sell more tickets. Each winner takes a picture with a check that becomes a 3-foot by 5-foot stand-up card. The winner is photographed standing next to a beautiful woman and the caption reads: 'New Jersey's newest millionaire.'"
Winning plays a game with your head
Bradley, who authored "Sudden Money: Managing a Financial Windfall," says winners get into trouble because they fail to address the emotional connection to the windfall.
"There are two sides to money. The interior side is the psychology of money and the family relationship to money. The exterior side is the tax codes, the money allocation, etc."
"The goal is to integrate the two. People who can't integrate their interior relationship with money appropriately are more likely to crash and burn," says Bradley.
"Often they can keep the money and lose family and friends -- or lose the money and keep the family and friends -- or even lose the money and lose the family and friends."
Bill Pomeroy, a certified financial planner in Baton Rouge, La., has dealt with a number of lottery winners who went broke.
"Because the winners have a large sum of money, they make the mistake of thinking they know what they're doing. They are willing to plunk down large sums on investments they know nothing about or go in with a partner who may not know how to run a business."
What if you get so (un)lucky?
To offset some bad early-decision making and the inevitable requests of friends, relatives and strangers, Bradley recommends lottery winners start by setting up a DFZ or decision-free zone.
"Take time out from making any financial decisions," she says. "Do this right away. For some people, it's smart to do it before you even get your hands on the money.
"People who are not used to having money are fragile and vulnerable, and there are plenty of people out there who are willing to prey on that vulnerability -- even friends and family," she cautions.
"It's not a time to decide what stocks to buy or jump into a new house purchase or new business venture.
"It's a time to think things through, sort things out and seek an advisory team to help make those important financial choices."
As an example, Bradley says that on a list on 12 things people who come into a windfall will spend money on, buying a house is at the top of the list while investing is number 11.
"You really don't want to buy a new house before taking the time to think about what the consequences are.
"A lot of people who don't have money don't realize how much it costs to live in a big house -- decorators, furniture, taxes, insurance, even utility costs are greater. People need a reality check before they sign the contract," she says.
Evelyn Adams, the N.J. lottery double-winner, learned these lessons the hard way.
"There are a lot of people out there like me who don't know how to deal with money," laments Adams. "Hey, some people went broke in six months. At least I held on for a few years."I
Give me the chance and I'll prove to you I won't squander it away. : )
My Theory: Winning Lottery turns idiot into bigger idiot.
It's a nightmare I'd like to be part of,though.
Haven't any of these people ever heard of financial advisors?
I just heard something very interesting (from a movie, that my wife confirmed was truly from a study): they analyzed people who lost their legs, and people who won the lottery; after 6 months, both groups were basically the same people they were before their (un) lucky events, as it were...
Curtis Sharpe.
Nuff said.
If only the new stuff went in as quickly and cheaply as the old stuff came out...
I used to know some people who had the problem of too much money. It can be a real problem.
However, all I want it the symptoms!
Poverty is behaviorial. People who know how to earn great riches also know how to hold on to it.
Rockefeller was right: Distribute all the wealth in the country equally. In five years, the same people as before will be rich and the same will be poor, with VERY few exceptions.
MM
Only if they're idiots.
A fool and his money are soon parted.
Notice none of them said "Joe Schmoe, a successful physician with an already good income and stock portfolio won $4.4 million in the Ohio Lottery...
My point is-if someone who has been irresponsible their whole life wins big bucks, they will squander it. If they are already doing well for themselves, they will probably be OK.
Several years ago, I saw a TV program about lottery winners and most of it was like these people in this article. Also in that program was a man and woman who moved to Montana or where like that to escape all the people hounding them for money in their home state back east somewhere. They said they moved because they no longer had any friends or friendly family because everyone wanted money and they could not give money to everyone.
Of course. All you poor people – money can’t buy happiness. Leave all the stress and hassle of having surplus cash to your betters. Be content with your allotted place in life.</ sarcasm>
It just shows what kind of trash plays the lottery. I believe the lottery is for people who know they have no shot to ever make any real money with their own ability.
A lottery ticket in itself is a bad investment so it doesn't surprise me that all these losers go broke.
Bill Pomeroy, a certified financial planner in Baton Rouge, La., has dealt with a number of lottery winners who went broke.
It seems that those around the winner...family and friends (distant and close)feel a sense of entitlement to the cash....not unlike the way many feel toward receiving benefits from the gov't.
How about WV Jack Whittaker who spends more time in jail than out.
This "institute" sounds like 'preemptive ambulance chasing' for the unsophisticated investor....
If you don't play, you can't lose. It's a scam whether you win or lose.
Bill Pomeroy, a certified financial planner in Baton Rouge, La., has dealt with a number of lottery winners who went broke.
And some members of my family can't understand why I will not play the Lottery. Hell, I've been slowly investing regular amounts instead of throwing it at something with so little chance of any return.
Well, money can't buy happinesss, but it can make misery a whole lot easier. Of course one needs to be able to hold on to that money first.
We've had a lottery here in Mass for 30 years and I've only bought 3 tickets,three.
My late mother thought I was nuts and she bought about 2 a week but never won anything,God bless her.
Right on. State lotteries are total scams. Pay yourself a dollar every day instead of Mustafa at the 7-11, & you'll win $300/yr. Can't lose.
They should read the 'Money Speech' from Atlas Shrugged:
http://www.working-minds.com/money.htm
"Only the man who does not need it, is fit to inherit wealth – the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him. Did it? Or did he corrupt his money? Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve that mind that cannot match it. Is this the reason why you call it evil?
Stupid is as stupid does...
I would take that 4.2 million, put it into tax-free municipal bonds at between 4 and 5%. That would give me around $200,000 a year tax-free income and would never have to touch the principal. I think I could live on that...
The lottery is a tax on people who are too stupid to know they are being taxed. Winning the lottery doesn't increase their intelligence. If instead of investing in the hope of instant riches, these people invested in savings; they would never have won the lottery and would be financially well off.
bunch of idiots
that has to be Francisco D'Ancoia from Atlas Scrugged!
The state lottery is a tax on people who did poorly in math.
That's what I am talking about. Just let me win one time.
Not to mention the waste of time....
Right.
Muni Bonds (tm). Because you only need to get rich once.
Not everyone who buys a lottery ticket is trash thank you. We don't have a lottery here in NC so I bought a couple of SC lotto tickets for fun when I went to Myrtle Beach over the summer. I spent 5.00 and I won a few bucks, enough to pay for my accomodations and have a nice dinner. I didn't see it as a tax. It was a voluntary purchase.
Ill never forget the bum who stood outside the Chicago Mercantile Exchange he stood their every day from 6am until 5 pm-- then one day I was walking home late and entered my apartment complex-- I saw the bum paying for multiple lottery tickets with the money he had collected for the day.
It really hit me-- I never gave to beggers before, but it made me think of all the liberals with no common sense who think these people never had a chance. Who think they will use this money for work clothes and shelter-- maybe even schooling one day..
What a joke! 95% of them use the money for booze, drugs or lottery tickets
EVERYTHING is a nightmare for an idiot-Buying a television, crossing the street, etc.
We do not seem to hear the other stories of prudent people who call their lawyers and accountants FIRST, then settle down somewhere, setting up their dream business or charities, etc.
One can 24-Karat plate a turd, but it's still....
It is! Found it online here: http://www.working-minds.com/money.htm
Step one would be to buy one of those Chevy 2500 (whatever they’re called) pickups. One of the big crew cab diesel rigs. That takes care of $45,000 or so.
Step two would be to buy me a small camper/trailer. Little 23’ rig would do fine. It would be my new house. Get me 15 acres or so out in the sticks and park it – preferably in Oregon or Idaho. [Though, frankly, I’m still somewhat fond of SE Texas… also nearly anywhere along the Apalachicola River is nice… in fact, I just got back from Wewahitchka – it’s still there if anyone was wondering…]
Step three is that my current house becomes a rental.
Step four – off I go (and it’s entirely possible that I may not return). Spend two weeks at Crater Lake (at the lodge, not the damn trailer). Then off for two weeks at Yosemite. Two weeks at Yellowstone, two weeks at the North Rim, two weeks at Brice, two weeks at Zion, two weeks at Stovepipe Wells…
I say two weeks, but my schedule is more-or-less wide open at this point so I can play it by ear.
Then maybe I go back to my little trailer out in the sticks for a month or so. Then I’ll just repeat my park-hopping expeditions as time permits, and I suspect time would permit pretty often.
Heck, I pretty much do that now without winning the lottery.
I've never played the lottery, but if I did and won big, I'd hire a few operators and add a couple dozen phone lines so that I could have the time of my evil life torturing and abusing all the moochers and scam artists who would be sure to call.
I'd even publish my number.
I feel bad for these poor people though. If they had clawed and gouged their way to the same amount of money as they won, they'd be able to handle it.
I'll tell you, there is nothing like going through a sharp and sudden financial disaster to show who who you're real friends are, except maybe a sudden shocking financial success.
Years ago I thought that the lottery was a true sign of the end times. I believed it was immoral and just plain wrong. Then I realized that it is the smartest scheme ever devised for taxing the poor.
My wife lost her job two months ago and our income has been halved. I know the sudden lost thing.
Even though I am forced to admit occasionally buying a ticket on a lark (I'm talking once or twice per year.. I just get a notion once in a while), I've always considered the Lotto to be a tax for the mathmatically challenged.
When I do buy one, I only buy one.. because what most Lotto junkies don't realize is that the odds are so astronomical that 1 ticket has about the same odds of winning as 10 tickets do.. or even 100.
I would retire from my job. Sleep late every day.Eat when I want to eat. Go to bed when I want to. Sit around on my butt all day if I want to. Visit with the grand kids. Putter around with my garden and yard work. Travel where and when I want to.
Oh, wait a minute---I already do that.
It's just wrong ... if you're smart enough to know how to handle all that money, you're also smart enough not to buy lottery tickets.
I'm sure there are good stories too. Why only the bad stories. Irresponsible people will act irresponsibly. What's so new about that? So now I am to believe that winning millinos of dollars is a bad thing? I'll take my chances, thank you.
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