The rent's on me, Powerball winner Pedro Quezada tells his Passaic, N.J., neighbors

Why so negative? I surely hope he secured a financial adviser. There is nothing wrong with helping one’s neighbors....He states we should.

If he had secured a financial advisor or at least a good one and was following their sound advice, he wouldn’t be going around announcing that he’s paying rent for everyone in the neighborhood. Stupid! Stupid! Stupid! OK so “He” states we should help the poor but I don’t think “He” ever said we need to be stupid about it. Come to think of it I don’t think “He” said much of anything about winning the lottery.

He also has to watch his own back. That's purely on him. He has plenty of money to pay for his neighbors rent for a month or two.

And that’s sadly exactly how too many of these big lottery jackpot winners ends up broke and bankrupt within a few short years. Sure they think, $328 million dollars (that’s before taxes and assuming he doesn’t take the cash option which is less) sounds like so much money that “I can afford to be generous¸ look how much money I still have left. I can’t possibly spend it all.” A couple thousand here, a couple of thousand there, what could possibly go wrong? Except that it adds up and adds up fairly quickly when you think it’s a bottomless pit of money. He probably has no idea what his taxes are going to be like going forward, how much sound financial advice and legal advice will cost him, what a sound investment strategy looks like, how much the property tax and upkeep on that big house(s) he will probably buy will cost him. No, he will give and give and spend and spend and before long, we’ll be reading about how he lost it all.

If he was smart and wanted to help some of his less fortunate neighbors, he could do that but he could do that in a much smarter way by first securing his own and his immediate family’s future by working with a good certified financial advisor (a reputable one with experience and a good track record of helping people who have come into large sums of money), and a tax attorney and an estate planner (and they should be all separate and non-related and it’s not a bad idea to hire yet another fee only financial planner or attorney just audit the actions of the others) before even thinking of making gifts or spending a dime. If he was smart, he’d keep a very low profile and quickly and quietly move away.

Then after a sound investment and tax and estate plan, he could set up a charitable fund with a set amount of money set aside to help the less fortunate, he could gift money to a reputable charitable org or a religious org and if he really wanted to make gifts to a few friends or neighbors directly, he could wait a bit and do that after he moved away with no forwarding address and do that anonymously or quietly.

I just pray he is smart enough to know how to distinguish between a true friend and “new friends”.

That’s the problem. A lot of people in this situation can’t distinguish the difference. They revel in their new found celebrity and or they fall for every sob story and or bad investment idea that comes along and there will be plenty of those. Long lost relatives, people he never met but claim to have been his friends, friends of friends of friends, scammers, psychics, people who claim to be clergy members, people looking for some angle with which to sue him, drug pushers looking for his kids, etc. - they will all come crawling out the wood work and will hound him without mercy. There might even be some who will threaten him or his family members, attempt extortion or even kidnapping.

Some states allow lottery winners to remain anonymous, I know Maryland does, and some states allow a winner to claim the prize under a blind trust – the other smart way to go if allowed, but New Jersey doesn’t allow it, however there is a bill under consideration that would allow the winner to stay anonymous for up to one year and I think this is a very good idea, one IMO that all states with lotteries should consider.

http://www.nj.com/politics/index.ssf/2012/09/bill_would_allow_nj_lottery_wi.html

Of course this wouldn’t stop a lottery winner from going public or living large with their 15 minutes of fame or making bad choices if they want to but it would allow a lottery winner to stay out of the public eye if they choose to and get their financial and personal security ducks in a row.

We don't know all details. Just as the new Pope is leading by example, perhaps this guy is.

OK. I don’t know all the detail either but really? You are comparing this guy who owes $29k in back child support payments to the Pope?

I am extremely judgmental....bad trait.

I’m not trying to be judgmental and for all I know the guy could be a “saint”. But I am trying to apply some common sense to the situation and looking at it with a reasoned mind rather than an emotional one and in looking at how far too many of these lottery winners end up when they immediately start giving away money or making promises to do so – announcing that you are going to pay the rent for everyone on the block, “for a month or two, at least” is just not very smart on his part. By making such announcements regarding giving the money away, even if under the best of intentions, he is just setting himself and his family up for trouble. What happens if he only pays the rent for 1 month when he initially said “or two” or “more” and what is “more”- 3, 4 months, a year? What if someone who lives 1 ½ blocks away thinks he’s entitled to the free rent payments too? Lawsuits. That’s what the guy is going to get for his publicly announced generosity. He could be generous and go about it in a less public, quieter, more humble and much smarter way.

I do believe that when the right hand gives, the left shall cover.

And this is exactly how some TV preachers dupe money out of the gullible – “send me $1,000”, “buy this “miracle water”” and the Lord will return it to you tenfold (or some other such nonsense). There is nothing wrong with being generous but one can do it and not be a fool about it – “A fool and his money is soon parted.”

It is stated, in the end of times, He will be speaking to us once again.

If this guys message is to help thy neighbors I see nothing wrong with it.

I truly believe we are either living in the last of days, or the beginning of it.

As He stated..... 1 Thessalonians 5:2 For yourselves know perfectly that the day of the Lord so cometh as a thief in the night.

The guy’s message sounds more like: “I won a big crap load of money so I’m going to live large and be a “hero” so people will love and respect me”, not any sort of Biblical message. And I somehow doubt that “End Times” or not, that God was speaking to Pedro or intervened to have the Powerball pick Pedro’s numbers. Get real.

At 4% ROI he’s got about $500,000 a month coming in .. He’d have to be Hall of Fame stupid to wind up broke. Not saying it can’t be done but he’d have to be heating his home by burning money to pull it off.

FWIW, he took the cash lump sum option of $152,000,000. After 39.6% in federal tax and 8.97% in NJ state tax taken right off the top, that leaves him with an approximate net of $138,365,600.

Using this calculator:

http://www.bankrate.com/calculators/retirement/roi-calculator.aspx

And assuming an initial investment of 100,000,000 (the largest amount the calculator would allow) with a 4% ROI and factoring in for inflation and a combined fed and NJ tax rate of 48.57%, in one year that would give a ROI of $1,994,180 and more like $166,181 per month and granted that is a very nice sum on which to live on- I could sure live quite comfortably on that :) ,

Of course if he invested $100,000,000 very conservatively, say in money market funds only, the ROI would be much lower than 4%, less than 1% actually and while investing in the stock market, the ROI can be much higher, some use a figure of 10-12% but that is over the very long haul and using an averaging over many years of volatility; a more realistic current rate of return in the stock market is closer to 3% and that doesn’t include fees so the $166,181 per month would probably be , while still a healthy income, much lower in reality.

Now let’s say he buys himself a rather “modest” $500,000 home and he buys similar homes for his parents, his ex wife and only two of his five children who are adults, and he buys himself and his parents and two of his adult children all a brand new Mercedes at 60k each. Well there are things like property taxes, insurance, maintenance costs and upkeep, utilities, furniture, the pool, the big home theater systems, landscaping costs, HOA fees if he buys a home or homes in “gated” communities.etc. Oh and say he buys a few more cars, a boat, a few jet skies, an ATV or two, or an airplane, goes on one or two luxury vacations. Pretty soon that adds up to quite a bit of money, a whole lot of money in fact and not only the initial costs to buy them; the homes and cars and “toys”, but also the money to maintain them; it’s a lot more than most people anticipate.

And we are assuming that he invests wisely, follows sound professional investment and tax advice and doesn’t spend any of his invested principal on bad investments like giving a half million dollars to his cousin to bail out his already failing business or starting his own business with little or no experience in running one and pouring money into it after loss after loss or gifting money to near do well relatives, friends or strangers and scammers with convincing sob stories or a “sure thing” investment. Not to mention those people who will file some sort of lawsuit against him, frivolous or not he will still have to hire a lawyer to defend against them or the mother of his other children who in addition to the $29k in back child support she is legally entitled to, will also want her “fair share” of his winnings.

And every time he dips into the principal, his ROI income goes down but his carrying costs on the homes, the cars, the “toys”, the bad investments he is already into, stays the same or goes up.

This is how people who win big lottery jackpots end up broke and bankrupt after only a few years. It is not “Hall of Fame stupid” as there are many examples of people do this.

13 Lottery Winners Who Lost It All

Winning The Lottery Isn't Always A Happy Ending

Although that is not to say the fate of all lottery winners is so tragic; some do follow sound financial and tax advice, invest wisely, don’t give money away willy-nilly, live on a budget but still find ways to help family and close friends and fund charitable causes in reasonable and sound ways; keep to a rather simple life style themselves and keep their new found fortune in perspective and live a quiet and rather normal life while still treating themselves to some fun. But even among those who have done so, they all say that they have been hounded by the scammers, the near do wells.

Lottery Winners Share Lessons, Risks of a Giant Powerball Prize - Sandra Hayes

"I had to adapt to this new life, "said Sandra Hayes, 52, a former child services social worker who split a $224 million Powerball jackpot with a dozen co-workers in 2006, collecting a lump sum she said was in excess of $6 million after taxes. "I had to endure the greed and the need that people have, trying to get you to release your money to them. That caused a lot of emotional pain. These are people who you've loved deep down, and they're turning into vampires trying to suck the life out of me."

The single mother kept her job with the state of Missouri for another month and immediately used her winnings to pay off an estimated $100,000 in student loans and a $70,000 mortgage. She spent a week in Hawaii and bought a new Lexus, but six years later still shops at discount stores and lives on a fixed income -- albeit, at a higher monthly allowance than when she brought home paychecks of less than $500 a week.

"I know a lot of people who won the lottery and are broke today," she said. "If you're not disciplined, you will go broke. I don't care how much money you have."

And that’s some pretty sound advice whether you have won the lottery, get a big raise or bonus at work, come into an inheritance or a big tax refund.

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