Lottery winnings ruin lives. Do you think FIRE folk would handle it better?

[ender]

That's pretty much it in a nutshell.

People who have been following MMM principles for some years BY CHOICE and have a good appreciation for how money is used to make money are far less likely to go crazy.

People who equate "having a big pot of money" to "time to spend! spend! spend1" and who think expensive toys are "investments" are much more likely to do stupid stuff with their money (because many of them already are!).


Lots more money just lets people more easily be the person they already are.

Yep.

Some luxury things I'd probably buy in the near future if we won that much:

• Pay off mortgage
• New cars
• New computer
• Maybe think about moving and/or buying a cabin

Even assuming we just bought really fancy cars and a really nice house/cabin that's still only maybe $1M. That leaves a ton more...

[PDXTabs]

Even assuming we just bought really fancy cars and a really nice house/cabin that's still only maybe $1M. That leaves a ton more...

I'd be very tempted to buy some modest flats in large cities around the world. But those aren't exactly depreciating assets. Even if I did get in over my head I could just sell them.

[Bloop Bloop]

I won a "lottery" (not really) of sorts when I was younger via an investment windfall. I think it was mostly skilful investment on my part (not Bitcoin) but of course luck plays a role in all investments. It wasn't a huge sum of money - mid 6 figures. I used it to pay down my then-mortgage and then get a start on further investment. It did not change my financial plan other than to accelerate my FIRE date.

Just curious, you don't call 400k-600k a huge sum of money?  That sum, in addition to whatever else at the time, merely accelerated your FIRE date rather than making you FIRE?

I can't even relate to that - how a mid 6 figures sum is NOT a huge sum of money.  What website is this again?  Is this the one for those that pay a wealth tax on their assets above 50 million?  FFS

I'm not sure how you expect me to FIRE off that figure. If I use a conservative 3.0% net return (after tax), it gives me abut $15k a year. That's  in Australian dollars - equivalent about $10k USD. It's not nearly enough for me to FIRE.

It doesn't strike me as a huge sum of money because it's not, to me. To others it may be. That does not change my characterisation of it.

[ender]

I'm not sure how you expect me to FIRE off that figure. If I use a conservative 3.0% net return (after tax), it gives me abut $15k a year. That's  in Australian dollars - equivalent about $10k USD. It's not nearly enough for me to FIRE.

It doesn't strike me as a huge sum of money because it's not, to me. To others it may be. That does not change my characterisation of it.

A number in that range would be very close to giving us enough to FIRE. It'd more than double our net worth and significant increase the amount we have directly in investments.

Using the 4% rule, $500k is a withdrawal income of $20k/year.

[MayDay]

I think everyone way underestimates the pressure of having everyone you know + everyone who looked you up, come at you for money.

Most states you can't be anonymous (which is crap but you know the rules when you buy).

It's easy to say you'd be just the same, but I think it would be a bigger mind fuck then most people here acknowledge.

[Roadrunner53]

The trouble with a lot of people is that they think they have to have blinged out things to make them happy. So they keep dumping money into cars, mansions, jewelry, exotic vacations and just blow money everywhere. Then there are the cling ons who are now your best friends who want to party with you and travel with you until you run out of money. The poor relatives who crawl out of the woodwork with their sob stories. The worst is the advice to buy real estate to invest money. Certainly not mansions anyway. Mansions are a never ending suction of money. The houses need full time maids to clean, pool people, groundskeepers, maintenance people. The houses need constant care and upkeep. Taxes are outrageous. Now, if they buy 3 or 4 mansions, same thing times 3 or 4 to a quicker financial death. Then there are those people who come to you to ask you to invest in their businesses that are probably not good ideas. Buying your own private jet is probably not a good idea. Buying exotic animals like giraffe's or elephants is probably not a good idea. Bragging about what you have to others is probably not a good idea.

Lottery winners should put money into trusts for their children, take care of their parents invest in things that will generate more money. Everything in moderation and stick to some kind of a budget. Even if it is 5 million a year, live within that budget. Buy cars and homes that are not going to suck the life out of you. Plus, not advertise that you won the lotto, and learn to say NO to the cling ons and sob stories. Give to charities instead.

[Khaetra]

First thing I would do is set up a trust and have my lawyer claim the money for the trust so I could remain anonymous.  Second would be to invest most of it.  I would buy a little better laid-out home with a garage (but not much bigger, that means more to clean/pay taxes and utilities on), I would keep my car (or maybe upgrade to the next model, but no high-priced luxury or sports cars) and I would dress like I normally do, jeans/t-shirt/sneakers.  I would live very well and have no one the wiser.

[aGracefulStomp]

I think if you win in Australia, you can opt to claim it anonymously - so I'd absolutely do that. Then it takes out everyone else's personalities and expectations, and you just deal with your own.

It's funny but it is like everyone has said - winning $500k and winning $500mil are two very different ball games. You almost (almost) would rather the amount be $500k because it's so much more manageable emotionally than $500mil.

$500k would just push people down the FIRE track. $500mil gives you the option of foregoing land travel all together for a spaceship ride.

I buy lottery tickets every now and then when the bounty reaches a ridiculous money amount. I put it in my entertainment category in my YNAB budget because it's a bit of fun to dream :)

[albireo13]

Things I would do ...
1. pay off all my debt
2. pay off all my children's student loans
3. help out immediate family
4. setup sensible trust funds for my kids
5. donate to charities of my choosing.
6. anything leftover ... invest into index funds and stop worrying about the future

[Roadrunner53]

Lottery stories: https://www.businessinsider.com/lottery-winners-who-lost-everything-2016-1

[nereo]

I'm a bit surprised at the lengths people say they would go to 'disappear'.  While I'd do what I could to collect anonymously, even if my name was public its perfectly possible to lead a normal, under-the-radar type life with tens-of-millions in the bank.  There are people with 8-figure net worths all over the place, and often you couldn't pick them out of a crowd. The ones you notice are the ones who go out of their way to stand out (eg driving cars worth more than most people's houses; owning yacht with a helipad; renting out an entire trendy restaurant for your birthday).

It's how you act that determines how people treat you. Throw money around and give publicly to every person and cause and there will be a line out your door.  Give anonymously and a lifestyle that doesn't stick out and very rapidly people will lose interest in you.  Sure, you might still be mentioned in water-cooler gossip, but probably not as often as you'd think.  Matt Damon had a line about staying out of view of the paparazzi:  Be as outwardly boring as possible and people lose interest. 

[EngagedToFIRE]

I'm a bit surprised at the lengths people say they would go to 'disappear'.  While I'd do what I could to collect anonymously, even if my name was public its perfectly possible to lead a normal, under-the-radar type life with tens-of-millions in the bank.  There are people with 8-figure net worths all over the place, and often you couldn't pick them out of a crowd. The ones you notice are the ones who go out of their way to stand out (eg driving cars worth more than most people's houses; owning yacht with a helipad; renting out an entire trendy restaurant for your birthday).

It's how you act that determines how people treat you. Throw money around and give publicly to every person and cause and there will be a line out your door.  Give anonymously and a lifestyle that doesn't stick out and very rapidly people will lose interest in you.  Sure, you might still be mentioned in water-cooler gossip, but probably not as often as you'd think.  Matt Damon had a line about staying out of view of the paparazzi:  Be as outwardly boring as possible and people lose interest.

Nearly every professional athlete!  I also found the comments about disappearing surprising.  Maybe disappearing from family!

[ender]

I'm a bit surprised at the lengths people say they would go to 'disappear'.  While I'd do what I could to collect anonymously, even if my name was public its perfectly possible to lead a normal, under-the-radar type life with tens-of-millions in the bank.  There are people with 8-figure net worths all over the place, and often you couldn't pick them out of a crowd. The ones you notice are the ones who go out of their way to stand out (eg driving cars worth more than most people's houses; owning yacht with a helipad; renting out an entire trendy restaurant for your birthday).

It's how you act that determines how people treat you. Throw money around and give publicly to every person and cause and there will be a line out your door.  Give anonymously and a lifestyle that doesn't stick out and very rapidly people will lose interest in you.  Sure, you might still be mentioned in water-cooler gossip, but probably not as often as you'd think.  Matt Damon had a line about staying out of view of the paparazzi:  Be as outwardly boring as possible and people lose interest.

For a lot of people, depending on their state you can't necessarily claim anonymously.

Additionally some folks have family backgrounds such that winning a major lottery would cause significant tension if it is known. Just read through some of the stories on this forum, people with considerably less flashy wealth than a lottery winning already have to deal with major family drama around money.

I can think of multiple relatives who I suspect would immediately hit me up if I won a lottery.

[nereo]

For me, family would be the hardest obstacle as my extended family includes some debt-fueled knuckheads. But If the choice is 'disappear entirely" or "deal with the relatives" I've already selected option #2.

The way I'd handle it is just pull aside a sum that would give me a ~2% WR and put everything else into another account for philanthropic purposes.  I'd tell those that kept pestering me that my winnings "were in a philanthropic trust" (or simply say it had been allotted to charity) and leave it at that. Even though I might retain full control I wouldn't advertise that fact. The money is going/has gone to established charities in need.

point is, I wouldn't hide, and make it clear I'm not a piggybank.  As it is, we already stand to be the 'rich' ones amongst a bunch of consumeristic suckas, so the dynamic wouldn't change, only the amplitude.

[Mississippi Mudstache]

I'm a bit surprised at the lengths people say they would go to 'disappear'.  While I'd do what I could to collect anonymously, even if my name was public its perfectly possible to lead a normal, under-the-radar type life with tens-of-millions in the bank.  There are people with 8-figure net worths all over the place, and often you couldn't pick them out of a crowd. The ones you notice are the ones who go out of their way to stand out (eg driving cars worth more than most people's houses; owning yacht with a helipad; renting out an entire trendy restaurant for your birthday).

It's how you act that determines how people treat you. Throw money around and give publicly to every person and cause and there will be a line out your door.  Give anonymously and a lifestyle that doesn't stick out and very rapidly people will lose interest in you.  Sure, you might still be mentioned in water-cooler gossip, but probably not as often as you'd think.  Matt Damon had a line about staying out of view of the paparazzi:  Be as outwardly boring as possible and people lose interest.

For a lot of people, depending on their state you can't necessarily claim anonymously.

Additionally some folks have family backgrounds such that winning a major lottery would cause significant tension if it is known. Just read through some of the stories on this forum, people with considerably less flashy wealth than a lottery winning already have to deal with major family drama around money.

I can think of multiple relatives who I suspect would immediately hit me up if I won a lottery.

My family would certainly not be a worry. My dad, all of his siblings, and his parents are all millionaires, and none of them have a cent of inherited wealth. We don't go around begging each other for money; somehow everyone in our family ended up with a decent grasp of basic financial concepts. I've borrowed money from my Dad on occasion to buy a vehicle, but that's because he's happy to earn 4% interest on my loan, and I'd rather deal with him than a bank.

[Roadrunner53]

How would some of you deal with relatives who would keep giving sob stories that they need money? If you give them a gift, and they are knuckle heads, they will just blow thru it and have their hands out again. If you could gift them once and somehow that money would keep making money for them you could be rid of them. Giving them money so they can sit on their asses doesn't make sense either unless they are sick or disabled. Maybe pay for a college education if they have none but if they are older they wouldn't be interested. Sometimes you just can't help those people that have no sense.

[EngagedToFIRE]

How would some of you deal with relatives who would keep giving sob stories that they need money? If you give them a gift, and they are knuckle heads, they will just blow thru it and have their hands out again. If you could gift them once and somehow that money would keep making money for them you could be rid of them. Giving them money so they can sit on their asses doesn't make sense either unless they are sick or disabled. Maybe pay for a college education if they have none but if they are older they wouldn't be interested. Sometimes you just can't help those people that have no sense.

We already give them nothing. Nothing would change.

[nereo]

How would some of you deal with relatives who would keep giving sob stories that they need money? If you give them a gift, and they are knuckle heads, they will just blow thru it and have their hands out again. If you could gift them once and somehow that money would keep making money for them you could be rid of them. Giving them money so they can sit on their asses doesn't make sense either unless they are sick or disabled. Maybe pay for a college education if they have none but if they are older they wouldn't be interested. Sometimes you just can't help those people that have no sense.

In some ways we're already dealing with this -

If they are receptive you can give them advice, and you can support them in a number of ways besides cutting them a cheque (eg one inlaw has had substance-abuse issues, so supporting them through his recovery efforts and missteps).  Problem is if they aren't ready to listen than advice will not be appreciated, and just giving them money won't make the problem any better, and will likely make it worse over time.

There are so many variables and different situations any stock advice won't be applicable to all situations.

[DadJokes]

It is a fun exercise to think of what good you could do with all of the money, and then to realize just how much is still there afterward.

1) Invest around $10-$20 million.
2) Pay off mortgage, as well as mortgages of parents and siblings.
3) Fully fund 529s for every child in the extended family.
4) Set up a trust, invest the money, and use dividends to perpetually fund some charitable organizations.

Steps 2 & 3 probably only cost ~$1 million, so that leaves a heck of a lot of money leftover.

[GuitarStv]

Lottery winnings would accelerate my FIRE by a couple years, and swell my bank account.  There's little appreciable change that it would make to my life though.

[MrThatsDifferent]

Lottery winnings would accelerate my FIRE by a couple years, and swell my bank account.  There's little appreciable change that it would make to my life though.

I mean we say that cause it hasn’t happened and most likely won’t. Hard to see how $50-500m wouldn’t change someone’s life in some ways.

[GuitarStv]

Lottery winnings would accelerate my FIRE by a couple years, and swell my bank account.  There's little appreciable change that it would make to my life though.

I mean we say that cause it hasn’t happened and most likely won’t. Hard to see how $50-500m wouldn’t change someone’s life in some ways.

My spending habits haven't changed between when I got out of university and now, although I've accumulated significantly more wealth.  I don't see why winning the lottery would change things . . . but I don't need 50 million dollars.  At least 49 million of that would be given away to various charities and causes.

[Bloop Bloop]

How would some of you deal with relatives who would keep giving sob stories that they need money? If you give them a gift, and they are knuckle heads, they will just blow thru it and have their hands out again. If you could gift them once and somehow that money would keep making money for them you could be rid of them. Giving them money so they can sit on their asses doesn't make sense either unless they are sick or disabled. Maybe pay for a college education if they have none but if they are older they wouldn't be interested. Sometimes you just can't help those people that have no sense.

I'm fortunate that my immediate family is composed of responsible people who are physically and mentally healthy and who do responsible things with their money. Thus, they have no need for charity.

If my extended family started doing that, I'd disown them completely. You control the quality of people you choose to be around.

[simmias]

This guy's off to a good start: https://www.charlotteobserver.com/latest-news/article227101379.html?

He waited 4 1/2 months before claiming the $877 million lump sum anonymously and has hired an attorney.  Luckily he lives in one of the eight states where you can remain anonymous.

[ysette9]

This guy's off to a good start: https://www.charlotteobserver.com/latest-news/article227101379.html?

He waited 4 1/2 months before claiming the $877 million lump sum anonymously and has hired an attorney.  Luckily he lives in one of the eight states where you can remain anonymous.

How funny, I have family who live in the town the ticket was sold at.

Too bad the state is taking the windfall and doing a tax refund instead of investing in their schools or something useful.

[OurTown]

Okay, so assume it is not anonymous.

First, pay the taxes.
Second, deposit the net proceeds.
Third, give notice at our jobs.
Fourth, put the house on the market and pick out a fun new destination location.
Fifth, ignore friends and relatives asking for money.

Sixth, enjoy life.

[Just Joe]

This guy's off to a good start: https://www.charlotteobserver.com/latest-news/article227101379.html?

He waited 4 1/2 months before claiming the $877 million lump sum anonymously and has hired an attorney.  Luckily he lives in one of the eight states where you can remain anonymous.

I liked the patient waiting. In his place I would wait for the Lotto attention to die down a little, get my info correct, find a lawyer, have lawyer verify what I believed to be correct, and then claim it anonymously if I could.

I've already witnessed adults obsessing over money in my life. Consumed by what they could do with it rather than creating their own income stream to build their own fortunes big or small. While I'm certain of what wealth would do for DW and I - I'm not sure what it would do to the people around us. We have some real spenders around us. Also some folks that never really found traction and earned much money for themselves.

Perhaps we'd dole out some fixed amount to each of these people and let them do with it as they please. Here's $1.5M or some other amount proportional to the winnings. Spend wisely and slowly. Or perhaps require them to spend a weekend learning from a financial counselor how to manage the money, make investments, etc. before they were given the money. When its gone, its gone.

[Mississippi Mudstache]

Okay, so assume it is not anonymous.

First, pay the taxes.
Second, deposit the net proceeds.
Third, give notice at our jobs.
Fourth, put the house on the market and pick out a fun new destination location.
Fifth, ignore friends and relatives asking for money.

Sixth, enjoy life.

Sounds good to me, except number 4. I might consider moving eventually, but we really love where we're at now.

[Villanelle]

I think everyone way underestimates the pressure of having everyone you know + everyone who looked you up, come at you for money.

Most states you can't be anonymous (which is crap but you know the rules when you buy).

It's easy to say you'd be just the same, but I think it would be a bigger mind fuck then most people here acknowledge.

This!

Would I take $500M if offered?  Of course.  Would it do wonderful things in my life and allow me to do wonderful things in the world?  Absolutely.  Would it complicate my life and and have some MAJOR downsides?  Absolutely!

The number of people who would come looking for hand outs (either as just blatant money requests or requests to "invest" in silly things) would likely be staggering.  And among those would be a few people close enough to us that the destruction of the relationship would be painful.  There are a couple people I can think of who would feel absolutely entitled to as much as they wanted ("You have $500M!  What's a few million for me?), as often as they wanted.  And no amount would ever be enough.  They'd be offended by our selfishness and greed that we only gave them $10k (or $20k, or $200k, or...) and would wastefully spend that amount and then want more.  I am 100% positive it would end badly. 

I also think that generally we are socialized to deal with the problems of our social/economic class.  Moving up or down slightly generally is fine, but when you shift that massively, you are ill-prepared for the day to day decisions and choices.  It's a huge chift, not unlike culture shock, I'm sure.

Again, I don't think it would be enough stress and discomfort and loss to offset the great stuff, but I'm not so cavalier about it all being rainbows and puppies.  (Even puppies shit on the carpet.)  I'd hope that before doing anything, DH and I would have many long talks and end up on the same page about who gets what and with what limitations, and that we'd be willing and able to stick to those pre-set limits even when it got tough. 

[stoaX]

I wouldn't change one bit. I'm committed to the 4% rule no matter how big my stache is. ;p

Nice...Thanks for supplying me with my laugh for the day.

[SwordGuy]

What would I do if I won a big lottery?

1) Pay off my 2.75% mortgage just so I don't have that bill to pay each month.
2) Write one big check to each utility company at the start of the year and tell them not to bug me until I owe more money, for the same reason.
3) Hire a maid service so my wife won't have to do so many chores or bug me to do them.
4) Replace my beat-up, hail-dented car with a newer small car, preferably a station wagon or 4 door hatchback.
5) Hire some handymen to do some maintenance on my house that I haven't gotten to because I've been working on new rental properties instead.

Let's see.  That gets me up to about $200k.   Hmmm.

6) Invest $10M in VTSAX and VTIAX for ourselves.   

7) Buy a 4-5 bedroom house near major universities with good MFA programs in the US and UK.   Hire people to renovate them and then set up a small trust with enough money in it to cover major repairs and cover ongoing expenses.   Hire property management companies to fill them with art students.   Charge the students market rent, then, if they don't tear up the place that year, refund 1/2 their rent.   Pool the rent that the trust keeps and fund more homes at other universities.   Say, 10 homes covering 10 universities, at $1M setup cost (purchase, renovation, trust capital) apiece.  Oh, and require one piece of quality art that the student made that year for that 1/2 rent refund.    Some of them are bound to become valuable and therefore fund other facilities.

8) Buy a dozen homes scattered around the country.   Hire property management companies to run them and set up a trust that can cover ongoing expenses.  When someone worthwhile that we know or know of needs some serious help, we can offer them the nearest place to stay for some months until they get their situation under control.  Examples would be parents with kids who just got divorced.  Families who got burned or flooded out of their home.  Women trying to escape an abusive spouse.   Folks who are refugees, etc..    My guess would be $250k per house on average, so that's another $3M plus another $2M for the trust fund.  And rent them out on AirBnB if they aren't needed at the moment.

That gets me up to $25.2M.

9) Set up a arts and crafts center in my town and a trust fund to cover ongoing expenses.   $10M to buy and equip it, $40M trust fund to cover ongoing expenses.   Provide fully subsidized classes to lower income folks and very affordable ones to the middle class.   
10) Partner the arts and crafts center with an industrial incubator that runs 24x7x360.  Think of it as a gym but with lots of tools to manufacture items along with coaches to teach people how to use them.   $20M to buy and equip it, $80M for a trust fund to cover ongoing expenses.   Same subsidy pattern for the poor and middle class.

That gets me up to $175.2M.   The last two items could be scaled down in size and capability if the winners were less.

If there is still money in the pot, talk to Dolly Parton to make sure her free books for kids program has a trust fund to keep it going.  If not, work with her to fund it.

Anything else, split it between setting up child care centers that provide subsidized child care for lower income folks and the partnered with a foundation set up to teach entrepreneurship skills and provides subsidized assitance to lower income folks starting their own businesses, with the necessary trust funds to cover ongoing expenses.


 

[Just Joe]

I love every part of your plan! Great ideas!

I love the idea of trusts that protect the interests of people trying to get a start in life or reboot their life. Sort of short circuits the capitalist mechanism a little bit. Profits are good and necessary but there is so much in our country that needs doing that isn't b/c it doesn't generate profits directly or its too expensive or it endangers some cash cow profit machine (college textbooks for example).

Thinking of free childcare or free healthcare.

[SunnyDays]

Powerball is $2xx million, which is $1xx million for lump sum, which is probably "only" $60-$70 million after taxes.  From a pure financial management perspective, I'd be totally fine.  Invest the sum in indexes, set a budget of about $900k per year (including charitable giving); well below the expected return and live within it.

The stress I'd see are the risk of kidnap/ransom etc.  My first priority would be figuring out how to disappear as best I could.  My last name is not a common one, so it would be easy for people to find me.

Logically though, you’re not the one who get kidnapped, cause you comtrolmthe money. They would go after your family.

Ok, well let’s start with the premise that most people who gamble on the lottery are probably not the most financially stable or have a plan. Most FIRE people have a plan and a strategy. If I won, mine would be this:

1. Do everything to prevent your name being released. See recent case of woman who sued to not be publicly identified.
2. Delete all social media immediately
3. Move
4. As mentioned, invest in index funds
5. Create a charitable foundation that awards scholarships or financial assistance.  Any requests from money go there
6. Travel the world, staying in resort places or the best hotels, use alias name to check in like famous people do

And that's why I don't buy lottery tickets.  I like my life just fine the way it is.  Who needs the stress of all that money?

[Spud]

My wife and I have discussed this many times. We've gone through scenarios of winning anywhere from £10k to £100m. Neither of us would have trouble keeping it a secret. We're not materialistic in the slightest. We'd keep the same house which is modest in a very nicely situated areas but it's not HCOL or fancy in any way. We'd put a new kitchen in. My wife would get a newer used car, I'd keep the same. Both of them are small, nondescript hatchbacks that cope just fine with everything we do. We'll never get big cars because they are impractical and pointless from our perspective.

We'd get some new clothes, but just more of what we buy now. We wouldnm't be dropping 5 figures on jewellery, handbags or footwear. We both currently wear our clothes to destruction (not quite but I haven't gone shopping for clothes more than 3 times in the last decade and most of my stuff is very old but still in great shape.

Our only debt is the mortgage of £200k and about £8k on my wife's student loan. We get rid of that. We'd go on some nice holidays and quit our jobs, but here's the thing. We only really see our friends and families at weekends and we don't work with any of them, and we don't socialise with people from work. As a result we could easily quit our jobs, and without lying too hard, our friends wouldn't know for perhaps, 5 years? Maybe 10.

When we see them socially the conversation would be:

"How's work?"
"Busy. The project I'm working on is coming to an end soon. My boss is doing my head in. Haha. How's thing with your work?"
"Oh yeah, my work is crazy.....[they then proceed to talk in great detail about their work for at least 30 minutes and never once ask about our work again. We could easily so this sort of thing for years.]

Why would this work?

Apart from a new kitchen, one slightly newer car, and slightly newer non-fancy clothes, they wouldn't have ANY visual indication telling them that we were wealthy.

If we instantly moved to a 6+ bedroom house with a heated indoor pool, bowling alley and home cinema roomin a very fancy HCOL area on the hill, had a couple of Lamborghini's and a Range Rover on the drive and massive designer wardrobes dripping with bling, they'd know what had happened. We'd also lose all our friends because they simply couldn't relate to us and we couldn't relate to them. Jealous and resentment would definitely set in.

We like our friends. We've known many of them for 20+ years. Why would we bin all that  overnight for houses, clothes and cars? We'd be idiots.

Keep everything low key and nobody will ever know.

It does help that I'm an only child and my wife only has one estranged sister who lives on the other side of the planet. My wife doesn't know her cousins at all and I only vaguely know some of mine. Our families are both very small and very spread out geographically. I can imagine for large families that are emotionally close and geographically close, and friendship and work groups that have a great deal of overlap, doing what I've described above would be virtually impossible.

[jlcnuke]

You could ask about whether folks on here would be better with lottery winnings, but it's a bit of an academic question given that playing the lottery is antithetical to the message here in the first place.   You have to play to win.

Nah, my coworkers and I go in on a lottery pool every few months.  Costs $2 and gives something to talk about.  Which is why I've given the question some thought :-)  And I know I'm not the only one here.

So you spend around $10 a year on the lottery?  The guy buying the average lottery ticket (not the average guy) probably spends a lot more, and is probably much less responsible than you.

I spend $8/week, or $416/year, on lottery tickets. Though, if I include the small winnings I've had, I'm probably averaging an actual out of pocket cost of around $250/year on the lottery. I love to day-dream and while FIRE will be nice in ~5 years, the ability to remove all financial burdens from my family and friends in one swoop would be worth so much more to me than the lottery jackpot numbers suggest. It's a guilty pleasure I have no shame for indulging in. It certainly doesn't impact my ability to save the amount of money I choose to save each year, or to pay my bills, or to otherwise enjoy my life, so I'm perfectly okay spending that much each year on a long-shot gamble.

If I won, first I'd split it with friends/family when claiming, with unequal shares set up to ensure there was enough to each of my close friends and family so they wouldn't have to worry about mortgage payments, car payments, student loans, etc anymore unless they choose to. Then I'd donate to charity. Then I'd take some of it to spend on my dream (sailing/diving around the world) and invest the rest.

As for the OP's question, yes, most FIRE minded folks would handle it better. The thing is, winning the lottery doesn't erase years or decades worth of poor financial habits. Most people spend every penny they get, so winning the lottery doesn't suddenly make them know how to save and invest. If they don't choose to learn how to handle money properly, their habits won't change and they'll continue to spend every penny they have (or more). It's what they've done their whole lives after all, so it must be the thing to do, right??

[Catbert]

I think serious MMMers/FIRE aspirers would be better than the average person for all the reasons outlined in this thread.  I would be fine up to $10-12 million.  Up charitable donations through my DAF, flying paid business class, nice gifts to family,  etc.

 Where the big issues would occur is winning some of the huge lotteries/powerball/super-duper-whatevers.  A while back there was something like a $1.5 billion win by a single person. That could easily ruin your life.  You'd need your own foundation not just a DAF.  Maybe in addition to MacArthur grants there would be Catbert grants.  Gifts to family members would take on a whole different mindset (tax implication for both of you, how/who to help rather than hurt with money, generational wealth transfer).  You wouldn't be deciding whether to fly business class but rather how big a jet to buy.  Multiple homes in different cities.  On and on.  These changes would require staff (to evaluate charity proposals, vet family member requests, plan for taxes, clean and maintain multiple houses, plan your travel etc.)  Then selecting and supervising that staff would fall to you.  Your nice FIRE would turn into a full-time job.

Luckily for me I've never bought a lottery ticket so I'm unlikely to win.   

[Kay-Ell]

It was in an exercise just like this, about 6 years ago, that I realized my desires in life were all quite modest, and were completely obtainable without any lottery winnings. I wanted to live in a beautiful place away from the big city in a a house that I designed, I wanted to work less, and on my terms, I wanted to adopt a child, I wanted to travel more. All of those things are not only achievable, but in these past 6 years I’ve accomplished most of them and will hopefully accomplish the remainder within another 4-6 years. Where the fun for me started was when I realized I didn’t need much to be happy, so the majority of any lottery winnings would be used to help individual people I care about, and try to change the world for the better.

My thought was to keep a good sized chunk for myself, such that I could live off of a SWR forever and have money to leave to my children. Probably 5 million.

Set aside another 100m to benefit all of the people I love into perpetuity. I probably wouldn’t give huge sums of money to most people but would focus on funding college for children, paying off houses, helping with small emergencies, helping with medical bills, and finding tangible ways to improve the quality of life for my friends and family members who I already know to be good people with strong character.

The remaining 400m or so, would be used to create a charitable foundation. I’d assemble a BOD, hire people with expertise in running charitable foundations and each year direct about 5% of all of those assets toward making the world a better place. Environmental causes, animal conservation causes, innovative and impactful technologies. I’d want to have a role in choosing how the money is allocated but I’d also want the foundation to have other more qualified leadership and daily management.

All the while it would be my goal to keep living a quiet, meaningful life, raising my kids to be good people, enjoying my freedom, and sleeping well at night with the knowledge that 99% of my lottery winnings were being well managed and used to the benefit of others.

[LaineyAZ]

I was glad to see some posters talk about focusing on helping financially with early childhood.  (I think too much philanthropy seems dedicated to helping kids with college - which is fine - but it's way too late for those in deep poverty.)   I think early intervention is key.
I've always liked the story of this millionaire and his work turning around Tangelo Park, a community in Florida:   https://www.today.com/news/millionaire-uses-fortune-help-kids-struggling-town-1C9373666

Something like that would be my dream.

[Villanelle]

I think serious MMMers/FIRE aspirers would be better than the average person for all the reasons outlined in this thread.  I would be fine up to $10-12 million.  Up charitable donations through my DAF, flying paid business class, nice gifts to family,  etc.

 Where the big issues would occur is winning some of the huge lotteries/powerball/super-duper-whatevers.  A while back there was something like a $1.5 billion win by a single person. That could easily ruin your life.  You'd need your own foundation not just a DAF.  Maybe in addition to MacArthur grants there would be Catbert grants.  Gifts to family members would take on a whole different mindset (tax implication for both of you, how/who to help rather than hurt with money, generational wealth transfer).  You wouldn't be deciding whether to fly business class but rather how big a jet to buy.  Multiple homes in different cities.  On and on.  These changes would require staff (to evaluate charity proposals, vet family member requests, plan for taxes, clean and maintain multiple houses, plan your travel etc.)  Then selecting and supervising that staff would fall to you.  Your nice FIRE would turn into a full-time job.

Luckily for me I've never bought a lottery ticket so I'm unlikely to win.

 

Except you wouldn't HAVE to do those things.  You could outsource as much of them as you liked.  Or you could let it all sit in a 1% savings account until you died, and skip all the philanthropy other than in making the decision on what goes in your will.  And let the accountant handle the family giving tax implications.

I probably would want to own multiple homes in multiple cities (likely rented so I didn't feel quite so wasteful.)  And I'd likely throw a lot of money at the problem to make sure management was almost entirely opaque to me.  I call and say, "I want the Skye property July 5-August 5 next year."  And everything else would just happen.   Likewise the place in Venice and the place in South Africa and the place in Iceland and the place in whatever other places I fall in love with.  But there's no requirement to do that, and even if you do, when you have 9 figures in the bank you can outsource just about anything that feels unpleasant if you so desire.  Not mustachian at all, but definitely possible.

[the barefoot badger]

I'm pretty sure I'd do fine with winning the lottery.  Basically, I know what I need and I know what my financial goals are.  I'm well aware of how much my lifestyle costs and how to evaluate additions to my lifestyle in terms of their financial impact and their overall enhancement of my happiness.  Winning the lottery would allow me to dispatch with the immediate goals in one shot, make financially intelligent upgrades, and then have a bundle of money left over to contemplate additions, the needs of my immediate people, and then the needs of my community.  I have absolutely NO desire to own a bunch of absurdly expensive crap or start paying everyone in the universe to do the work of living for me.  When children - regardless of their biological age - win the lottery it's a disaster.  I'm a grown up.  Aren't you?

[Catbert]

I think serious MMMers/FIRE aspirers would be better than the average person for all the reasons outlined in this thread.  I would be fine up to $10-12 million.  Up charitable donations through my DAF, flying paid business class, nice gifts to family,  etc.

 Where the big issues would occur is winning some of the huge lotteries/powerball/super-duper-whatevers.  A while back there was something like a $1.5 billion win by a single person. That could easily ruin your life.  You'd need your own foundation not just a DAF.  Maybe in addition to MacArthur grants there would be Catbert grants.  Gifts to family members would take on a whole different mindset (tax implication for both of you, how/who to help rather than hurt with money, generational wealth transfer).  You wouldn't be deciding whether to fly business class but rather how big a jet to buy.  Multiple homes in different cities.  On and on.  These changes would require staff (to evaluate charity proposals, vet family member requests, plan for taxes, clean and maintain multiple houses, plan your travel etc.)  Then selecting and supervising that staff would fall to you.  Your nice FIRE would turn into a full-time job.

Luckily for me I've never bought a lottery ticket so I'm unlikely to win.

 

Except you wouldn't HAVE to do those things.  You could outsource as much of them as you liked.  Or you could let it all sit in a 1% savings account until you died, and skip all the philanthropy other than in making the decision on what goes in your will.  And let the accountant handle the family giving tax implications.

I probably would want to own multiple homes in multiple cities (likely rented so I didn't feel quite so wasteful.)  And I'd likely throw a lot of money at the problem to make sure management was almost entirely opaque to me.  I call and say, "I want the Skye property July 5-August 5 next year."  And everything else would just happen.   Likewise the place in Venice and the place in South Africa and the place in Iceland and the place in whatever other places I fall in love with.  But there's no requirement to do that, and even if you do, when you have 9 figures in the bank you can outsource just about anything that feels unpleasant if you so desire.  Not mustachian at all, but definitely possible.

Yes, I'd certainly throw a lot of professional help at these new complexities.   But would you really want to give complete control of your $1 Billion to a single individual?  I'd want some checks and balances which would involve selecting and supervision at least several people.  Even with a billion  I wouldn't want to get ripped off or embezzled from. Putting it all in a bank would just be foolish.

[catorbe]

Putting it all in a bank would just be foolish.

That's why you have to split the $1B into 4000+ different bank accounts in order to stay under the FDIC limit (lolz)

[Just Joe]

I was glad to see some posters talk about focusing on helping financially with early childhood.  (I think too much philanthropy seems dedicated to helping kids with college - which is fine - but it's way too late for those in deep poverty.)   I think early intervention is key.
I've always liked the story of this millionaire and his work turning around Tangelo Park, a community in Florida:   https://www.today.com/news/millionaire-uses-fortune-help-kids-struggling-town-1C9373666

Something like that would be my dream.

Makes a person wonder why our gov't doesn't do things like this rather than just building more and more prisons doesn't it? We've seen this in our own town. When the economy tanks, unemployment is up - here come the petty crimes people do to get the things they want or need. There is truth in the idea that we all prosper together.

[Villanelle]

I think serious MMMers/FIRE aspirers would be better than the average person for all the reasons outlined in this thread.  I would be fine up to $10-12 million.  Up charitable donations through my DAF, flying paid business class, nice gifts to family,  etc.

 Where the big issues would occur is winning some of the huge lotteries/powerball/super-duper-whatevers.  A while back there was something like a $1.5 billion win by a single person. That could easily ruin your life.  You'd need your own foundation not just a DAF.  Maybe in addition to MacArthur grants there would be Catbert grants.  Gifts to family members would take on a whole different mindset (tax implication for both of you, how/who to help rather than hurt with money, generational wealth transfer).  You wouldn't be deciding whether to fly business class but rather how big a jet to buy.  Multiple homes in different cities.  On and on.  These changes would require staff (to evaluate charity proposals, vet family member requests, plan for taxes, clean and maintain multiple houses, plan your travel etc.)  Then selecting and supervising that staff would fall to you.  Your nice FIRE would turn into a full-time job.

Luckily for me I've never bought a lottery ticket so I'm unlikely to win.

 

Except you wouldn't HAVE to do those things.  You could outsource as much of them as you liked.  Or you could let it all sit in a 1% savings account until you died, and skip all the philanthropy other than in making the decision on what goes in your will.  And let the accountant handle the family giving tax implications.

I probably would want to own multiple homes in multiple cities (likely rented so I didn't feel quite so wasteful.)  And I'd likely throw a lot of money at the problem to make sure management was almost entirely opaque to me.  I call and say, "I want the Skye property July 5-August 5 next year."  And everything else would just happen.   Likewise the place in Venice and the place in South Africa and the place in Iceland and the place in whatever other places I fall in love with.  But there's no requirement to do that, and even if you do, when you have 9 figures in the bank you can outsource just about anything that feels unpleasant if you so desire.  Not mustachian at all, but definitely possible.

Yes, I'd certainly throw a lot of professional help at these new complexities.   But would you really want to give complete control of your $1 Billion to a single individual?  I'd want some checks and balances which would involve selecting and supervision at least several people.  Even with a billion  I wouldn't want to get ripped off or embezzled from. Putting it all in a bank would just be foolish.

But why is it foolish?  You'll have more than you'll ever need.  So you die with "only $.4B instead of the .6B you'd have had if you'd better managed it.  So?

Or you keep $100m for yourself and give the rest to your foundation.  You have lawyers write up solid guidelines and requirements for that foundation, and perhaps you are actively involved in hiring.  Maybe you attend the monthly board meetings and have an annual meeting with them to review everything.  And if something sneaks through and there's embezzlement?  While it's not ideal, it also doesn't affect your life in any way.  It's not maximizing every dollar, but at those levels, I'm okay with not maximizing. 

[nereo]

Having worked with a lot of not-for-profits, many of which were set up by the generous donations from very rich people.. I'm continually amazed at how many people would want to establish their own charitable organization rather than give to the countless ones already established, and how many are utterly convinced they can do a better job

[Mississippi Mudstache]

Can I take a moment to question the very premise of this post? It turns out there is a robust body of data to suggest that, far from ruining lives, winning the lottery reliably and significantly improves the quality of the winners' lives for decades or more. Here is one example from Sweden, published just last year. The same effect holds in the U.S. as well. This is a consistent finding when social scientists study this effect.

I think people want to believe that others who win the lottery end up worse off in the long run, because it makes us feel better about not actually receiving an unexpected windfall (hence, the media is quick to serve up stories of lotto winners gone awry) but the data tell us a different story. Note that in the media coverage for the above-referenced article, most of the headlines read something to the effect of "Winning the lottery won't make you happier", because the researchers found much smaller effects of winning on happiness, which they defined as day-to-day feelings. The primary finding of the story - that overall life satisfaction was reliably and sustainably increased by lottery winnings - was never mentioned in the headlines.

[Versatile]

Can I take a moment to question the very premise of this post? It turns out there is a robust body of data to suggest that, far from ruining lives, winning the lottery reliably and significantly improves the quality of the winners' lives for decades or more. Here is one example from Sweden, published just last year. The same effect holds in the U.S. as well. This is a consistent finding when social scientists study this effect.

I think people want to believe that others who win the lottery end up worse off in the long run, because it makes us feel better about not actually receiving an unexpected windfall (hence, the media is quick to serve up stories of lotto winners gone awry) but the data tell us a different story. Note that in the media coverage for the above-referenced article, most of the headlines read something to the effect of "Winning the lottery won't make you happier", because the researchers found much smaller effects of winning on happiness, which they defined as day-to-day feelings. The primary finding of the story - that overall life satisfaction was reliably and sustainably increased by lottery winnings - was never mentioned in the headlines.

I'm glad you brought that up. There are many winners that stayed humble and invested their winnings wisely, setting up college scholarships for their family members, donating to good charities, and some even stay employed. I think if one is troubled before winning then they have a greater chance of catastrophe after taking in a huge windfall.

I do know though I could do quite well if I won assuming I could keep my anonymity, but since I don't play that's not going to happen. Somebody once said it was a tax on financially illiterate people and I have to agree but I still play for entertainment once every couple of years.

[DrKartman]

Can I take a moment to question the very premise of this post? It turns out there is a robust body of data to suggest that, far from ruining lives, winning the lottery reliably and significantly improves the quality of the winners' lives for decades or more. Here is one example from Sweden, published just last year. The same effect holds in the U.S. as well. This is a consistent finding when social scientists study this effect.

I think people want to believe that others who win the lottery end up worse off in the long run, because it makes us feel better about not actually receiving an unexpected windfall (hence, the media is quick to serve up stories of lotto winners gone awry) but the data tell us a different story. Note that in the media coverage for the above-referenced article, most of the headlines read something to the effect of "Winning the lottery won't make you happier", because the researchers found much smaller effects of winning on happiness, which they defined as day-to-day feelings. The primary finding of the story - that overall life satisfaction was reliably and sustainably increased by lottery winnings - was never mentioned in the headlines.

I'm glad you brought that up. There are many winners that stayed humble and invested their winnings wisely, setting up college scholarships for their family members, donating to good charities, and some even stay employed. I think if one is troubled before winning then they have a greater chance of catastrophe after taking in a huge windfall.

I do know though I could do quite well if I won assuming I could keep my anonymity, but since I don't play that's not going to happen. Somebody once said it was a tax on financially illiterate people and I have to agree but I still play for entertainment once every couple of years.

friend, you're so right
people should spend their money wisely

[dougules]

Is it just me, or has necroposting gotten more common?

[BTDretire]

I think it would be a burden to win $100 million in the lottery.
Can I get anyone to help me get rid of it?
 If I win.
That will be hard since I don't play.
 My wife brings a couple tickets home about once a week.