As you know, last week the Powerball lottery was $590 million. I had considered buying a ticket (roughly my 3rd or 4th ever) but never made it to the store to actually pull the trigger. I haven’t been tossing and turning all week wondering if I would have won. The reality is that the odds were VERY against me.
There is at least one person down in Florida that has undoubtedly lost a LOT of sleep over the last week. It was announced that there was one winning ticket sold at a Publix grocery store in Zephyrhills Florida last Saturday. No one has come forward yet so all we can do is wait to see who it is. There was a rumor that a 26 year old girl won but that hasn’t been confirmed.
Whenever the lottery gets really big, I always find myself doing some quick math in my head. Mostly I just fantasize about the huge amount of interest I could generate on such a large amount of money. Without a lot of work, I think someone could generate at least $6-7 million after taxes and never cut in to the principal with a jackpot that big. That’s a ton of money. The first thing I always think about is who’s houses I’d pay off first. In the first year, all of my immediate family would get their houses paid off and I’d give them at least $250,000 each. In the second year, I’d focus on very good friends. In the third year I’d pay off houses for my cousins and other family. In my mind, I’d save about $1M of interest income for myself each year and then use the rest to impact other people’s lives. Why keep it all for myself? With that much income, you could really ease the pressure on a lot of people around you and you wouldn’t have to worry about ever running out of money. I’d really only have one rule which would be, “never, EVER use any of the principal”.
If you’ve been reading this blog for very long, you know I’ve always kept an eye on lottery winners that end up spending all their money. There have been a huge amount of people that started out poor, won the lottery, and then a few years later, ended up poor again. Just because you have a large chunk of money in the bank, doesn’t mean you automatically learn how to be smart with it. It’s almost too bad that they don’t mandate that winners have to take a financial literacy course before they receive the majority of their winnings. Maybe they could just force winners to spend a minimum of 40 hours reading personal finance blogs. That just might be enough to keep them from ending up right back where they started.
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