What would I do if I won the lottery?
Early this year, I explained why I buy lottery tickets. Some of us buy comic books, some buy art. I buy little slips of paper that have a slight, very, very remote chance of maybe having a small probability of winning back the $1 I spent to buy it.
But what if I actually won some sizable amount of money? What about the actual big jackpot? What would I do with the money? I’ve actually thought about this for years, and each year, my plans change depending on our current financial situation. So, I decided to outline my plans, based on winning different levels of money.
ASSUMPTION 1: To make my dreams somewhat reality, I’m going to use a base 40% cut in the winnings for taxes. This is just a rough guess at the maximum I would owe towards taxes, and makes calculations easier. Your local may differ. Also, I’m not getting too technical in this since they’re all just dreams anyway. Don’t be a nerd and try to correct my math or assumptions. No one likes a know-it-all, so leave my dreams alone.
ASSUMPTION 2: I’m assuming any of these amounts are cash options, not annuities.
$30,000
This is the top amount I see on a number of $2 scratch-off tickets. I don’t generally buy anything higher than $2, and I usually avoid scratch-offs anyway, but sometimes that little high is just what I need that week.
If I won $30k, I’d get to keep $18,000 after taxes. I would NOT use it to buy anything new. Instead, I would use it to pay off our highest interest debt, which right now is my student loan. With the remaining $4,000, I’d either pay some of Stacie’s student loan off or just put it in the bank as an emergency fund. I may also put it all in next year’s Roth IRA.
$250,000
Now we’re talking about some real money here. This is roughly the 2nd place prize in the multi-state lotteries. After taxes, I’d get to keep about $150,000. Knowing that we have $50,000 in non-home debt left, and about $75,000 on our second mortgage, I would pay both those amounts off. It would reduce our monthly debt obligation from about $3,200 down to about $1,800. At that point, Stacie could probably quit her job and we could live comfortably off my salary. Sure, Stacie could quit her job now, but money would get REAL tight, and we don’t want that.
The remaining $25k would be split into emergency savings, Roth IRA and then some other investments. No need to buy any new toys yet.
$1,000,000
Wouldn’t Dr. Evil be jealous of me! We’re moving into the 7-figure range here. What would I do with 1 million dollars? After tax, we’d have about $600,000. That would pay off our entire mortgage and non-home debt, with about $160,000 left over. Part of that remainder would stay with us for investments and the rest (maybe $100k) would be split with our parents to pay off debts and/or go towards retirement funds.
We would have no monthly debt obligations, just utilities, insurance, property taxes, and other incidentals. We wouldn’t be able to just quit our jobs (except for maybe a year or two). Stacie could take time off and set up shop to do outpatient consulting or write for Building Nutrition. I still wouldn’t just quit my job, but I don’t think I would be so stressed.
Now, the question is whether we would sell the house in DC, move to central PA (closer to family) and try to find new jobs there. Cost of living is so low near our parents, so we could live comfortably for years with a half-million in our pockets. However, neither of us would be satisfied just sitting around, and we would want that money to work for us. We would get jobs (probably in the same fields we’re in now), invest the money for ourselves and our parents (and grandparents).
$50 million
Now, with $30,000,000 after taxes, we’re talking about retiring early. We’d get the heck out of the D.C. area and move closer to our families. We’d buy a good house, but not go overboard with marble floors and gold toilets. We would obviously pay off our debts, our parents’, grandparents’ and siblings’ debts, and invest money towards their retirements and our nieces’ and nephew’s college education.
Additionally, we would donate a few million ($5-10 mill) to Stacie’s alma mater and maybe to a few other charities or schools close to our hearts. We would both continue to educate ourselves and stay current in marketable skills, but more for launching our own ventures rather than working for someone else. We’d get to travel to Europe (mainly Italy, Ireland and Greece), and probably stay longer than 2 weeks at a time.
$150,000,000 and higher
Ok, this kind of cash is just ludicrous. We would definitely retire, veg on our $100,000 bed all day and watch Jerry Springer, Oprah and reruns of Seinfeld…in different wings of our $20 million house. Seriously though, we would donate a lot of the money to charities, and enable ourselves and our families to pursue their dreams.
Granted, we would need to ensure they don’t try to take advantage of the sweet life and lose any of their skills. We would need to be strict with any “allowance” we would give to our families, and make sure we’re not trying to control their lives with our money. I can see how many people winning this amount of money might wish they never bought that lottery ticket because of the problems it probably causes.
I dream of winning this much money, but in reality I’d be very worried about my and my family’s safety. As I get older, I dream less of winning this amount and more of maybe $25 million and lower. I think we can accomplish our rather mediocre dreams with much less money.
What Would YOU Do?
I invite you to share your dreams with any level of lottery winnings, however far-fetched. If you’re a blogger, I also invite you to write your own similar post and feel free to link back here so I can check it out!
No where in your little outline did I see any mention of the cut for your bestest friend 🙂
But, seriously, for the 30k and 250k, we’d probably focus on eliminating our debt. The prizes are (relatively) small to be trying to help everyone, but with our extra income from less debt, we would be able to help our families out if needed.
In the $1M range, we would be able to eliminate our debt and still have enough left for charity and helping out family.
With the $50M, we could live comfortably, and help friends and family while donating heavily to charity.
With $250M, I’m gonna have a building named after me at PSU or I’ll buy a sports franchise (just kidding). I don’t know why anyone needs this much money, but I def wouldn’t be carrying it around in a brief case like that idiot in WV.
Similar things–pay down debt, maybe help our parents pay down debt. Save for a house, give to charity, and put some in retirement–depending on how much money we got overall.
Regarding “Granted, we would need to ensure they don’t try to take advantage of the sweet life and lose any of their skills. We would need to be strict with any “allowance†we would give to our families, and make sure we’re not trying to control their lives with our money.”
Good luck with that.
Ensure they don’t try to take advantage of the sweet life is precisely controlling their lives with your money.
The best thing you could *possibly* do in regards to family if you won the lottery is to never tell them about it.
anonymous, of course I thought of not telling them, but they would wonder why we quit our jobs and moved. But we’re talking about BIG money there, not 1mill or less.
My boss occasionally buys lottery tickets; I don’t. But every once in a while when we’ve discussed what we’d do if we won the lottery. We both decided that we’d want to win $1million. That’s not enough to upset our lives–we both said we’d have to keep working, but we’d be able to buy a house (or pay off her house in her case), and enjoy a few luxuries in life–a nice vacation, a new car, etc. (Also: put money towards retirement and give larger gifts to charities I already support.)
If I won more than that, eep. At some level, I’d probably retire on it, living off of the investments.
My husband loves to play the lottery… Not the scratch offs but Super Lotto and Mega Millions. We never win, it doesn’t hurt anything as he only spends maybe $2-$3 a week… But we have this ongoing joke.. I always say, should we buy a ticket or just throw this dollar on the ground… Either way, same results.. 😉
But deep down, I enjoy playing too. If we won $30,000 or so .. it would simply be saved after a few small frivolous purchases, I’m sure.
One million or up (after taxes).. we would quit our jobs and open a business… Depending on how much over would probably decide where we live…. One million, we could quit our jobs and live probably forever in a small town… If we decided to stay in San Diego our winnings would need to be well over a million so I’m not sure on that one, we love San Diego..
Of course if we won a substantial amount of money… my family (which is very small) would have plenty of money to do whatever they wanted also..
At a few thousand pounds, I’d probably do some work on the house. A few million would be spent on investments, only working four days a week, upgrading my lifestyle, charity and family.
I don’t even play the lottery.
I’ve purchased 4 lottery tickets so far in my 2 years of being “of-age” and I don’t really dream of winning the lottery here in Kansas. It’d sure be a welcome relief having that much money but not a relative need of mine.
Anything under $1mil would be spent in the same manner as you, with particular attention to future children.
Usually the amounts above $1mil are given an option for lump sum or annuities, I’d opt for the 40-year annuity and live comfortable. I’d not retire, nor would I go out of my way purchasing anything that won’t do me any good. I’d probably buy up land in multiple states and possibly countries, donate to charities and become somewhat of a philanthropist.
Other than that I couldn’t really decide what else to do than invest.
I never spend money on lottery as I don’t believe I can win any prize from it. ( I don’t win anything since i was a child). But if I really won the lottery, I will save up some for my emergency fund, maybe 70% of it and then 30% will be a donation. Since I get the money by luck, then I must share my luck with others.
IF I were to win the lottery, I would probably take the money and shove it into a CD for 6 months while I figured out what the hell I was going to do with it. Most people make really stupid purchasing decisions after winning the lottery and end up broke after a decade, I definitely wouldn’t want that to be me.
Actually, your math is incorrect. You will NOT lose 40% of the jackpot, you will lose 75%. Here’s how it works:
–You will get the whole jackpot amount (spread out over 20 years) if you take the annuity payout (minus taxes with each monthly check you receive).
–But if you choose a lump sum instead of an annuity, you will only get 50% of the jackpot as your initial lump sum.
–And THEN you will lose almost a full 50% in taxes from that already reduced lump sum.
So…
A $10 million jackpot will result in $2.5 million in a lump sum.
A $30 million jackpot will result in $7.5 million in a lump sum.
A $160 million dollar jackpot will result in $40 million in a lump sum.
Etc.
Sheila, my math wasn’t incorrect. If you read the article in full, you would see I’m NOT taking the annuity and the sum I’m stating is the lump sum. And from there, I took out a rough 40% for taxes. So we’re both saying the same thing, but I said it first, so I wasn’t wrong.
For the 250K and 1 million range, why pay off all your debt immediately?
I would definitely pay debt down, but there’s nothing wrong with having mortgage debt or student loan debt since they are typically the cheapest!
Instead I’d up my retirement contributions & funds to the max & go looking for some good long-term stocks or other investments.
eveyone will come looking for you!
if i won 1million i would buy a hooker. =)
A few millions I’ll set up a trust to help myself and for my nieces and nephews education.
Several millions I would leave the US move to third world country build a condom/contraceptive factory, open adult education schools, educate people about sex education and open hospitals and health clinics for women and children. That’s my goal……I hope I win several millsssss one day soon. People in the third world countries really need sex education and less children.
Interesting strategies, and smart. On my blog I write about people that actually did win the lottery. Some of them have happy endings (like yours would), and others are a nightmare. It is fun to dream about what we would do with all that money though!
“What you say” if I won this 115 mill this sat drawing it’s on you hear me! first thing first before cashing the ticket in I would get all me and my immediate family personal things like pictures important papers put them and the ticket in a safe deposit box. I would call a local thrift store and let them come get all furniture and clothes. I’d forward all mail to a p.o.box and go set up shop at a nice 5 star hotel in the downtown area, where kids can continue to go to school until I deal with this, I’ll quit my job. This would be confidential only me and my boo will know about this winning ticket. I would go set up a special accounts at my existing credit union and bank having the funds wired after turning in the ticket as “private” instead of public. I then would be on the low-low waiting on 10 business days for the money to post. Take out like 2 million cash and have like a money party in our room throwing it up, swimming in it enjoying this new wealth. We’ll get credit reports and payoff all our debt on them first thing. Then I would go to a car dealer and purchase a new caravan on the spot, donate my current car to goodwill, give my church a nice chunk if they will take it . We then going to the mall and just blow like 50,000 on clothes for our family sneakers,Tim’s jean suits slick type stuff load up the van drop the stuff off go eat and a movie on the way back to the hotel stop get a bunch of house magazines where the big ballers dwell in my town and go chose a nice mansion around 4 mill furnish it as we chose get settled buying the things we need and want. Then I’ll get with my extended family in a meeting not disclousing the winning jackpot but telling them my wife father came into some money hitting his daughter off and we want to do a lil something somethan and vice verse with her family. basically start living doing the stuff I always wanted to do like go on a cruise, go to like superbowls and nba games, concerts, hollywood, vegas, paris type trips. I would invest in real estate buying property all over my state renting them out. I would be living it up and staying focus and remain the person I am. I would be doing alot of charity for homeless organizations and for my homeboys and their families. It feels good to dream like this but one day I never know!!! I WON
i would buy me a mazda rx-7 hooked to the teeth and a chevelle other then does two purchases i would probably do the same thing most people would do is pay of debt retire at age 20 and enjoy life, travel and such things
Well lets see if I won a huge lotto I would first and foremost get a lawyer, finiancial advisor, and a tax man to help me figure out all the legal mumbo jumbo of what I would like to do. I would first set up several trusts for myself and family on an individual basis ie my folks I would set aside 2 million in trust for them insuring about 100,000 a year in interest that they could live off of for the rest of their lives. I would do the same for my two brothers with a lesser amount so their annuities would equal 50k a year. I would probably do the same with my friend who I have known for 17 yrs. The rest would be in two trusts with me as trustee. The first would be just like the ones for the other people in my life if a bit larger giving me about 200k yearly while the second would be for investments and used to pay off all of my debts first and getting a house and toys second. I would not go crazy probably just having my dream home built for me after I have found the perfect location for it which would take alot of time, and simple vehilce purchases three to be exact a new mustang convertible (for dates and tooling around town), An SUV probably an excursion or Hummer (for group outings), and a truck for when I need to haul something. All in all I would estimate that the property price tag on houses and vehicles would be around 2 mill or under so the majority would just go to investments. Once my investments have made back all the money that I have spent so far by setting up the various trusts and getting myself set up the way I want I would look at maybe then some sort of big ticket purchase of toys such as an RV or a boat. Other than that I would just try to live fairly simply and enjoy the sensation of not owing anyone anything and knowing that all my bills were taken care of.
My husband got layed-off and we are having a heard time just paying our bills. No one wants to help people like us. If I won money it wouldn’t be all for us. First I would help out my granddaughter who is sick. I can’t even take her to do anything, just something simple that doesn’t cost a lot of money. She is my world! I love her so much. My money would go on her and her mom to make things easyer.
I agree with getting out from debt, charity, and living well within your means.
One of the worst things I read about winning the lottery is how many people crawl out of the woodwork looking for a handout. I would take care of close friends and family. I would go to them before they could come to me and basically say “Hey bud, I won the lottery. Here’s something for you, what you do with it is your business but don’t spend it all in one place because it’s all you’re going to get.”