Wednesday, October 25, 2006

So You Just Won ... A Mediocre Lottery

One of the (many) things my wife regularly jabs me about is the fact that I refuse to (or give the appearing of refusing to) daydream about money. What this means, in other words, is that I don't spend much time answering the question, "What would you do if you won the lottery?"

Every so often she'll ask me that. It's just for fun, because I could probably count on one hand the number of Lotto tickets I've purchased in my lifetime. I don't get anything out of playing the lottery, to be honest. I've been to Las Vegas, and I didn't get much out of that, either. If I'm gonna blow a dollar or five somewhere, it'll be for something I really like and/or value: Maybe a Cherry Coke, or a new Dr. Grip pen, or a used book of some sort. Stuff like that.

Here's the thing: If I won a multimillion-dollar lottery, I wouldn't do anything ridiculously creative. I'm boring by nature, and as Dave Ramsey says, "More money just makes you more of what you already are." I mean, I'd probably do what a fair amount of other folks would do. I'd keep going to work for a while. I wouldn't stop going to work until I could a feel for the New Big Money. Once that happened, though, I might just bide my time until that one special Pain In the Ass customer came through. At that point, I'd unload a few years' worth of frustration on them, clue them in to How the World Really Works, and then I'd pack my stuff and be out the door. Thanks for playing. It's been real.

But last night Lisa (my wife, for those new to the show) asked a more interesting question: What would you do if you won (after taxes) only $2,000? What if you won $10,000? How about $50,000?

Those sums aren't astronomical, to be sure. Some discretion and forethought would be required (if you're someone who understands the nature of money and wealth, anyway) in order to maximize the benefits of your Moderate Good Luck. Yes, when you when millions, you still have to avoid American Dumbass Syndrome and pay attention to your money, or else it will just go away. But when your winnings aren't up to that handful-of-millions mark, the spending and/or saving decisions are quite a bit different. You kind of have to focus.

If I Won Some Money...

Okay, here goes the daydreaming.

If I Won $2,000: I'd use it for repair/remodel of our house.
If I Won $10,000: See above.
If I Won $50,000: Pay off our Honda. Then repair/remodel our house. Then save the rest. Okay ... I might buy a big HDTV and new entertainment center. Might.

What Would You Do?

How would you make sure you were actually financially better off after winning your 2 or 10 or 50 thousand bucks? Or would you do the patriotic, Joe Sixpack thing, and blow it all on 20-inch rims or a sweet new ride that the guys 'n' chicks seriously dig?

— Posted by Michael @ 8:42 AM


1. Credit Cards
2. Car loans
3. Student loans

That is $50,000 to $60,000, so anything more would be big lotto winnings. Then I would add the mortgage to the list.


grumble, grumble . . . I just went to preview my comment and I got an error page. Now I get to write again!!!

Michael, this is YOUR WIFE. I asked you what you would do with $2K vs $50K vs The Big One (MILLIONS!). But that's okay, because it was late when I was rambling, and you were tired. At least you got part of it right. :P

For ME:

2K -- Have the foundation checked/repaired. If there happens to be any leftover, we probably put it towards a new appliance.

50K -- Like you, I say we pay off the car. That should leave us with just over $35K. I think we put away $5-10K for a rainy day. We make home improvements with most of the remainder. I would look at getting better pliers, and check into a kiln or tumbler (jewelry-making).

MILLIONS -- I stay at home, so I can't quit. But I'd have you quit ASAP. Seriously, I'd call you and scream that there is an emergency and you need to come home immediately, and those people would never see you again (except when we're being interviewed on local TV).

We would make arrangements so The Kid's future is taken care of. For those of you who don't know me, this does NOT mean she gets whatever she wants, whenever she wants it. I didn't get everything as a kid, and neither will she! We do some planning so our own futures are secure.

We take some time to plan what to do about a different house. I'm not a McMansion person -- it's just not in my personality. But we'd get a nicer place, likely in the same down, and definitely with a tornado shelter. If we're building, we use current technology to have a greener house (kind to the environment green -- not the color green!).

We'd make more donations to the charities we've always believed in.

You would have your own office with plenty of room for all of your books. I would have a room for my crafting. Would the kid have her own playroom? That sounds indulgent to me. We'd think about it. We would take a vacation more than once every 7-8 years. I'd finally have the chance to get my '67 Mustang beautified the way I'd like.

Did I already mention that you'd quit work ASAP? :-)

That's all I can think of right now. I can say that we DON'T go and buy lots of fancy, expensive cars. I'd be fine with the Accord. I would have been fine with the old '95 Accord. We DON'T throw fancy parties to entertain people we don't know, and who wouldn't care about us if it weren't for the money. And, just as I don't care too much about how people judge us now, I wouldn't care too much about their opinions after we win crazy amounts of money.

Enough daydreaming . . . now I'll go throw a load in the washer!

Anonymous The BattleAxe
, at 10:17 AM, October 25, 2006  

$2K: Drop it in my condo downpayment fund, or possibly my efund.
$10K: Spend some serious time with a reputable planner deciding if it was worth paying off my 5.9% student loan or using it all for the condo downpayment.
$50K: Take $26K of it and pay off all but my 2.75% student loan to free up cashflow. Put $3K in the efund. Take $1K and be mildly frivolous. Use the rest guessed it, the condo downpayment.
Under $10M: Stay at work for awhile, and hire a good planner to help me develop some secure income streams and my giving options.
Over $15M: Mainly the same as above, but eventually leave to run a full time charitable foundation.


$2k - stash it in emergency fund for a rainy day (though I'd take $300 and buy rinkside Bruins/Oilers tickets for DH)

$50k - stash $20k for our student loans, $10k EF, and $10k furniture, $10k to buy a new car

$1 millon - can't quit work but can retire earlier. Set aside $50k EF, $50k goes to 529 for our 4 unborn kids (now we can afford 4 instead of 2), $100k for 2 newer cars and furniture, $800k invested in stocks/bonds 80/20% mix. This million should allow us to retire at 55 and 57 (or in about 28 years). Currently we probably meet this goal, but this will allow us to do it without a sacrifice in living ever.

$15 million - we can both quit now and live on it comfortably, anything less than $5 million we'd probably have to work.


I had to laugh when I read this post because I have exactly the same reaction when my wife asks me what I would do if I won the lottery! She just rolls her eyes when I try to explain to her how improbable it is that it would actually happen, so what is the point on speculating.

Anonymous Anonymous
, at 3:27 PM, October 25, 2006  

If I win: 2k - Paydown student loans

If I win: 10k - Pay off car and loans

If I win: 50k - Pay off all bills and go look for land to buy a house.


Don't forget taxes. For the purposes of these dreams you could assume after tax amounts, but remember the good ol' federal government is gonna want its share of any windfalls. Or you could pull a Richard Hatch and not report it... but then prepared for tax evasion charges.


Since I'm a renter if I won $50K I would put 100% of that down on a moderately priced home.

$2000 would go into the emergency fund I'm about $4000 short on that.

$10,000 would go to emergency fund, and the rest would probably go for long term investments. Though I have been eyeballing a new motorcycle so I might figure out a way to fit that in as well.

Anonymous Anonymous
, at 7:55 AM, October 27, 2006  

If we were to start a contest between both of us on who is more boring, I might just win. :) Because, this is what I will do:

$2K -- HSBC Direct
$10K -- HSBC Direct
$50K -- Half in HSBC Direct and other Half in Emigrant Direct.

In all probability I will just sit over it for an year wondering what to do ....and will probably dream about how much interest I will get in a year on $50K the bank.


If I may first comment on the plight of the Cruz's dilemma regarding winning that McMansion: I think those Dream House shows and others where people win fabulous prizes are just sensational PR for the sponsors. What's the point if you have to immediately sell off your winnings to pay the taxes?

Anyway, if I won two grand, I'd probably just roll it over into my IRA. $10K would probably go towards a down payment on a new car for the wife, while $50K would most likely go towards paying down the mortgage.


Booo the pessimists! Why speculate? Why not? What does it hurt to dream? As long as we understand that it’s just a dream/fantasy, it’s okay. It can be FUN!

Oklahoma jumped on the lottery bandwagon just over a year ago. There was LOTS of press. One of the local TV stations asked viewers if they were for or against the lottery, and why. The station wanted viewers to call a phone number and leave messages with their opinions. There were reasonable people on both sides of the argument. But there was one man who said something like, “Yeah I’m fer the lottery! We’re living paycheck to paycheck as it is, and any way to get ahead is great for me!!” THAT is dangerous speculation. This man wasn’t just fantasizing – he was banking on winning the lottery to get him out of his hole. I hope that most of the readers of Michael’s blog will be well-grounded enough to realize that only WE can dig ourselves out of the holes we’ve dug.

Please look at this:

Based on that, why get married? According to them, almost every married guy out there is completely miserable in his marriage. So why bother?

Because, deep down inside, we have that dream of happiness . . . and we’re optimists!



Anonymous the battleaxe
, at 12:24 AM, November 01, 2006  

I acutally came into a bit of a "mediocre" windfall a couple of years ago. After a car accident with an uninsured motorist, my insurance company awarded me about $8,500 for "inconvenience, loss, pain and suffering." I said "thank you, sir, that will be fine" as I was expecting vehicle replacement and medical bills and nothing more.

Being an insurance payout, it came over tax-free.

Step 1: Pay off stupid big screen TV.
Step 2: Pay off stupid laptop
Step 3: Pay off stupid credit cards.
Step 4: Fill baby emergency fund.

First thing I would do with any windfall, big or small, is get my debt closer to zero. Period, end of story.


I would just invest it...

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]