Avoid Going into Financial Distress After Winning the Lottery

There are a lot of cautionary tales that are trotted out every time a Powerball jackpot goes into orbit, and everyone has a lot of advice and examples that show in detail what not to do. But when you look at the history of jackpots, you have to ask yourself if there aren’t any responsible people buying tickets? Well, yes and no. There are responsible people out there, but by and large the ones that we’re aware of are the winners who go from rags to riches and back to rags in spectacular ways – kind of like those professional sports players who rake in millions each year, only to turn up in bankruptcy court with $800 to their names.

One Way Tickets

Stories of lottery winners who end up in financial distress were common enough that the state of Virginia actually hired someone to counsel their winners. In an interview, he told ABC News that he can tell how someone will handle a windfall when he hears them talk about the future. Those who have well-defined goals and values before they brought that ticket approach the windfall as a tool instead of play money to be spent profligately. Salvador Salazar Jr. from Beaumont, Texas is a case in point illustrated by KBMT-TV, being only eighteen when he bought his winning ticket, taking a lump sum payout of $15 million. A struggling young father and construction worker, he and his father still get up and go to work every day – as owners of their own construction business.

Bright Lights, Big Hassles

Lottery winners struggle, too, with the sudden attention that all that publicity and all that cash bring. Publicity is a big cog in the lottery machine, and few states (Delaware, Kansas, Maryland, North Dakota and Ohio allow their winners to remain anonymous. Other states are considering anonymous claims, or allowing winners to have a year of anonymity as they settle into their new life. California lottery winner Tom Tehee would probably have wished to have remained anonymous when he won his jackpot, he got a call from a school clear across the country from a school that wanted him to install a new heating system, and has had complete strangers approach him and his family in public – up to and including parking in the driveway of his house.

Beat the Odds

The best advice to recipients of any large settlements, such as lottery or gambling winnings, settlements, or inheritances is to stop, take a deep breath and then call a lawyer, a Certified Public Accountant, and a Certified Financial Planner. Don’t call your buddies, don’t call in to work and quit, not your boyfriend’s brother the stockbroker, not the Ferrari dealership. In the case of winning the lottery, it could take as long as six weeks and you may be taxed as high as 50 percent of your winnings. Starting off on the right foot with sound advice is a good way to make sure your rags to riches story has a happily ever after.