What You Need to Know About Lottery Winners and Financial Literacy

So you think that buying that Powerball ticket is a chance to slay all your problems with a gigantic cash bomb, but that same lottery dream can turn into a nightmare. Many lotto winners are simply not equipped to handle the changes that a large windfall of cash brings into their lives, and they can often wind up in even worse circumstances than they were in before.

It’s No Joke, Winning Isn’t Everything

You might think that coming into a huge amount of cash would instantly solve all of your problems. To a certain extent you’d be right. Having a paid for house and car, no balances on your credit cards, paid off student loans, and cash on hand would be terrific. You’d get rid of one set of problems, and immediately get a whole new issue of them courtesy of your newfound wealth. Think about all the celebrities and sports figurescovered here who have blown tens of millions of dollars. Lottery winners are no different in that their sudden wealth can turn their lives upside down.

Some winners like Rhoda Toth, in an interview with the Tampa Tribune, call it the worst day of their lives. With only $27 to their names, she and her late husband bought a lottery ticket at the Circle K, and wound up $13 million richer. The lived high, gambling, traveling, and made a lot of friends attracted to their free-spending ways. Between free spending and shady financial advisors, the wild ride came to an end when the IRS came calling with a bill for $3 million in back taxes and proceeded to file criminal charges. Rhoda’s husband died shortly before a trial that could have landed them in prison for 24 years and resulted in a $16,000 per month fine. She pled guilty and was sentenced to two years in a federal penitentiary. Now free, she lives in a mobile home with her son and his family, collecting a pension and survivor’s benefits. Of the friends who were so quick to put a hand out, there’s no sign. Rhoda said that she’d rather trust the friends she made in prison.

Skills Needed, but Lacking

Lotteries are often criticized as being marketed to those who can least afford them and act as a tax that pulls money from the pockets of those so powerless and poor that they feel their only hope for financial security lies in a lucky pick. CNN notes that households making less than $12,400 a year spend 5 percent on average on lottery tickets. Handling finances takes skills that should be taught in high school, but often aren’t, leaving many people financially illiterate to the point where they can’t balance a checkbook or understand credit card interest rates, much less how to handle having an avalanche of cash land on them. If you have a large windfall, and do not typically handle that kind of money, you need reliable advice from legal and financial advisors that you can trust.

Even if you haven’t won the lotto, you can experience financial hardships just the same. If you need to talk to someone about the options available to get out of debt, Van Horn Law Group is ready to help.