Lottery "financial planning"

Discussion in 'Off Topic Discussion' started by VMS, Mar 28, 2012.

  1. VMS

    VMS Victim of high standards and low personal skills.

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    Ok, let's get this taken care of first: the lottery is a bad gamble. It's a really, really, really bad gamble. It's a 1:176 million gamble for the Megamillions, for instance.

    That said, lottery winners often go broke because they don't plan ahead. Plan ahead.

    First, lotteries are subject to federal tax. For anything over $380k (or, really, adding up to $380k when combined with whatever you made as a working stiff), that's 35%. That takes this Friday's $359 million lump sum payment and turns it into $233.35 million, right off the top. After that, there are any applicable state and local taxes. I'm in PA, where there are no state/local taxes on lottery winnings.

    Win!

    Know what you're going to do with that money. Plan ahead.

    First off, are you going to distribute it? If you're going to give $10 million to your mom, $8 million to your sister, $9 million to your brother, etc., realize that if you do so AFTER you win the lottery that money is subject to gift tax. That means you'll get another tax hit after you've already paid the 35% federal tax (and any state and local taxes that apply). Don't do that. What you should do is establish ahead of time the assignment of your lottery ticket. It's what those people in office pools do: do the same thing with your own family.

    For example, with my nuclear family (mom, dad, sister, me) I've established a 52/16/16/16 split. I'm not gifting my family with lottery proceeds: I'm gifting them $0.16 each out of each $1 lottery ticket I buy ($0.32 out of each $2 ticket, since Powerball went up to $2 each ticket). Then, if that number wins, they get 16% of the winnings. They'll pay the 35% federal tax (and my sister will pay whatever state/local taxes apply in California, since I think she's officially a resident of CA even though she hasn't lived in the US in over 10 years) on their 16%, but they won't have to pay gift tax on whatever I gave them if I didn't establish that 16% of each ticket was already theirs.

    After that, it's the obvious shit. With this kind of money, earmark a bit as your "hookers and blow" money for you to party with for a little while, earmark a bit for whatever whimsical things you want to do with it (sponsoring a Math department chair at Virginia Tech with lottery money would be kind of funny to me), and then decide what lifestyle you want. Set up investments to support that lifestyle out of the interest earned, not the principle. Then invest the rest in a true "grow your wealth" fund, to keep ahead of inflation.

    In the above scenario, I'd have about $121,342,000 in my pocket after disbursement and taxes. If I put $20 million away in something insanely conservative like CDs, earning about 1% interest each year, I could live off of the $200k/year interest. I don't require much, to be honest. I'd blow about $1.3 million of it on a little partying and the like. That would leave ~$100 million for true growth of wealth planning. Done smartly, I could die a billionaire instead of dying broke like most retard lottery winners.

    What's your scenario for how you'd spend lottery money?
  2. fletcher

    fletcher Darkness always says hello. Donator

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    ~$100 million more lottery tickets. Seems like the best odds.
  3. Your_Moms_Box

    Your_Moms_Box Free Shit / Socialism 2016 Donator

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    i wouldn't give my family shit. i would buy houses and cars and rent them to them for $1/month.

    I would invest half the money in cds in as many banks as needed to stay in fdic limits with all the itf titlings for my kids.

    the other half goes into conservative growth and bond funds.

    i live off tge cd interest

    Sent from my rooted Liquid Thunderbolt with my thumbs.
  4. VMS

    VMS Victim of high standards and low personal skills.

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    And you'd pay the taxes, insurance, etc. all on it. And they'd live in giant houses where they wouldn't be able to afford to furnish the houses or the insurance on the cars.

    Don't get me wrong: if your goal is to keep your thumb on your family, that works. Nothing wrong with that POV, if that's your goal. Me, I'd rather give my family a lump sum of money. If they want to keep hanging out with me, they love me. If they take the money and ditch me, I'm better off without them.

    That's what I'd do if my share (after taxes, disbursement, etc.) was under or at ~$20M. Beyond $20M, though, I don't feel the need to live above what I'd get from CDs on that $20M. $200k/yr with no work and no effort seems pretty reasonable to me.

    Everything beyond that, you put in growth funds. Growth = not conservative. Not super-risky, either, but the focus is that if you take a hit you can walk it off and keep growing the pot. Again, with something like $100M to play with, the goal would be to be worth 10 figures before I kick it.

    At a certain point, I wouldn't "need" the amount over the $20M. Anything over $20M becomes play money, to see how well I could game it to make a shitload more money. I'd be perfectly happy living off of $200k/yr if I didn't have to do anything but see my banker once a year.
  5. whiskeyguy

    whiskeyguy PR representative for Drunk Whiskeyguy. Donator

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    "Those fancy city folk think us rednecks are dumb with our money, but God damn if we don't know good investments when we see 'um."

    I would say that on national TV if I won. I watched a couple interviewed on Fox who won tens of millions, and their big plan was to add-on to their trailer so his (and probably her) mother could move in.

    Edit: Been playing the Mega-Millions for two cycles (it's just fun to think about this shit). Bought $10 tickets both times, won $11, so I'm only down $9 so far. I will be buying $10 tickets until this thing hits.
  6. VMS

    VMS Victim of high standards and low personal skills.

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    So you'd bet $100 million on 1:1.76 odds? Odds just a bit better than a coin flip? And ignore the possibility that there can be more than one jackpot winner, so even if you win it's quite possible your payout will be less than the $100 million you just gambled away?

    You're fucking with us, right?
  7. Gonzoid

    Gonzoid The Tenacious T-Bagger

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    I maybe spend $20-$30 on lottery tickets per year tops. My local store has one of those automated machines so you do not have to wait in line and interact with anyone.

    This may sound dumb, but my ideal lottery winnings would be like $3-$5M after taxes. Enough to upgrade my house (but not into a mansion), make sure my boys college education is paid for as well as nieces/nephews and then bank the rest in Growth funds and CDs. I like my sales job and since we are somwehat of a startup company I get inspired and motivated everyday to go out and hustle. If all of a sudden I had $100M in the bank, I fear I would become an unmotivated lazy fuck. And having 2 young boys, I have seen enough evidence of kids growing up with FU money that pretty much makes them pieces of shit knowing they will never have to struggle in their lives b/c of Dad's cash. Not a good, productive way to live.

    With this laarge payout, everyone and their mother would know you and start harrassing you for $$ and handouts. A much smaller lottery you can still have your privacy to an extent.
  8. VMS

    VMS Victim of high standards and low personal skills.

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    And for fletcher, I just found this old article about NJ lottery winners:

    Man, NJ politicians are dickheads. Don't get me wrong: I'm generally not a fan of lottery winners' whining, but this is obviously a case where the NJ state government fucked them over, hard.
  9. maz

    maz TRueWDTer Donator

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    I'd buy a Jagwa

    Treat Mysellllllfffff !!!!!
  10. jnoble

    jnoble Registered User

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    I can't wait for this lottery thing to be over just so I don't have to listen to the preditable "What I would do if I won that much money is...." chatter at work in the morning. Ok, I got it. You'd immediatly quit and buy such and such. I hear you say the same thing every year.
  11. fletcher

    fletcher Darkness always says hello. Donator

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    Sorry, I was just trying to make a joke.
  12. VMS

    VMS Victim of high standards and low personal skills.

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    I can see that. And I agree there would be issues with raising kids in that environment. Given the financial dynamics of my family, it's something that I've considered WRT my own future, hypothetical children. Not FU money, but my kids would have a shitload more money than I had when I was growing up.

    It's not about the money you have: it's about how you raise your kids to approach money. If you do it right, having family money is just a tool that will help your kids do more and better, rather than an excuse to do nothing. That's on you, the dad, not the money. Shit, Mitt Romney's family had money (I mean, his dad was the governor of Michigan). That gave him a head start, but as best as anyone can tell he made his $200M "on his own". Could he have made that money without the connections he made in college? No. And could he have gone to the colleges he went to without his family money? No. But he used that to make his own cash, separate from his family. That's a good thing, to my mind, regardless of how you view his politics.

    Shit, isn't sending your boys to whatever college they can get into your goal anyway? Why not up their odds?

    Don't get me wrong: I don't care how much money I have, my kids will be flipping burgers as their first summer job. If for no other reason than fast food is a pretty tough job for a kid and they'd need to learn how normal people live so they can appreciate what they've got. I mean, yeah, I'd try to swing a Senate page job for them for their junior year of high school and "spoil" them that way, but they'd have to learn what the real world is like, too.
  13. Gonzoid

    Gonzoid The Tenacious T-Bagger

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    I agree, which is why in the infintisimal chance I ever win one...I would stay at my current job. Your kids see you working hard and not slacking off, it definately helps them in the future. Also, may turn the other way where your kids not having to ever worry about money choose careers they love and not worry about their paycheck.

    Actually one of the first things I would do with that cash, as a PSU alum, would buy your wackbag account and change it to a JoePA tribute account!
  14. Motor Head

    Motor Head HIGHWAY TRASH REMOVAL

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    The first thing I do after I get the money, disappear and hire a lawyer and an accountant.
    Second I spend part of the money on....http://www.geekologie.com/2011/04/finally-a-decent-zombieproof-house.php
    Everybody I work with gets a Gold Rolex.
    My daughter gets money placed into a trust, she can tape so much of it a month but I have 100% control of it, and can cut it off at anytime.
    Family gets postcards from all the places I visit, maybe a couple of them get a present under $5K.
    Charity? Yeah, St. Judes, Veterans, and animal charities can expect a check.
    I will have a full arsenal in my zombie proof house.
    At least a dozen cars. Nothing crazy, mostly old muscle cars, new ZR1 Vette and a new Viper.

    Any profit the money generates, Switzerland. I figure after the government soaks me for better then half the money, they got too much already.
  15. jnoble

    jnoble Registered User

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    I made you laugh a little while ago with a "moe-haircut on a wood chipper" retard joke. Maybe you could throw a few bucks my way? (insert wavy guy)
  16. DanaReevesLungs

    DanaReevesLungs I can keep rhythm with no metronome...

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    I'd make any amount last me exactly 20 years, so I can say those were the best years of my life and then die broke. But have enough set aside to pay for my funeral. And if I live passed the 20 years, I'd put a bullet in my head the moment I spend the last dollar. Yes, I'm serious.
  17. Motor Head

    Motor Head HIGHWAY TRASH REMOVAL

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    Oh, the wackbag members only part will be epic.

    We'll have "The Donkey" imported from Mexico.
    Beers from around the world.
    Midget Prostitutes
    Tranvestites (maybe even attractive ones)
    Full bar
    BBQ an entire black angus steer with all the fixins.
    2U will be playing
    Jimmy will be our MC.
    The whole thing will take place in Las Vegas during the same weekend as the porn awards, in the same hotel.

    At the end of the night everybody gets an envelope, some will contain checks and some will be warnings that a team of hired thugs are waiting for them in the parking lot to power kick them in the balls.
  18. MT_Jonny

    MT_Jonny All my posts come with a free smile Donator

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    I would donate it all to the ASPCA on terms of never airing another Sarah Mclachlan commercial.
  19. VMS

    VMS Victim of high standards and low personal skills.

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    There was some rich dude on Top Gear (UK) who had a great idea (stolen from someone else, I think): your kids get a stipend where they won't starve, but if they get a job they matching salary from Super Rich Dad. Multipliers if it's a job you particularly want them to have. You want them to be a counselor who helps abused kids? 10X multiplier. You like the idea of a kid who's a rodeo clown? 5X multiplier. It's still their choice, but you steer them a bit that way.

    And you can work hard making the money grow, too. To be honest, I get restless when I go without a business project for too long. I don't see that changing if I won the lottery. It's just that my "downtime" would be more interesting, consisting of more hookers, travel, hookers, blow, hookers, adventures, and hookers.

    Honestly, I liked the old fart. Check my post on the PSU thread in the sports forum. But PSU needs to hear shit about this, too. We can go into my opinions on PSU's "behind closed doors" environment, but we'll leave that for someplace else.
  20. Ballbuster1

    Ballbuster1 Super Moderator Wackbag Staff

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    I'd just buy a big chunk of land, build a nice house,
    put a big ass fence around it and tell everyone to fuck off.
  21. fletcher

    fletcher Darkness always says hello. Donator

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    My exact text to my lady friend when I heard how high the jackpot was going up to, "Id buy all the houses in a cul de sac and put up a gate". Im so suburban its disgusting but Id love it. Block parties every night.
  22. VMS

    VMS Victim of high standards and low personal skills.

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    For my "fun", I'd do the following:

    The aforementioned Math chair at VT.

    Renew my season tickets for VT football (I gave them up for next season, since my crew is no longer going to be able to go). Seats, not boxes. I'd want really nice seats, but I'm not going to cheer from inside a luxury box.

    A nice condo in one of the residential towers in Vegas, a nice house in Blacksburg, VA, and a nice house here in Central PA. Nothing crazy: $500k could give you some really nice places in each of those towns. Not so big it sticks out, but not so small you feel hemmed in.

    The zombie compound: a fenced, dry-moated, bunkered property over a natural gas deposit. Have a natural gas well drilled but capped, with a few trucks converted to NG fuel and an NG flamethrower fence for the compound ready for deployment. And guns, etc.

    A couple of nice cars for fun and a decent beater for daily knock-around driving. I'm thinking an Aston Martin, a Nissan GTR, and keeping my faggoty Prius.

    Oh, and I'd pay for my Super Bowl (the old high school friends who still come to my place to watch the Super Bowl) crew's kids to go to college.
  23. ruckstande

    ruckstande Posts mostly from the shitter. Donator

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    I always wondered about this. What lawyer or accountant can you trust to know what to do with this kind of money? How do you protect yourself from anyone taking your cash. I'd like GE's accountant.
  24. WoodenPlank

    WoodenPlank Yo, homie. Is that my briefcase?

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    I have an acquaintance that's an investment broker for a large investment company, and exclusively handles multi-million dollar accounts. He would be my first phone call.

    Otherwise, do the same as VMS - a little set aside for fun money right out the gate, and about 98% into various accounts to make me more money.
  25. ruckstande

    ruckstande Posts mostly from the shitter. Donator

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    If New Jersey can get their shit together with their brewpub laws I'd love to start my own pub.

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