I get it. It sucks you in. Dreaming of all the ways you would spend a sudden windfall. The lottery is this amazing chance to live on easy street for the millions that play it every week. It’s literally a ticket to a better life. Where else but the Powerball lottery can you invest $2 and turn it into $1.3 billion dollars overnight?
When you come forward, your name is public in most states. I hope you enjoy being a very popular third cousin once removed to everyone and their brother. And hey, if you do win, can I borrow some money because I’ve got a really great business idea and I’m willing to let you in as a partner on the ground floor? I’ll pay you back, I promise.
Let’s visit Jack Whittaker to see how the $315 million he won in 2002 changed his life. Spoiler alert: it wasn’t for the better. After winning an absurd amount of money, poor Jack was robbed a dozen times, got divorced, and, at 68, is currently back at work running two businesses that “aren’t doing very good”. It might be because he spends $600 per week trying to win the lottery again. Because it worked out so well the first time!
Poor Jack joins hands with his fellow “winners” like these ten people and these nineteen people who won big then lost it all.
Playing the lottery is dangerous, even deadly. And not just because you’ll get jumped by a gang of ruffians like Poor Jack. Your odds of dying while driving to the gas station are higher than winning the lottery.
Let me drop some Math on you. The odds of winning the Powerball jackpot are 1 in 292 million. Given the national average fatality rate of 1 death per 100 million miles driven, a four mile round trip to the gas station equates to a 1 in 25 million risk of dying in an auto accident. For a freaking lottery ticket. The odds are stacked against you. You are 12 times more likely to die in a car crash while getting the ticket as you are to pick all six Powerball numbers.
Skip the lottery, save $2, save your life.
Even if we get past all the objections to buying a ticket, I ask “what’s different now?” Is $1.3 billion materially different from $130 million or $13 billion? Any of those jackpots would put virtually anyone into an entirely different category of wealth compared to where they are today. Why do we chase a billion so much harder than a measly hundred million? You would be fabulously filthy rich either way, so why try so hard for the billion?
Maybe it’s because a mere $100 million isn’t such a great jackpot after all, and it takes a billion dollar jackpot to entice us all off our couches and into our (deadly) cars to buy these $2 luck rockets. I’m talking about the haircut from taking a lump sum and the huge tax bill.
You’ll lose 38% of the pot by taking a lump sum. Then lose another 40-50% of what’s left when Uncle Sam realizes he, too, has won the lottery. You’re going straight to the top of the 39.6% federal tax bracket and depending on your state and local taxes, you could face another 10%+ tax burden. What you are left with is between 31% and 37% of the “jackpot”. For the current $1.3 billion jackpot, that’s “only” four or five hundred million dollars. A $100 million jackpot would only leave you with $31 to $37 million.
$31 million is a lot of money, but it’s not going to get you to Filthy Richville. You couldn’t afford to buy and maintain a private jet with such a small pittance. You’ll be stuck in first class sipping expensive champagne with all the other decamillionaires. On a (non-private) public jet. With Poor Jack Whittaker giving you the stink eye from his middle seat in coach while he contemptuously sips his room temperature can of ginger ale.
Of course, you might not even get $31 million because of the pari-mutuel nature of the lottery. In pari-mutuel betting, all jackpot winners share the pot. If anyone else picks “your” lucky numbers, get ready to split the pot with them. Is $15.1 or $10.3 million still a “jackpot”? You might be back in coach sharing that flat ginger ale with Poor Jack.
Between taxes, discounting for taking a lump sum, and the nature of the pari-mutuel bet, the $1.3 billion prize won’t be anywhere near $1.3 billion.
Setting aside the financials for a moment, just consider the sinking feeling you get when you realize you’re a loser. It can’t be healthy to stare at a fist full of wadded up lottery tickets covered in your tears. That megayacht with a helipad on top isn’t going to happen. Go ahead and fire the imaginary butlers you’ll never be able to afford.
Let’s face the facts. You are going to lose the lottery. You have a 291,999,999 out of 292,000,000 chance that your $2 ticket isn’t going to win you a billion dollars. Them are long odds. And even if you win, you will still lose (need I mention the parable of Poor Jack again?).
Are there alternatives to losing the lottery?
Fortunately, there are. One alternative is to light $2 on fire (without burning down your house) and at least enjoy some light and warmth from the fleeting flame. And for only $2, you can tell your friends how you literally watched money burn instead of wasting it on a lottery ticket. Instead of growing old and lamenting how you wasted $2 back in 2016 not winning a billion dollars, you can regale the youth with an epic tale of burning $2 just because you could.
But perhaps there’s another way to win the lottery of life. Like saving the lotto ticket money and investing it responsibly. Want to win $90,000? Starting at age 18, forgo the twice weekly $2 tickets all year. Keep doing that until you’re drawing Social Security at age 68 and all those $2 tickets will grow to $90,000 at a 7% rate of return. Why play the lottery when you can guarantee a $90,000 jackpot just by buying an index fund and not wasting money on lottery tickets?
P.S.: The Powerball folks put out a pretty funny FAQ. Check it out if you’re bored and/or tempted to waste money on lottery tickets.
What’s the appropriate amount of money to blow on lottery tickets? $0, because, well, math. $2 for entertainment value just to say you played? $20 so you can boost your odds to 1 in 29.2 million? If it’s higher than $20 just say $20 so I can feel better, okay?
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While I know that I likely will never win I do have to admit that I’ll be buying tickets for the $1.3 B draw. It still doesn’t make sense to do it but blowing $20 on a chance at $1.3+ B, even though it’ll be something like $500 M of actual payout, that’s still fine by me. That’s life changing money for your entire family tree, forever.
There’s also a story of a lady in Florida? that won the lottery, went bankrupt, and by some miracle won the lottery again. Talk about good luck!
The stories of the lottery winners’ failures are amazing to me. I think the statistic is that about 40% go bankrupt within 5 years which is mind boggling to me.
Best of luck! I’m sure you will be a strong outlier (in the positive direction) if you do win the lottery and figure out a way to not squander it in a few years. This article is probably wasted on my readership but maybe it’ll get shared to friends and family that are flushing $ down the drain on an unattainable dream. 🙂
It’s amazing, but reading the comments it looks like many of your readers DO buy powerball tickets! I always figured those people that buy lottery tickets are just a different kind of person…maybe not. Maybe the dream of early retirement and winning the lottery are correlated.
Rest assured, I won’t be buying a ticket. After 1 in 10 million odds, what’s the point? I could go to Vegas and get better odds (admittedly on smaller sums).
So far I’m hearing most people here say they are buying just a few tickets and many only buy when the jackpot goes crazy, which explains why our Root of Good kind of people rarely win the lottery (it’s those other guys).
I think everyone gets the lottery dream (myself included), but not as many get the futility of buying tickets and just how unlikely it is to actually win the big prize.
Apparently so! Here’s a couple comparison points for anyone who cares:
1 in 292 million – the odds of winning powerball.
1 in 11 million – the odds of dying in a plane crash.
1 in 3.7 million – the odds of being killed by a shark.
1 in 5,000 – the odds of dying in a car accident.
Save your money folks and drive carefully.
I’ll add one.
98 out of 100 – the odds of having enough to retire early if you save 25-50% of your income for a few decades.
That’s a lottery I think we can all win 🙂
Yeah, I added my 5 bucks to the office pool, just because you don’t want to be the one person still going to work when everyone else quits.
But I really don’t want to win that much money. Because of Jack Whittaker, and others – I value my life and privacy and safety. I don’t *want* to move and worry about my kids and security.
But $2M after taxes? That would be nice. If we win, take the lump sum, have to split the pot with 2 other winning tickets, and split our ticket 15 ways, that’s *only* $10M. Still too much.
I’m going to print this out and sit at the receptionists desk at my work the next time the jackpot goes back up. It will save me from having the same conversation with 90% of the people I encounter as I did last week!
On a side note, the parents of a friend of mine in high school hit big (but not Powerball big). I believe it was $7-10 million. They built a massive house and started other ridiculous spending. They were divorced and bankrupt within 5 years. Great stuff that lottery is!
I’m shocked! It took them a whole 5 years to ruin their life after winning the lottery? They beat the odds.
It’s so true! What a waste of money the lottery is. I used to play when I was younger and noticed after some time, it’s not $2. It’s more like $5, then more because you’re not winning fast enough. It blows my mind when I see people win the lottery and then lose it all. Are you kidding me? You could’ve invested that, and traveled the world forever!
On another note, I saw in a forum post the other day about office pools and how one office won the pool and two people that didn’t put their money in. In that case, maybe it’s a $2 insurance policy of not being the one that didn’t quit the next day? Lol. That would be a rough Monday.
Ha ha, yes, I’ve contributed to the office pool before (and even ran it a few times). Excellent insurance. 🙂
I always wonder if the owners of our company (who also participated in the lottery pool) realized the underlying message of the lottery pool. Everyone wants to get rich so they don’t have to work for the owner’s company any more. 🙂
It is a funny underlying message. When a colleague mentioned our office pool today she said “It would be pretty awkward if we won. The office would immediately shut down since everyone would quit immediately.”
I’ve also never seen a random person look so offended as when I said “no thank you” to someone’s offer to join the office pool. Lotteries are strange things.
There’s a lot of poor reasoning here.
1. a lot of people don’t drive to the store JUST for a lottery ticket. Many are there shopping. Me, I don’t own a car, I walk to the store. You could come up with statistics about how many people get hit by a car walking to the store, but that’s a chance people take everyday. I gotta go get my groceries. Buying a lottery ticket is an incidental.
2. you’re always going to hear about the people who won the lottery and then blew all the money, because that’s what makes a good story in the papers. Who wants to read about the hundreds or thousands of people who won the lottery and lived happily ever after? (Someone got divorced? They were probably on their way already. Perhaps the money freed them from a bad situation.)
3. I can’t believe that a blog about becoming rich through saving your salary and frugal living would state that 31 million wouldn’t make you “filthy Richville.” C’mon! Yes it would! And YES, 15 or 10 million would be a jackpot! And I’d be in coach because I’d want to manage my jackpot well! If someone dropped even 1 mil or 2 mil in my lap tomorrow, I certainly wouldn’t turn up my nose at it because somehow it wasn’t enough!
4. Reverse the “light a $2 bill on fire” statement. Yes, burning $2 or spending it on the lottery is both pretty useless. But hey! Only one gives you a chance to win the lottery! 😉
Personally, I spend about $10 to $20 a year on the lottery. I call it entertainment, and I think that’s a good way to look at it. (And I make and save a lot of money.)
I live in a poor neighborhood though (cheap rent!) and what makes me really sad is seeing people who obviously have no money lined up at the cashier buying dozens of scratch off tickets week after week after week. I’d love to talk to those guys about investing in an index fund, and about the powers of compound interest. Because $30-$100 a week would maybe get them somewhere.
0. This article is just a bit tongue in cheek 🙂
1. Smart people would certainly grab tickets while they are out. But I’ve certainly seen more than one person specifically go out to get lottery tickets. Grab them while you’re already getting gas or groceries and you’re only throwing away a few bucks and fortunately not risking your life. 🙂
2. I’d love to actually read about successful, happy lottery winners. I’m afraid there aren’t many stories about them because I think they are like unicorns – probably a myth and if real, very limited in numbers and never seen in the wild.
3. Ok, I’ll concede that $31 million will buy you a crappy apartment on the outskirts of Filthy Richville so you’ll technically be a resident. Just barely. But you’ll still feel like all of us proletariat ordinary millionaires since you can’t keep up with the residents of Filthy Richville (by flying coach, for example). A conservative 2-3% withdrawal from $31 million would be a little over half a million per year after taxes. Does that make one “filthy rich”?
4. Wouldn’t lighting $2 on fire be way cooler than NOT winning the lottery? I’m sticking with my assertion that it would.
As for the lower income folks you see blowing $100/wk on the scratch offs, I see the same thing since we live in a lower income area. I just feel sorry for these folks because I imagine $100 for some is a full day’s work, and they scratch it all away in minutes. $100 per week starting at age 18 and invested at 7% in an index fund would give the person over $2 million by retirement age. And in the meantime it would be a heck of an emergency fund.
Re: #3–Jason, your thesis is you’re happy living on a budget of approx 20,000 a year and you feel rich. 500-600k a year wouldn’t make you feel filthy rich? 😉
There’s this myth that sudden money makes people want more, more, more. I live in Manhattan, I know what things cost here, and believe me, that income could buy me a pretty nice apartment. I don’t care about what the billionaires have now, and I wouldn’t give a hoot about keeping up with them if I had more money.
Guess what? I was going to sit this lottery out, but you’ve convinced me to go buy a ticket! 😉
Well, good luck then! 🙂
oops, sorry about the wrong name
It’s okay. I get “Jason” all the time. Even my old boss at a small company called me Jason all the time.
Thanks KR for making the points I was thinking about. Re:#2 “I’d love to actually read about successful, happy lottery winners I’m afraid there aren’t many stories about them because I think they are like unicorns- probably a myth.”
Incorrect- you don’t read about them because it is not a sensational story for the media. I’m sure it’s more people than you think. A headline of “Responsible Person Lives Comfortably from Lottery Winnings” won’t generate any buzz.
I’m sure they also hide from the limelight and that’s partly how they became successful lottery winners.
I also think the people that tend to win tend to play the lottery a significant amount (more than $2 a few times per year for big jackpots) and therefore are probably much worse than the average person when it comes to managing a sudden windfall. I have no doubt that if the average RoG reader won a half billion bucks, that they would be able to manage the finances successfully (and probably manage the PR/fame/third cousins once removed issues). Contrast that with the folks dropping $50 or $100 on each lottery and whose long term wealth building strategy is winning the lottery. In my research for this article, I found that ~80% of the tickets are sold to 20% of the people, and it’s those 20% that (a) win 80% of the time and (b) suck at money.
We had a family in Lakeland that won the lottery. The took the 30 year payout. 133,000.00 per year. They didn’t want to get ruined by too much money and both continued to work.
As I’ve always said, if you don’t know how to manage money before you win you’re not going to be able to manage it if you do win.
I saw some good advice that recommended to take the 30 year annuity for those big jackpots. It’s not an optimal choice in terms of maximizing your lifetime investment returns (the annuity payment implicitly uses a 1-2% rate of return I think) but it would save the recipient from blowing all the $ in a couple of years then being on the street.
The family you reference would find it hard to lose everything to the point that the $133k/yr couldn’t bail them out.
My husband generated two sets of random numbers for us so we could pretend to play on Saturday. Neither one of us matched any of the numbers that were drawn. This is consistent with the other 4-5 times in our lives that we have played, only this time we saved $2. Yes! Closer to retirement!! Thanks for the fun article 🙂
No, my friend! You saved $4! 🙂 Tickets are $2 each now.
I mostly agree with everything you said. The only counterpoint I’d make is that some lottery winners do have happy endings. The one that I remembered, which stuck out to me the most, was the Canadian couple from a few years back that gave their winnings all away to charities. I think it all depends on one’s own level of happiness and self worth before you win lotto.
That said, you did make me think twice about buying a lotto ticket. Spend $10 on lotto tickets, or food during an awesome road trip that I’m going on this week? I’ll let you know how it turns out 🙂
I saw that article on positive outcomes. Good to hear that not everyone ends up bankrupt and broken!
I’d save the $10 for an awesome meal on the road trip. 🙂
Just a quick update…didn’t buy any tickets. You were right, and am happier now for it. My road trip starts tomorrow & am looking forward to some good eats with the extra $10. Thanks Justin!
Congrats, and enjoy the meal(s). 🙂
“Let me drop some Math on you.” … “1 in 291,999,999 chance that your $2 ticket isn’t going to win you a billion dollars.” I think you broke your math when you dropped it!
Oh man, how embarrassing. Going to ninja edit that now…
Great post. I don’t have any objections to someone’s spending two bucks for a couple days of fantasy, but you can enjoy all the “what would I do with all that money” wondering whether or not you buy the ticket.
Like you, I am not convinced that I would even want to win. We’re so happy with where our lives are right now that I would be hesitant to upheave them with that kind of publicity and stress. The only saving grace would be having the ability to give major financial support to some of the causes about which we care the most.
I would graciously accept a few hundred million without complaint. Though I wonder how much happier it would really make us once we were the target of all those third cousins once removed and entrepreneurs looking to help us invest in the next big thing.
Exactly; I’d have no qualms about having and managing that kind of money. It’s more about the way it could change your relationships with family, friends, and strangers and bring all kinds of unwanted attention.
Meanwhile, I’m now over three thousand years into playing Powerball twice a week on powerball-simulator.com, and I still haven’t won more than $100 in a drawing. And this web site uses the old odds, before they increased the number of balls!
Keep trying. Only a few (hundred) million tries should do it.
Never bought a lottery ticket. Never will. For all the reasons you mentioned. I’d rather just get an extra slice of pizza and enjoy the evening with family and friends, while steadily building my early-retirement machine. Far more gratification there, IMO, than striking it rich via dumb luck.
I do love pizza. Much tastier than a lottery ticket and the pizza won’t leave you with an empty feeling.
I threw in a few bucks. What the hey, right? If I’m willing to drop money on the lottery (only the second time in my life btw), I can donate an equal amount to my favorite presidental candidate’s campaign! It’s been a fun source of conversation for my friends and I over the last few days, and very insightful as to their true priorities.
Please say your fav is Trump. Love his hair.
My husband and I almost always buy a lottery ticket this time of year in rememberance of our pre-marital counselor’s advice to go buy a lottery ticket and talk about your financial dreams and aspirations.
What would change, and what wouldn’t? Oh, and after you don’t win, how are you going to handle your finances?
We went to a gas station, but the line was pretty long, so we went home and watched an episode of the Arrow instead. The only thing that made me sad, was that I was also hoping to buy a soda, but Rob pointed out that I still had to wait in line for that.
That’s a great thought exercise! Especially the “how are you going to handle your finances when you don’t win?” part.
As for the gas station, did you drive there just to get lottery tickets or were you already passing by it? 🙂
We were there to buy gas on the way home from the airport, but when we ran into the convenience store, we just left. Probably $2 richer than we otherwise would be.
I wanted to buy lottery tickets this weekend also. Justin talked me out of it. I was bummed out and started watching the 3rd season of Arrow knowing Justin doesn’t care for the show. 🙂
I started a lottery pool at work so I could waste all of my co-workers money as well as mine. For Saturday’s drawing, we had a total of 274 tickets. Won a whopping $47. I put that money back into the Powerball and started another pool for Wednesday. Sure, it’s a waste of money, but it’s fun to do as a group as it gives us something to dream about together.
The worst part is Thursday morning when you didn’t win and you all have to go back to work with those smashed dreams of the millions you don’t have. 🙂
But I’ll still have my dream of early retirement! The rest of them can think about all the long years they have left to work, until they are well into their 50s or 60s.
Hey Justin, great timely post! I was thinking about going to the store on my way to work to buy a single ticket, but you have changed my mind. I have plenty of family and friends already taking a chance at it.
I have lots of coworkers that play the lottery all the time and they are also pack-a-day smokers. So, in a sense, in addition to wasting money on lottery tickets they’re also burning up their money.
Smoking is really playing the lottery.
I got my ticket. 🙂
I usually don’t buy until the jackpot is huge – over $500 million. Why not, it’s only 2 bucks.
A billion dollars is an absurd amount to win. I could do some good locally if I have that much dinero.
Good luck, Joe!
$31m should at least get you a fractional ownership in a private jet right? I will walk over to the store at lunch this week and buy $20 worth. I enjoy the daydreaming about winning even if I know the odds. I would like to think given my finance background that I would be a “successful” lottery winner at least!
You would have to shop carefully and make significant sacrifices even with fractional ownership. I just saw this article on Netjets (a Berkshire Hathaway subsidiary for those Buffett fans).
$550,000 for a 1/16 ownership interest (=50 hours usage per year) – but you own this “forever”
$115,000 per year maintenance fee ($9,600/month)
$97,500 per year for 50 hours flight time ($1,950 per flight hour)
That’s over $200k per year in operating costs plus $55k/yr in capital costs if you spread it over 10 years (ignoring cost of capital).
Pretty steep even for someone with $31 million if they are pulling a conservative 2-3% out of the portfolio (a little more than a half million in expenses after taxes). I saw another company that had costs about 75% of Netjets, but it’s still barely within a $500k/yr spending budget.
And there are limitations on where the fractional ownership companies fly (some don’t go far outside the US). Combine that with 50 flight hours per year for the plan I mentioned, and you’re fairly restricted (that would be 5 round trip flights to Vegas or Mexico City for us). And that’s the point – $31 million isn’t quite enough to be filthy rich (ie owning your own private jet or a large fractional ownership interest) unless you get very aggressive in the withdrawal rate, in which case you have decent odds of becoming Poor Jack (though I think he spent his $ on girls and gambling, not fractional jet ownership).
You can tell I’ve given some thought to how I would spend a lottery jackpot. 🙂
edit: I see they also have the Marquis Jet Card, a prepaid card that gives you 25 hours to be used within 18 months, with current rates of $125-135k. That’s certainly within the budget of someone with $31 million, but it still won’t get you more than 2-2.5 cross country flights per year.
I spent $2 on the last draw. Maybe I’ll spend $4 this one. Luckily I’m in a position where it won’t make or break my FIRE goals 🙂
Well, it might “make” your FIRE goals very suddenly. 🙂
Just to leave you a happy lotto story… a couple who live on my dad’s block won a little over $100 million about 9 years ago now. They did take lump sum and I know taxes took their fair share, but it’s safe to say they still took home a good chunk of change. They live in the same house still. I talked to them over Christmas when they brought their (ancient) snow blower over to help clear snow when they saw me out shoveling. I was amused to hear the things they splurged on this year:
-New carpet for the bedroom
-Used minivan (with auto-open back doors for the grandkids!)
After they won, they both kept working (he retired about 2 years ago now at age 55-ish and she switched to part-time when he did. She just likes working as a Wal-Mart cashier). They quickly hired a lawyer and an accountant before even turning in the ticket (I only know this because they asked my dad for advice for both). They paid off their house. They have donated some to charity (mostly setting up local scholarships and a big donation to help build the new Humane Society) and set up college funds for the grandkids. Beyond that, they mostly just live their life with a lot more fishing and a little more visiting of national parks.
Dad is pretty close to the husband… from their conversations, it appears that they still have a ton of money left, they just see no reason to try to spend it all. Here is a paraphrased quote from when he was showing me his “new” truck soon after the win: “I guess I could have bought a brand new truck, but this one had everything I wanted, so why pay all that money just for a new one to say it’s new?” He is still driving that new to him truck.
That’s pretty awesome! Glad to hear the “good guys” finally won the lottery. Since they have kids and grandkids I bet they want to leave a generous legacy for them all. I would probably manage the money about the same way (maybe a new minivan or truck instead of used), other than the working part.
They actually sound a bit like The Sage of Omaha himself, with fewer millions. How charming are they with their ancient snow blower, helping out neighbors?! This warms my heart!! I bet they donate to causes some, as well — they just sound like it! Nice to hear!
According to my calculation you have better odds of becoming a US president than winning this lottery.
Apparently lots of us Canadians have been driving down to buy PowerBall tickets. That just blows my mind.
There are probably 150-200 million Americans eligible to run for president (natural born citizens age 35+), so assuming a random drawing (which might be almost as good as our current method of picking a prez), then yes you would be more likely to win the presidency than to win the lottery. And the presidency comes with a $400,000 annuity!
hmm… you like math, right? here’s some more math – eh? =)
Statistics and probability say that the Expected Value (EV) of the tickets purchased is roughly equal to [your odds of winning the jackpot]*[said value of the jackpot] (give or take a few pennies since there are other possible ways to win)!
Hence the, now (as of 5:16 PM MST) *estimated* $868 million cash value after my great nation’s and state’s (Colorado) tax bill will be worth an *estimated* $482 million. Considering that the odds of winning the jackpot are *actually* 292,201,337:1, the probability of winning said jackpot is 1/292,201,338. Therefore the EV of a $2 ticket (bought by residents of CO, in particular) is somewhere in the neighborhood of $1.65. Figure +/- 12% for other states… so somewhere between $1.45 and $1.80??
Considering, the above – you are *really* only “loosing” approximately $0.35, if you buy a single ticket (with no powerplay option!)…
I’ll trade that *theoretical* quarter and dime I found on the ground the other day for the possibility that I can change the face of the planet!!! Besides, the government could prolly use that extra mini-tax from the lottery – by way of my singular lottery ticket play – since I likely (1/292.2 million chance) won’t be paying $1.00 in taxes via state or federal means for 2016, thanks to your advice.=D
You’ll have to discount your EV calculation for the odds of 2 or more winning tickets being sold (which I understand the odds of that are pretty good given the hundreds of millions of tickets being sold). So maybe ~$1 EV so you only lose 50%. Still not as bad of an investment as buying oil two years ago. 🙂
I have read all the horror stories of lottery winners, and it does scare me for future winners. It must be awfully difficult to get so rich, so fast (and you’re right–in most states, you cannot remain anonymous). I do not spend any more than $20 in a year, and only when the jackpot gets high and publicized. I just really like to think of all the people I could help with that money, and rarely do I think about what I would do for myself (I think I have just about everything I could want). My kids, neices and nephews all have student loans–wouldn’t it be fun to pay them off plus a little more? That magnicifant homeless shelter we volunteer at–wonder what they could come up with if I gave them a chunk? My neighborhood school really needs some new facilities. Even though I realize none will probably ever come to fruition, somehow I get joy out of thinking about it. And Mr. ROG–I’ll give you some too if I win 🙂 Just because I think you are a good guy trying to help the rest of us. All others…please apply to my foundation 🙂
Oh wow, I’m in for a cut of your winnings? 🙂 Thanks! I wish you extra good luck in that case!
“The odds are 1 in 292,000,000”
Sooo, you’re telling me I have a chance? 🙂
Dear Mr ROG,
My brain is exploding with fury at the number of commenters on your blog that play the lottery. I feel compelled to write my own blog post about it because I’m losing my voice yelling at the computer screen.
PS: I’m quoting your awesome article.
Love,
TheHappyPhilosopher 🙂
I will never forget, when, long ago, the Governor of my state was trying to get the Lottery legalized. He declared it to be “voluntary taxation”…I think those words fit today. A lot of benefit has been reaped from lottery revenue in this “neck of the woods”. As for me I will buy 2 tickets and consider that $4 entertainment. $4 is about the cost of a Burger King Whopper….I’d rather have the tickets…..
Well looks like from a pure mathematical odds stand point, you should be playing the powerball. 1 in 292 million will win the powerball but you’ll get a payout of ~500 million, if you were to buy one ticket. Just by buying one ticket, you in a sense “win” because you are playing when the odds are in your favor.
Yes yes, most likely you are burning that $2 but mathematically, looks like a solid play.
The expected value of a ticket is still under $2 (it would cost $584 million to buy all the tickets to win $500 million). Even worse when you factor in splitting the pot if there are 2+ winners.
Save your $2 and play the simulator instead for the same rush and fun of dreaming:
http://graphics.latimes.com/powerball-simulator/
Then realize there’s no way you’ll win.
I’m letting this one run in the background on my laptop. So far I’ve saved $32.8 million by not buying the 16.4 million tickets I’ve played. I still haven’t won the “5 white balls” million dollar prize after all those plays. I’ll keep it running till the Wednesday night drawing to see if I can get the jackpot (virtually).
We spent $2 just for fun on Saturday. But it was mainly to have a “real” chance to dream about what we’d do. Shockingly, we didn’t win. But it was fun to play just once. I’m not buying one for Wednesday’s drawing because once was enough.
That said, I do have to point out that some states allow you to stay anonymous. Others let you create LLCs that can claim the money in your stead. You can definitely still have problems, no doubt. I’d tell as few people as possible. Basically, just the friends/family I helped, and I’d probably just say, “I came into some money.”
That said, if I did win and my name got out, I’d probably have my S-corp buy our house so there wasn’t an easy way to trace where we live. Then again, we’d probably keep the 1,500 square foot house we have now. And we’re home all the time — with the car in the driveway — so we’re probably less likely to get robbed. I’d buy an alarm system just in case, of course, but… Anyway, it’s not really worth thinking about. But a one-time $2 expense, as long as you look at it as an expense, was fun.
I would love some of that anonymity, and I would totally do an S corp or LLC to claim the prize (through my entity’s attorney or agent). I would not want my name attached to winning a big pot of money. I might give $ gifts to family and friends but I would just say I hit a big winner in the stock market. 🙂
Not that I play the lottery, but I don’t understand the logic behind enormous jackpots. Seems to me better to pay 1400 one million dollar prizes than one 1.4 billion dollar prize. Spread the wealth!
Marketing.
They are selling hundreds of millions of tickets for each drawing right now because of the massive jackpot. And that causes the jackpot to grow even more. It was $1.3 billion on Saturday and now it’s already $1.5 billion.
I’m just going to wait till it’s $7 billion so I can give every person on the planet a dollar when I win.
My favorite strategy on this subject is to buy a ticket and then eat it. You will fret and agonize over whether you might’ve won until the numbers are called and you can relax. And then you’ve won something!
Eating a ticket doesn’t decrease your odds of winning that much (still very close to zero). I like the approach.
Privacy lost after winning the lottery? Who cares, with $1.3 billion it should be very easy to “disappear”, just saying 😉
If you don’t mind moving. Otherwise, I feel like you’ll always be known to the community as the guy that has a billion bucks (and won’t share it with me!).
Update: Jackpot up to 1.5 billion.
I don’t think enough people are reading this blog 😉
Just think, it would have been $1.6 billion if I didn’t publish this post.
Oh wait… 😉
#optimism
I like your style.
I didn’t buy a ticket but my husband bought two lol. We had a quick discussion on what we would do. I am way more conservative than he is!!!
At least i won back $12 , i got the power ball number…
Better than nothing! How much did you spend on tickets? Just $4?
Gambling is not about winning, just like retiring early is not about hoarding cash. It’s all about tickling the human emotions of chance, luck, fate, destiny, competition and fantasy. In other words it’s about the journey more than the destination.
For many people the difference between the stock market and the lottery is minimal. I can’t tell you how many folks I know who are running scared right now dumping long term stocks because of…what every one else is doing. Ironically those same people have no problem buying $200 worth of useless power balls.
As my daughter said at the age of 5, “humans are weird”
Humans are weird, and best avoided in all but the smallest doses. (Sounds like something Dostoyevksy or Tolstoy would say)
Wow. A-freaking-men. I’ve never bought a lottery ticket in my life, and no amount of lottery money would ever entice me to part with any fraction of my stash, even if it’s a couple bucks. As low of a chance as we have to win a “normal” lottery sum, our chances get even lower the higher the amount gets because, well, somehow taking home $31m just isn’t enough these days, hardly worth the $2 spent on the ticket. I need over $100m, damnit!
I honestly pity lottery winners. They didn’t earn the money and probably don’t have a clue how to properly manage it. They, as you point out, set themselves up to be robbed or extorted. Family suddenly comes out of the woodwork to “make contact” with you again because they want some of that loot.
It’s so much easier to just invest those bills in the market and watch your little stockpile grow.
I appreciate every single little dollar that’s working for me in my portfolio. Every one is valuable and serves a purpose.
Great post! IMHO, the lottery is a tax on stupid people.
If you treat it like anything more than entertainment, then I agree.
Unfortunately I’ve read this reddit post (https://www.reddit.com/r/AskReddit/comments/24vzgl/you_just_won_a_656_million_dollar_lottery_what_do) and when I try to imagine what I’d do with the jackpot I just get a lot of anxiety. No thanks lottery.
It’s a good problem to have to figure out. 🙂 And with that kind of money there are consultants you can hire to help you.
I am also an early retiree (semi-retired, still sit on 2 boards of directors and do a few hours per week of consulting) – stopped full time work at 33, am 37 now (and a multi-millionaire, closing in on being a deca-millionaire in the next 5 or 6 years), and a fan of your blog. I actually geo-arbitraged to move to a less expensive state (with no income tax), something that made so much sense to me and I am surprised more people don’t do it.
I have never once bought a single lottery ticket.
My thought has always been that THE LOTTERY IS A TAX ON PEOPLE THAT DON’T KNOW MATH. Period. My observation is that lottery tickets are similar to drugs… People who are down and out and will never have a good life, use it as their only chance to get out of their rut (like a Hail Mary pass in football), but it ends up only exacerbating the problem.