Lessons From Lottery Winners
Last week we covered money lessons from athletes (visit midweek.com for the article). Lottery winners, in many ways, also have lots to teach us. Although the chances of winning a lottery are slim, it is important to prepare for any financial windfall, such as family inheritances, divorce settlements, cashed-out stock options and overnight business successes. According to The National Endowment for Financial Education, 70 percent of people who get sudden windfalls lose that money within several years. Here are some lessons to abide by.
1) Save! Evelyn Adams won $5.4 million from the lottery in 1985 and 1986. Today she resides in a trailer park after gambling it all away. Sharon Tirabassi, a single mother who had been on welfare, won more than $10 million in 2004. She spent everything on a “big house, fancy cars, designer clothes, lavish parties, exotic trips, handouts to family, loans to friends.” Less than a decade later, she is living in a rented house, working part time and back riding the bus. Be sure to set up a financial plan for the windfall.
2) Be honest. After winning the New Jersey lottery, construction worker Americo Lopes lied about it and quit his job. After ex-colleagues found out, they sued Lopes for not splitting the winnings as promised. The court ordered Lopes to split the prize. In 1991, Ibi Roncaioli won $5 million and gave $2 million of it to a secret child she had with another man. When her husband found out, he poisoned her with painkillers and was sentenced to manslaughter. Denise Rossi won $1.3 million and left her husband without a word. Her husband, Thomas, agreed to the divorce and two years later received a letter revealing the truth. He sued her for not disclosing the winnings in the divorce and the judge awarded him every cent. Sadly, coming into money can bring out the worst in people. Not being truthful can come back to haunt you, so it’s better to be honest.
3) Watch for taxes. Tonda Lynn Dickerson, a former Waffle House waitress, was forced to pay the tax man $1,119,347.90. Dickerson placed the winnings in a corporation and gave her family 51 percent ownership, qualifying her for the tax. Alex and Rhoda Toth won $13 million but lost everything within 15 years. The couple declared bankruptcy and was sued by the IRS for tax evasion. Alex died before the trial, and Rhoda served two years in prison.
4) Be disciplined. Sandra Hayes won $6 million after splitting a $224 million jackpot with co-workers. She states she “had to endure the greed and the need that people have, trying to get you to release your money to them. That caused a lot of emotional pain. These are people who you’ve loved deep down, and they’re turning into vampires trying to suck the life out of me … If you’re not disciplined, you will go broke. I don’t care how much money you have.” Evelyn Adams agreed: “Everybody wanted my money. Everybody had their hand out. I never learned one simple word in the English language, ‘No.’ I wish I had the chance to do it all over again. I’d be much smarter about it now.”