It's probably not surprising that lotto winners, usually not filthy-rich beforehand, can blow their winnings quickly after getting a windfall of cash. This New York Times article from 2005 comically yet sadly details how two lotto winners, a blue-collar Kentucky resident who shared a $65 million Powerball winning ticket (a cash value of $34 million) with his estranged wife, didn't fare too well. After the husband bought a "Mount Vernon-sized estate," horses and plenty of cars, his wife stocked up on Mercedes cars and bought an equally enormous house that she filled with cats (they lived separately). The husband, when shopping for groceries, would pay in $100 bills and pass the change, sometimes upwards of $80, to the customer standing behind him. He was also swindled out of $500,000 drunk one night at a bar, and two years after winning the lotto died from complications due to alcoholism at age 45. His wife's body was found some weeks later decomposing in her own home, apparently dead from a drug overdose.
Yes, these stories may be the epitome of lottery disaster. But instant wealth doesn't seem to provide instant gratification, and it may be best to take a deep breath if faced with an influx like a Hummer-sized pile of cash. A column in the New York times this morning discussed this intelligent waiting approach, and used the recent Survivor: Cook Islands winner Yul Kwon as a positive example. Mr. Kwon said to the New York Times: "I have tried very consciously not to get too ahead of my self on what to do, I plan on sitting on the money for a while so I can get my feet on the ground. I don't want to be rash about it." The article is the antithesis of the article about the Powerball winners; this time, it seems the winner is making the smart choice.
In the California lottery's "Winner Handbook" (here in .pdf form), they recommended speaking with Boston Globe columnist Charles Jaffe, who advises recent winners to spend 10% of the initial payment on ridiculous purchases to get it out of their system, and then to not spent anymore until taking a long peaceful vacation to think about what's important in life. Mr. Jaffe tries to impart the idea that free time, not material goods, are most important to people. If you play your cards right, you can use that lottery money not to buy Aston-Martins and 12 ranch-houses, but to buy yourself the freedom from a job you don't like or the flexibility to visit your parents and kids whenever you want. Yes, it seems that controlling your own time is a handy way to raise your own level of happiness.
An article on October 8, 2006 in the Wall Street Journal also explains this idea ("Nine tips for investing in happiness"). The Journal - which relishes the role of playing Wall Street cheerleader - makes the un-Journal-like opening claim that "If you want to be happier, forget spending dollars -- and focus on how you spend your time." Among the things that can genuinely increase happiness, according to the journal: volunteering, spending more time with friends, challenging yourself (by not watching TV after work, and instead doing things like projects or working after personal goals), not trading up to a more expensive lifestyle (it can seem desirable to move to a better neighborhood, but once there you realize your neighbors have lots of fancy cars, extra houses, and a lifestyle that you still can't afford), and reducing your commute (according to the Journal, a commute is universally seen as one of life's least pleasurable activities).
Great lottery thoughts: If you created a chain of people holding hands at earth's equator, and if those people stretched all the way around the world more than twice, and if you gave each person in that long chain a different Megamillions ticket, you still wouldn't be guaranteed to have a winner. Alas, people are not deferred from playing - not even yours truly.
(odds of winning Megamillions are slightly more than 175,000,000, people standing around the world assuming 2 feet of space for each person front and back, based on 25,000 miles around the world at the equator).
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