Hmmmmm, How much to live on?

[SeaCat]

In work not to long ago they were talking about winning the lottery and how much they would need to win to live comfortably.

I couldn't believe the answers I was hearing. The lowest was $30 Million.

I sat down and did some figuring. The lowest Jackpot from the Florida Lottery is $3 Million. On their standard 30 year payout that would work out to $8333.33 per month before taxes.

Hell $8333.333 is more than three times what I make in a month. (Before taxes.) If I can't live on that then there is a problem.

How about you? How much would you need to live comfortably and happily?

Cat

 

[redpaint]

I could easly live on that. But I would not mind if that 3 mill was 10mill insteed. Thats only becouse I would like to take my whole family on a trip together.

 

[PrincessErin]

.....

 

[Weird Harold]

I sat down and did some figuring. The lowest Jackpot from the Florida Lottery is $3 Million. On their standard 30 year payout that would work out to $8333.33 per month before taxes.

As long as I wasn't stupid enopugh to move to California, New York City, or some other high-rent district, 8K/Mo would be more than enough to establish an income that would last beyond the 30 years of the annuity.

However, since I'm only a couple of months away from pushing down on 60, I'd probably take the much reduced lump sum amount ($1.4 mil or thereabouts?) and insure that the annuity was transferable to my heirs without the inheritance tax hit the lottery annuity would incur.

I'd actually do fairly well with about a third of that 8K/mo figure once I bought a new vehicle and "the dream house' -- which just might be the same thing, since I don't have any particular need to stay in one place.

 

[Weird Harold]

The local newspaper did an article about three lottery winners in our area who won between $200000 and 1 million dollars. They broke down what they spent the money on and it as startling. Oh, should I mention that the three winners had all declared bankruptcy.

The BBC did a similar expose of the troubles winning big bucks can cause (Football Pool winners in their case) in the early seventies when I was stationed in England.

The bankruptcy rate among lottery/slot machine/football pool winners is why most lottery payouts come with an offer of finacial managment counseling.

Personally I think the reason that so many big money winners go bankrupt is that the innately fiscally responsible people like me generally don't buy lottery tickets or play mega-bucks(tm) slot machines.

 

[PrincessErin]

.....

 

[voluptuary_manque]

In The Millionaire Next Door the statement was made that a prudent, responsible person would find it impossible to spend the income from 10 million. I believe it! Even taking into account my taste in California Impressionists and Jungendstil bronzes, I'd still have bunches left over. I mean, how damned many Armani suits can you wear, for God's sake?

 

[SlickTony]

I love this question.

I've never worked it out based on how much I'd get per month but I'm thinking that 2-3 million dollars would be enough.

I mean I have a list of things that I want to buy and a list of people I want to give money to. Once that is done I'd invest the rest and live off the interest.

The local newspaper did an article about three lottery winners in our area who won between $200000 and 1 million dollars. They broke down what they spent the money on and it as startling. Oh, should I mention that the three winners had all declared bankruptcy.

The one that made me roll my eyes is that one of them bought a parrot for $10000 and then spent another $30000 over the next few months to take care of it until it died because the owner didn't realize how hard it is to take care of a rare tropical parrot (or whatever kind of bird it was).

They must have been doing something wrong. I used to work with a woman who I know damn well wasn't making that kind of money and she had an African Grey.

I figure if I win the Lottery, I'm gonna keep my job, for the sake of the insurance. Otherwise, I'd have to pay for all my prescription drugs and broken bones and minor operations and such until the money was all gone.

 

[Weird Harold]

That might be true but it also might be that the fiscally responsible people, when they win the lottery, don't make headlines.

I don't know what the statistics are for lottery winners, but the BBC documentary I mentioned tracked every football pool winner to win over 100,000 Pounds over a ten year period. They profiled the most egregious cases of fiscal irresponsibility, but the overall statistics were something like 75% of big winners went bankrupt in less than five years.

Most of the ones who do go bankrupt don't make the news either -- like your mother's friend, the paparazi go looking for fresher faces once the sensation wears off and the winners fade into anonymity.

I do know that there have been several scholarly studies on the effects of sudden wealth since the BBC's 70's documentary, but I haven't followed them closely once I determined that their results were essentially the same as the BBC came up with.

 

[john-the-author]

In The Millionaire Next Door the statement was made that a prudent, responsible person would find it impossible to spend the income from 10 million. I believe it! Even taking into account my taste in California Impressionists and Jungendstil bronzes, I'd still have bunches left over. I mean, how damned many Armani suits can you wear, for God's sake?

I strongly agree. It'd be nice to travel as much as I like, to do a number of things, to not have to do a day job for a living, but even today, the tax-free income on $10M is easily $500K a year, and that is one pissload of money! I've thought of what I'd do if I won large lottery ($20-30M or more) and after buying college annuities for my couple dozen nieces and nephews and a few things here and there for the family (that'd be maybe $1.5M) and setting something up so my siblings were secure, and probably taking a bunch of family on a large family vacation (call that maybe another $3M), there'd still be far more money than I could actually >USE<. I'd keep a wad for myself--maybe $5-10M--and then look into setting up a charitable foundation of some kind or otherwise do something philanthropic.

Having money is really wonderful, but there comes a point where you can only buy so many cars and houses and eat just so much lobster. Money's got to have some kind of purpose or it's going to become a problem in one way or another.

 

[sr71plt]

I could trim down to living fine on that $8,000/month. Of course I have no mortgage or other debt other than payments on one car.

 

[jomar]

I could trim down to living fine on that $8,000/month. Of course I have no mortgage or other debt other than payments on one car.

It would mean cutting back on a bottle or two of fine wine though.

I would want to win enough to live comfortably on some net interest while still allowing the principle to grow for my heirs to inherit. I live comfortably on what I make - but if we're wishing and all, I'd like be able to think less of how I spend money.

 

[Xelebes]

I would use the winnings for bonds and live off of those bonds while working whenever I want to.

 

[cloudy]

We live quite nicely with a little less than that a month, so we'd do fine.

 

[christabelll]

2 mill - just enough t'piss you off LOL... But seriously, after debt paying, house & car buying for self, college fund setups, a bone to each sib and my mom = there wouldn't be a hell of a lot left over = but that left over, if properly invested should last a good long while. With no car payment or mortgage payment, were talking about insurances and fuel, utilities etc.... yes I could do it...and be quite happy about it.

If I were to win a huge amount 10 + mil - I would pay off all my & my siblings debts and mortgages - set my mother up to live comfortably the rest of her days, set up trusts and college funds for my kids, have a house in the rockies a working farmette, the keys, we all need a place to rest, and somehwere in Europe, the south of france is lovely isn't it?, a favorite car for each local - and then I would stuff the rest into a matress and create fort knox - no --- just kidding on that - but it would be put away and used to live the rest of My Days... I would also probably set up a fund to help wild and domestic animal rescue places.

I'd managed to live on less than a thousand a month for years after paying CS.. These days, with no income and only the SO's we do well on just at 4k a month, with a mortgage to boot. Not extravagantly but comfortably.

 

[Belegon]

I could easily live on the income from $3 million. Obviously, the market ain't the best place to put it right now, but say you had a return of only two and half percent... (even in these days, you can do better than that with CD's)

On three million, that is 75K per annum. That's not wealthy, but it is solid middle class.

 

[R. Richard]

One thing that hasn't been mentioned is lifstyle. People who win big money chage their lifstyles. The $25K car that was a prized possession now becomes a $100K car. The $200K house now becomes a $1M mansion. The $5 lunch now becomes a $50 lunch.

What kills the big winners is the cost of maintaining a lifestyle they never had before.

 

[Liar]

One thing that hasn't been mentioned is lifstyle. People who win big money chage their lifstyles. The $25K car that was a prized possession now becomes a $100K car. The $200K house now becomes a $1M mansion. The $5 lunch now becomes a $50 lunch.

What kills the big winners is the cost of maintaining a lifestyle they never had before.

That, and the fact that if you have money, other people will try to get it.

Many are the stories of lottery winners, who have no habit of dealing woth those sums of money, and let someone with a fast tongue and few scruples "invest" their big win, proceeding to scam them for considerable parts of it.

It won't make them poor per se, but it can easily turn ten mil into five. Combined with irresponsible lifestyle change, they run out of funds eventually, and is stuck with a big house that costs a whole lot to maintain and an expensive car that costs a fortune to drive.

 

[JAMESBJOHNSON]

I can live good on $2000 a month. Of course, my home is paid for and my tastes are simple. The money allows me to drive a new car, take a decent vacation, and eat what I want. The rest is for insurance and taxes and utilities.

My ex-sister-in-law won a million dollars (after taxes) back about 1985. The money was gone in about 3 years. Her house was a small 2 bedroom starter, to which she added the biggest pool youve ever seen, a stable for a herd of horses, plus a barn, then she went to work buying new cars...she bought a Lincoln, and a Camaro, and a Chevy Blazer. Then she found a saddle bum and married him. The wedding was as fancy as I've ever seen. Her redneck friends kept the free bar in business all night. Dumping the saddle bum cost her another new truck and a bass boat. And in 3 years she was back washing poodles for a living.

 

[john-the-author]

One thing that hasn't been mentioned is lifstyle. People who win big money chage their lifstyles. The $25K car that was a prized possession now becomes a $100K car. The $200K house now becomes a $1M mansion. The $5 lunch now becomes a $50 lunch.

What kills the big winners is the cost of maintaining a lifestyle they never had before.

You're quite right, RR. Most people don't understand what to do with money when it falls in their lap. VM's mentioning The Millionaire Next Door is very appropriate: it not only tells you how to become a millionaire, but it gives a lot of effective advice on how to survive winning a lottery: you do the same things that aren't profligate as if you wanted to become a millionaire and you'll win the game.

 

[john-the-author]

I can live good on $2000 a month. Of course, my home is paid for and my tastes are simple. The money allows me to drive a new car, take a decent vacation, and eat what I want. The rest is for insurance and taxes and utilities.

My ex-sister-in-law won a million dollars (after taxes) back about 1985. The money was gone in about 3 years. Her house was a small 2 bedroom starter, to which she added the biggest pool youve ever seen, a stable for a herd of horses, plus a barn, then she went to work buying new cars...she bought a Lincoln, and a Camaro, and a Chevy Blazer. Then she found a saddle bum and married him. The wedding was as fancy as I've ever seen. Her redneck friends kept the free bar in business all night. Dumping the saddle bum cost her another new truck and a bass boat. And in 3 years she was back washing poodles for a living.

Interesting, but I'm sorry she couldn't hang on to it, JBJ. It underscores RR's point about spending too much when you don't have the income stream to support it.

I assume this was a state lottery of some kind?

 

[JAMESBJOHNSON]

JOIN THE AUTHOR

Yes. It was sometime in the mid 80s when we got our lottery.

There have been several stories of lottery winners going bankrupt soon after winning. One man here in town won the lottery twice. Already rich, and an old friend of Johnny Cash, he donated the money to a home for kids with cerebral palsy....twice. I'd likely do something like that, because I dont want the goddamned problems with hardluck stories.

You know, a lot of really dum, ugly people suddenly discover that theyre popular and desirable, and they go nuts. Then theyre alone and ugly again.

 

[Stella_Omega]

A while back, there was a "Mystery Lotto Winner," that didn't come forward for several weeks to claim the winnings. When they did, they were ready; they had already retained a financial management team, and I recall being impressed by that firm's credentials.

 

[trysail]

There is an obvious and simple explanation for the tendency of lottery winners to go broke.

The folk who spend money on lotteries are demonstrably a priore innumerate. My associates referred to lotteries as: "A tax on stupid people."

It should come as no surprise that stupid innumerates are highly likely to piss away money. It is a teleology. Quod erat demonstrandum.

In contrast, people who understand probability and statistics don't waste their money on lotteries— government sponsored or otherwise.

 

[voluptuary_manque]

There is an obvious and simple explanation for the tendency of lottery winners to go broke.

The folk who spend money on lotteries are demonstrably a priore innumerate. My associates referred to lotteries as: "A tax on stupid people."

It should come as no surprise that stupid innumerates are highly likely to piss away money. It is a teleology. Quod erat demonstrandum.

In contrast, people who understand probability and statistics don't waste their money on lotteries— government sponsored or otherwise.

Uh-huh. I used to teach a math lesson on that very subject, The Probability of the Non-Occurance of an Event or, "Yeah, sooner or later someone will win that big suckah, but it won't be you!"