Monday, May 21, 2012

How to Win the Lottery

            Okay don’t get all excited; I don’t have a magic formula for how to cheat the numerical odds and actually win the lottery. If I did, I sure as hell wouldn’t be telling you. (It would be pretentious if I implied otherwise, and clearly I am not keen on pretense.)

What I do have is an idiot-proof plan for how not to piss away the winnings if you stumble into a windfall. It’s kind of like a financial diet. (So, maybe not that idiot-proof.) But stay with me.
            Let’s say you win $10 million, you’re married, and you both actually like each other enough to not split up and go be someone’s sugar-daddy/sugar-momma. Right off the bat, you gotta shave off about 35% for taxes (depending on where you live, it varies), so BAM you’re only left with $6.5 million. After $10 million, $6.5 mill kind of sounds like you just got robbed, but let’s keep going. You’re going to be okay, if you just follow my plan.

Finally! I was fucking starving.

            A lot of lottery winners want to immediately go out and buy the biggest-ass house possible so they can feel like big-ass important people. Don’t do that, especially if you plan on quitting your job, which dehr, of course you’re going to quit your job. You hate it, remember? Anyway, the house you buy should be no more than 15% of your net lotto winnings (what’s left after taxes) and you should put down a hefty down-payment so that your monthly mortgage payment doesn’t suffocate you. That’s another mistake people make. They think, ‘Oh, let me just put down a small percentage on this house so that I can have the rest of the money to throw on my bed and roll around naked in it, like on the movie White Men Can’t Jump.’ You don’t want to do that. There are far wiser ways to use your new-found fortune, and besides, that’s fucking unsanitary.

            So in my scenario I’ve allotted you an $800,000 house, with $600,000 down. That means the mortgage is only $200,000, with a payment of roughly $1,500 per month – totally doable for a rich bastard like yourself. And now you own real estate, which in any year besides 2008-2010, is a pretty safe investment.

            Another dumbass move a lot of lottery winners make is buying crazy-expensive cars. Because to someone who used to make $50,000 per year, $6.5 million sounds like a lot of damn money. And it is, unless you’re not bringing in an active income (as in, you get a W-2), and we’ve already established that you hate your job and will quit the second you’ve confirmed the numbers on your ticket for the hundredth time.

So don’t get a fancy-pants car. Especially if you’re a dude. I know guys think an awesome car gets you laid, but me and my girlfriends, we joke about how when a guy flaunts a nice car, it’s usually to compensate for something else that is sorely lacking. Don’t be that dude. Anyway, in my scenario, you’re still married, so babe-magnet cars should be irrelevant. Go ahead and buy a couple new cars, but not Lamborghinis. Instead, go for something sensible yet cool, like a Honda Pilot. You get an $80,000 budget for vehicles, which really is nothing to stick up your nose at.

            Okay so you’ve bought a sensible dream house and sensible yet cool cars. You have $5,820,000 remaining. “Oh Sweet Heaven that’s a lot of mullah!!!” you say? Well, yeah, kind of.

But wait, there’s more.

            Let’s assume you’re middle class. Chances are that means everyone else in your family is also middle class. Now imagine that your brother won the lottery, and not you. How would you feel if he spent his days lounging by the pool at his fancy-pants house sipping strawberry margaritas while you’re still busting your ass as an office manager for the World’s Most Psychotic Boss, and the only benefit you get after all these years of sibling loyalty is an invite to ‘come chill at my new pad’? You’d be fucking pissed, that’s how you’d feel! It’s not like your brother worked for that money. He played a fucking quick-pick! Time to pay up, dude!
Stingy bastard.
            So now that you’ve won the lottery, it’s your solemn duty to hand out some of your not-hard-earned cash. Most morons would hand a huge wad of money, say $100,000 each, to each family member and call it done. Bonehead move, because surprise! You have to pay taxes on anything over $13,000. Yes, you, not them. I know, it’s confusing. Google it if you don’t believe me.

Also, you know you can’t trust those idiots to spend your bighearted endowment wisely. So put together a gifting plan wherein you provide an annual sum of such-and-such to each close family member who you feel is worthy of your generosity. I’m going to say you and your spouse have eight close relatives between you, and you will give each of them $11,000 annually. It’s damn generous, but plenty under the gift limit threshold so you won’t eat it come tax-time. It’s also a weird number that makes it sound like you’ve really put a lot of thought into the matter. Most importantly, you will give $25,000 to a charity of your choosing each year, or your ass is going to Hell, plain and simple.

            According to that last paragraph, you are giving away $113,000 per year. Did you just choke on a little spit? Don’t worry, this is all hypothetical. But seriously, if you don’t give away some money, your dream house will get hit by an asteroid, just like the fat guy on Lost. Don’t tempt fate.    
God says: Don't tempt me.
I’m giving you a monthly expense budget of $11,000. Isn’t that awesome? This covers everything from your mortgage, pest control for that big-ass house (nothing like a roach infestation to make your house look really fucking un-fancy), mobile devices, cable, car insurance, alarm system (because now you’re a target), dining out, travel budget (you get to spend $9,600 per year on travel, you’re welcome), clothes, extra-curricular activities, housekeeper (you know you can’t keep that big-ass house clean by yourself!), and lawn-care for your big-ass lawn (unless you LOVE tooling around your yard on a riding lawnmower, then you can scrap lawn care from the budget), and most necessary, your trusted financial advisor, to whom you pay $40,000 per year (roughly) to manage your big-ass investment account. Yep, that is the correct number of zeroes.   

Your monthly expenses total out to about $132,000 annually, which, added to all your generous giving adds up to a grand annual total of $245,000 per year. Okay so remember how after the house and cars you had $5,820,000 left? Since we’ve already decided that you hate your job and are going to quit immediately, we have to assume that this handsome sum of money must last you for the rest of your life. Also if you’re like most middle-class Americans, it’s unlikely that you’re going to Donald Trump that shit into another $6 million. So put it into a sensible portfolio aimed to reasonably garner 6% interest per year, and live on the 5%. That’s $291,000 per year income, or roughly $247,000 after the 15% taxes you will have to pay on your investment income. The other 1% is to be added to the portfolio for growth so that when you get nailed by inflation you don’t drain the account before you and your spouse are both dead.

So you get a big-ass house with a big-ass yard, some cool but not idiotically expensive cars, a monthly budget that’s nothing to scoff at, family members that don’t want to slop their mashed potatoes at you at Thanksgiving dinner, some charity giving that will get your foot in the Golden Gates, and a solid $6-million portfolio that is a billion times better than a Sleep Number bed for restfulness (but you can afford a Sleep Number now too, if you want). After all, money can’t buy you happiness, but it can buy you financial peace of mind… if you know what to do with it. And now you do.

You’re welcome.
It could happen... you never know.

Images courtesy of freedigitalphotos.net

2 comments:

  1. Well... Thanks to you, I feel prepared for my impending and enormous windfall. I wish!!!s This is great advise though, and quite well thought out. I can't even begin to guess the number of nights (likely drinking) I've spent up late with friends haviing conversations about what we would one day do WHEN we win the lottery. I love your rational thought process but now I want to hear the irrational one... Dream cars, home, toys, etc.

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    1. Jennielou! that is a GREAT idea! A post about how NOT to win the lottery would be so much frickin funnier!! I am totally going to do that!

      And best of luck in your lottery endeavors! ;)

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