RE: Women wins $10 million after "rude" stranger bumped her into hitting wrong button
"playing the lottery...is a pretty fantastic indicator that one is not the best at financial management.
Nothing sedates rationality like large doses of effortless money (Buffet quote).
Statistically, like you said, she will mismanage most of that money, and by the time she realizes how bad she has screwed up, she will not have enough left to make a significant difference in her life. Unless she takes the annuity option which pays out over the next 20 years. That's probably the best bet for someone that can't manage money…the annuity saves her from herself.
I wish her the best and I hope she manages it well. Put it somewhere where it grows, and she only lives off the ROI, and doesn’t blow it on some BS like nonprofits, relatives and friends… that's the quickest way to lose the money.
I have never understood why people don't take this option. Are they afraid that the lottery commission is going to have them killed or something? If she took that option she would have a guaranteed 20 years of $300,000 or so after taxes. How can she not live off of that? She could still get the house but this would ensure that her money management is at least somewhat enforced by the payouts.
I suppose I can see a scenario where she or others would be able to screw this up as well because she could go to some sort of loan shark that would give her terrible rates on future earnings. For me, I would always go for the annuity but it seems like no one ever does.
I would be willing to bet that a ton of her friends and family come out of the woodwork and try to be her "best friend EVER" soon if they haven't already.
The idea of putting it all in a simple savings account would be more than enough to live the rest of her life off the interest.
There is a story of a guy that won something like $100 million dollars and the newfound wealth resulted in his brat kids becoming drug addicts and one of them died. He later lamented winning the lottery as "the worst thing that ever happened to him."
People underestimate the seductive nature of money. It doesn't necessarily change anybody… like Tom Clancy said; money doesn't change character, it reveals it…
Money has the ability to bring out the worst and better angels of our nature. People need to keep that in mind when they receive a lot of it quickly. Because people haven't developed the self-discipline to control those emotions yet. And when money is freely available, it degrades your desire to use due diligence in using it…400 years of debt financing has proven this over and over again.
I think what gets people into trouble with large doses of effortless money is they underestimate the power of that money to pull out the most devastating aspects of our nature. Because we all have it in us.