“I’m just a lonely pilgrim.
I walk this world in wealth
I want to know if it’s you I don’t trust
‘cause I damn sure don’t trust myself”
Why do people run through large sums of money quickly?
I’ve devoted more than 30 years of my life finding the answer to this question.
When you hear about Powerball winner Jack Whitaker running through millions that he received from the lottery or Allen Iverson, who has none of the $154 million he made as a professional basketball star, you wonder what happened.
It’s not just famous people who do stupid things with their money. It’s everyone.
A report by the National Endowment for Financial Education said that 70 percent who receive a lump sum, from any source, run through it in a few years.
For more than 30 years, I’ve worked with injury victims, lottery winners or people getting an inheritance. At first, I thought that the problem was people getting too much money too quickly. I assumed that controlling the flow of money, such as giving them monthly payments for a lifetime, would keep them in line.
It’s a little more complicated than that.
People blow through money for five different reasons.
1. Family and friends. People try to “buy” love and friendship or they feel compelled to show off by buying houses, cars, clothes and items. As Will Rogers used to say, “They are spending money they don’t have to impress people they don’t know.”
2. Bad habits, bad advisers, lack of knowledge. People who spend more than they make will not suddenly be “cured” when they get a lump sum of money. In fact, whatever problems they had will now be magnified by having more money to get in more trouble with.
3. Taking the money in a lump sum. Social Security, defined benefit pension plans and many other programs pay out money over a lifetime instead of in a lump sum. They know that people will run through a lump sum quickly and be broke. I’m in the structured settlement and annuity business and have been successful as I am not a peddler of products; I am a hardcore, true believer. The people who are happiest in my role are those who have a monthly check coming in that they can count on.
4. They don’t think before they act. People make impulse decisions. They think they can pay something off “over time.” Then time runs out on their money.
5. Not having a purpose for their money. My father was a professional gambler and owned bars. As a child, it would stun me to see men who had toiled all week in a steel mill or hard labor job come into a bar and gamble a week’s pay in one night. The workers knew to make money, but had no purpose for it.
Making sure that I never have to worry about money in old age is a purpose. Making sure my children and grandchildren are educated is a purpose. Giving to causes I support is a purpose.
Blowing money aimlessly is not a purpose.
I wrote a bestselling book about lottery winners. I tell people to do five things if they find out they hit the jackpot:
1. Never tell anyone you won. If you live in a state where you can collect the money anonymously, do so.
2. Don’t make any quick decisions. Take some time and put together a plan.
3. Take the money in payments instead of a lump sum.
4. Talk to experts who have worked with more money than you have. If you win $100 million, find advisers who have received $150 million.
5. Use your money for a purpose.
Having made the connection that people who get any kind of lump sum have the same problems that lottery winners do, I’ve taken the advice for lottery winners and distilled it into practical advice, commentary and insights that the average person can use.
The book is called “Life Lessons From The Lottery.” It will be out on Kindle on Nov. 10 and in paperback next spring.
As Springsteen noted in his song “Brilliant Disguise,” many people don’t trust themselves — with money or anything else.
After learning some lessons from lucky and unlucky lottery winners, it will help people trust themselves whenever their financial ships come in.
Don McNay is author of the upcoming book, Life Lessons From The Lottery, which will be available on Kindle on November 10. He is the author of two bestselling books, Son of a Son of a Gambler: Winners, Losers and What To What to Do When You Win the Lottery and Wealth Without Wall Street.
“I’m just a lonely pilgrim.
Larry Flynt: Business vision from a smut peddler
If you want to start a business, you can pick up ideas in unusual places. One of my first exposures to the concept of business vision came from a childhood encounter with Hustler Magazine publisher, Larry Flynt.
Of Democrats and Lennon
My daughter inherited few things from her dad, but one is a love for The Beatles. This weekend she attended a concert featuring Paul McCartney, the second time she’s seen a live performance by the former Beatle. I think she enjoys lording it over me as much as being there.
The courageous story of Michelle Lanham
“Imagine going to sleep Wednesday morning and waking up Thursday afternoon. Picture waking up to a hospital room full of people and being told that you have a tumor in your brain and that your kidneys have shut down... once again, your days are numbered. Your eyeballs are swollen to the point that your eyelids can’t close, you find out that your children are distressed, your family is distressed, you aren’t even supposed to be awake... what would you do?”
A better light at a better price
Many of us may have read about light bulbs recently (Time, May 20). The top bulb is the LED at $12.97 giving 25,000 hours of light; with normal use lasting for decades.
One-size-fits-every-state curriculum mandates just the latest federal education fiasco
The latest threat to our rights as Kentucky parents to educate our children in ways that best fit each child’s needs comes from a federally imposed, one-size-fits-every-state educational curriculum known as the Common Core State Standards (CCSS).
Growing up with Dad
Someone close to me was recently divorced. It was a tough battle because children were involved, but necessary for a myriad of reasons. But what bothers me is those children will not have memories to fall back on when they’re adults about times spent with their father.
Happy Father’s Day to Mom
A couple of years ago, Louisville political activist Mary John Celletti posted on her Facebook page that she got a Father’s Day present from her son Patrick. He said she had been the mother and father in his life.
It is no wonder the devil was a snake
Last week, I told you all about my riding lawnmower adventures. Just a week later, my front yard saw even more action.
Double mastectomy and the price of life
Was this really necessary? Has fear overcome reason? Is it not mutilating one’s body when it is presently healthy irrational and capricious?
‘Life is’ ... or ‘is not’ a lot of things
“Life is” a busy thing that keeps us hopping, going and looking for a resting point.
- More Editorials Headlines
- Larry Flynt: Business vision from a smut peddler