I won the lottery -- and I'm keeping my job
Now that we suddenly had more assets, we had to worry about protecting them.
Although I know the schadenfreude of reading a lottery winner's tale of woe, I want to share a more positive perspective. I also think that windfalls are more common than we realize, whether they come from inheritances, settlements or tax refunds. So here's my windfall story.
The year 2009 was a rough one financially for my husband and me. We dealt with a job loss, the birth of our first child, a very expensive medical emergency, and an unexpected move across country for a new (much lower-paying) job all at once.
Fortunately, we had a 12-month emergency fund ready, no debt, and knew how to adjust to more frugal living. (We're longtime Get Rich Slowly readers.) We surprised ourselves by how calmly we accepted the drastic changes to our circumstances.
But you never know what life has in store. Post continues after video.
My husband settled into his new job and joined a $5-a-week state lotto pool with a few co-workers. Yes, I know that the lottery is a fool's tax with astronomical odds (1:~5,000,000 in this case) but he viewed it as a bit of fun at an otherwise stressful job. My view was that it was $5 down the drain, so imagine my shock when he called to tell me the office pool had won the jackpot.
After going through a roller coaster of emotions, we met a fee-only financial planner and devised a plan.
- First, we avoided publicizing our name by claiming the win with a trust. (Tina isn't my real name, in case you were wondering.)
- Then we planned for taxes. The initial prize was over $10 million, but after taking the lump sum, dividing it among winners, and setting aside 40% for federal and state income tax, we were left with $1 million and some change. Not enough to retire on when you're 30 (we're keeping our jobs), but we can't complain.
Now that we had more assets, we had to worry about protecting them.
I work in a medical field with some chance for litigation, so I greatly increased liability and umbrella insurance. We set aside one-third of the cash to custom build our dream home (not a McMansion; a 2,500-square-foot ranch home on a half acre). Then we maxed out a 529 college fund for the kids. (Bonus: The contribution is tax-deductible in our state.) A portion was allotted to charity and we were left with quite a bit of cash to invest.
We decided on an 80% stock/20% bond allocation (we went more aggressive because we are relatively young and have no mortgage). We had always maxed out retirement accounts, but now needed to start taxable investing. We're using a passive, indexed approach; our retirement accounts are composed of a total bond market fund, and the taxable account is split among a total U.S. stock market fund, an international fund, and a tax-exempt bond fund.
It has been an adjustment to watch our balance fluctuate by $50,000 when we have a volatile week in the market, but the plan is to stay the course, rebalance when needed, and do lots of tax loss harvesting (we need it this year).
I've read the studies that have found no significant increase in happiness for lottery winners. Overall, I agree. We really are just as happy as we were before all this, and our lifestyle really hasn't changed. However, it's very nice not to worry about finances if we have an unexpected car repair or want to take a family vacation.
The lesson I've learned is prepare for anything. Just when you think you have life on autopilot, life throws some turbulence your way.
More on Get Rich Slowly and MSN Money:
Though I think the author and spouse were smart winners, I am a bit amused at how they and some other posters, say they are not happier or their lives have not really changed. That is of course ridiculous. SInce the author described her previous circumstances as difficult and her husbands job as very stressful (one of his reasons for playing the lottery) I find is dishonest to say he is not less stressed and they are not lighter on their feet, every time they walk into their no mortgage, brand new dream house. And how about the poster who said they were in similar cricumstances and take their children to experience new cultures but are no happier. Really? I think being able to travel and explore new cultures wiht your children must be a source of great happiness not available to folks who can not afford to do so. Yes, others find simpler ways of enjoying their chidlren etc. but certainly you are not taking these travels because they are just ho hum, middle of the road, every day occurances that are easily replaced.
Come on folks. Financial relief is a positive influence on feeling happier. And since as much as 57% of divorces are blamed on financial problems, I am thinking that removing those problems has some inflluence on being happier. Let's not be sore winners. I agree money isn't everything. But is it way ahead of whatever is in second place!
When I saw the headline on the main MSN page for this article, I thought they were talking about someone who had really won big in the lottery - and I was going to go off on the person for being selfish and keeping a job he/she didn't need when so many people are in desperate need of jobs. However, after reading the article, I don't think "Tina" is selfish at all. If she and her husband only ended up with a million dollars, she's right - that's not enough for a 30 year old to retire on. Now if it was me, at 57, and being as frugal a person as Tina is, I probably COULD retire on a million - but it certainly wouldn't last her and her husband for 40-50 years.
Several people have posted mentioning the couples should "step aside" and let someone else have their jobs. NEWSFLASH: If you think that, then your skills, your education, your training, and your opinion are quickly becoming IRRELEVANT and UNNECESSARY. You WILL be outsourced to China. Do like my Grandmother used to say and light a fire under yourself and get after it. Do like my Mom and Dad used to say and get out there and HUSTLE. No one owes you anything.
Figure out how to solve someone's problem. That's how you get a job. Nobody wants to hire a whiner who can't figure things out for themselves. Learn a trade. Get a relevant degree. Take a second job, if you have to, for GASP, MINIMUM WAGE.
I hope if anyone posting here wins a lottery they consider that buying a larger, newer house will increase other bills too...heating/cooling, property taxes, lawn care, maintenance, higher insurance. The same goes for buying a new fancy vehicle...higher insurance, higher tag prices, higher maintenance fees.
Put your money to work for you by investing and live off the proceeds. That makes more sense than blowing it!
Wow, these posts calling them selfish for keeping their jobs are...well, the selfish comments. Even better, risk the million and start your own business. Unfortunately, 1million in today's world is not enough to retire. It is the equivalent of about a $50,000 dollar job for the next 35 years. Without healthcare. If they were older, it might have been enough, but even so, it would not have been selfish to keep a job. Jade_dragon is the um, bad word.
You know what? When I read the blogs, most information is guesswork, assumptions and information that does not relate to the subject at hand.
We Have an annual income of $72,000 dollars and an investment income of $40-45,000 per year. The investment income is from Fixed annuities, Corporate bonds and a real estate income trust fund. Our investment principal over the last five years (Volatile market) has gone up or down in actual liquid worth no more than $12,000 dollars. We live on income and investments and retired at age 56 and 53. After deductions we pay 17% Federal tax. These young people will have amassed a pretty penny in about 15 years. They can then retire and live off the money the money makes if invested wisely and never touch the principal.
What is erroneous is thinking when you have a million, you spend the million with no interest and/or dividends from the money making money.
Good for them!!!!
Enjoy your new found fortune! You should definitley not worry about other people. Take care of your family. That's all that matters...
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