RICH MONEY MILLION

5 Mistakes Lottery Winners Make

2010-01-16T09:05:00.006-05:00

It's easy for your dream to turn into a nightmare if you're not careful.

The number one mistake is that people think short term. You should figure out when you really need the money: now, in retirement, or sometime in between -- for example, when the kids go to college.

Another common mistake is carelessness. Because it's 'found money,' some winners tend to care less about paying a penalty for doing things the wrong way; a recipient of a windfall might lose 30 percent of an investment and not really mind, until later.

Lottery winners are especially in danger of being lulled into complacency. For example, someone who wins a jackpot paying $50,000 annually for 20 years may try to live on the money, instead of investing it, and takes a two-decade vacation. Twenty years later, they're 20 years older, broke, and have no training or work experience for the last 20 years.

Waste and imprudence is also an issue, especially for younger winners. Adults over 40 tend to invest windfalls carefully, but younger people often want to live large and they buy fantasy boats and big houses. When the bills come in, reality sinks in.

And most importantly, although coming into a lot of money will cause your life to change, don't change who you are, or take steps to guard against change. If you're not grounded you can become adrift for a while. Your priorities and values got you this far, and they'll see you through.

7 Things You Must Do When You Win The Lottery

2010-01-15T15:58:00.009-05:00

If you're lucky enough to win, here are 7 things you must do.

Safeguard your ticket by printing your name, address and phone number on the back of the lottery ticket immediately, then photocopying the ticket, front and back, and then sealing it in a zip-lock bag.

At first, tell absolutely no one that you’ve won. Not friends, not relatives, not co-workers. Sharing this information too soon can damage your relationships and your peace of mind.

Hire a good lawyer, accountant, and financial advisor to help you figure out what your options are and to map out a financial strategy. Make sure your financial adviser finds out what your payment options are, and discuss those options in depth. You might be able to choose between getting a lump sum, receiving annual checks for a number of years or getting stock options. If you can collect the jackpot in a lump sum, do so. If you want to maximize the interest income, claim your prize as soon as possible. Put the money in government treasury bills then start your planning.

Remember to pay your taxes and keep in mind that a jackpot isn't so big after the IRS takes a bite out of the winnings. Let's say you win a $1 million jackpot, which you will receive in 20 annual payments. After federal income taxes, your annual check is about $35,000. If you have to pay state and local income taxes, your check shrinks further.

Keep most things status quo until you sort of the details of your winnings. At least for a few weeks, keep your job (but take a leave of absence), keep your house (but consider staying at a hotel), and keep in touch with close friends, relatives as usual (but don’t tell them anything about your win, yet).

Change your phone number to an unlisted one. If you already have an unlisted phone number, change it. You’ll be surprised how little privacy you will get — even from people you trust.

Learn how to say "no". Beware of fair-weather friends, long-lost relatives, bogus investment experts, and questionable charities. Your sanity and future happiness depends on this, almost more than anything else.

NEW FORMAT FOR RICHMONEYMILLION

2010-01-14T15:11:00.001-05:00

Greetings readers! As you may have noticed, the RichMoneyMillion blog is undergoing a format change.

This blog started over two years ago with a focus on slightly different matters, and in that time I noticed an interesting trend: I had a massive number of visitors who were interested in my content on lottery winners and managing the financial, social, and psychological issues of that come with being the beneficiary of a windfall.

After speaking with you, my readers, I have decided to re-format RMM to focus solely on offering information for recipients of large cash and asset prizes, such as lottery winners and game show winners.

Please feel free to leave comments and opinions, and support the site by visiting often, supporting our advertisers, and making a donation if you can.