Lottery Winners Share Lessons, Risks of a Giant Powerball Prize

Powerball winnerBy ALAN SCHER ZAGIER

COLUMBIA, Mo. -- So you just won the $500 million Powerball jackpot, the second highest in lottery history. Now what?

Perhaps it's time for a tropical vacation or a new car. There are bills to pay, loans to settle, debts to square.

Past winners of mega-lottery drawings and financial planners have some more sound advice: Stick to a budget, invest wisely, learn to say no and be prepared to lose friends while riding an emotional roller-coaster of joy, anxiety, guilt and distrust.

"I had to adapt to this new life, "said Sandra Hayes, 52, a former child services social worker who split a $224 million Powerball jackpot with a dozen co-workers in 2006, collecting a lump sum she said was in excess of $6 million after taxes. "I had to endure the greed and the need that people have, trying to get you to release your money to them. That caused a lot of emotional pain. These are people who you've loved deep down, and they're turning into vampires trying to suck the life out of me."

The single mother kept her job with the state of Missouri for another month and immediately used her winnings to pay off an estimated $100,000 in student loans and a $70,000 mortgage. She spent a week in Hawaii and bought a new Lexus, but six years later still shops at discount stores and lives on a fixed income -- albeit, at a higher monthly allowance than when she brought home paychecks of less than $500 a week.

"I know a lot of people who won the lottery and are broke today," she said. "If you're not disciplined, you will go broke. I don't care how much money you have."




Easy Come, Easy Go

Lottery agencies are keen to show off beaming prize-winners hugging oversize checks at celebratory news conferences, but the tales of big lottery winners who wind up in financial ruin, despair or both are increasingly common.

There's the two-time New Jersey lottery winner who squandered her $5.4 million fortune. A West Virginia man who won $315 million a decade ago on Christmas later said the windfall was to blame for his granddaughter's fatal drug overdose, his divorce, hundreds of lawsuits and an absence of true friends.

The National Endowment for Financial Education cautions those who receive a financial windfall -- whether from lottery winnings, divorce settlements, cashed-out stock options or family inheritances -- to plan for their psychological needs as well as their financial strategies. The Denver-based nonprofit estimates that as many as 70 percent of people who land sudden windfalls lose that money within several years.

"Being able to manage your emotions before you do anything sudden is one of the biggest things," said endowment spokesman Paul Golden. "If you've never had the comfort of financial security before, if you were really eking out a living from paycheck to paycheck, if you've never managed money before, it can be really confusing. There's this false belief that no matter what you do, you're never going to worry about money again."

"At Times I'd Wake Up and This Would All Seem Like a Dream"

David Gehle, who spent 20 years at a Nebraska meatpacking plant before he and seven ConAgra Foods co-workers won a $365 million Powerball jackpot in 2006, used some of his winnings to visit Australia, New Guinea and Vietnam. He left ConAgra three weeks after he won, and now spends his time woodworking and playing racquetball, tennis and golf.

But most of his winnings are invested, and the 59-year-old still lives in his native Lincoln. He waited for several years before buying a $450,000 home in a tidy neighborhood on the southern edge of town.

"My roots are in Nebraska, and I'm not all that much different now than I was before," Gehle said. "I'm pretty normal. I never was the kind of guy who went for big, expensive cars or anything like that. I just want something that runs."

In the first year after he won, Michael Terpstra would awaken many nights in a panic. Had he slept in? Was he late to work the night shift?

"At times I'd wake up and this would all seem like a dream," the 54-year-old said. "I'd have to walk around the house and tell myself, I did win. I'm not working anymore, and I do live here. I didn't get drunk, break into someone's house and go to sleep. This is where I'm supposed to be."

His new home is a roomy, two-story house in south Lincoln with a big-screen television and paintings of Jesus on the walls. He no longer uses alarm clocks and spends his days taking his 92-pound black lab, Rocco, on walks.

He was terrified when he first won, convinced that he would lose all of the money and have to return to work. So he lives carefully off the interest from conservative investments, with help from accountants and lawyers. He bought the new house and a truck, but struggles to name any extravagant purchases.

"I can't buy a super yacht. I can't buy a Gulfstream," he said. "Then again, I don't think I'd use either one, so why would I buy one?"

That said, some mega-winners still can't resist the lure of big jackpots, at least not the two-buck chances. On Tuesday, former ConAgra worker Dung Tran, a Vietnamese immigrant, walked into the same Lincoln U-Stop where he purchased the winning ticket six years ago and bought 22 more from the very employee who sold him the first prize-winner, said cashier Janice Mitzner.

"We joked about it," she said. "I told him, 'Wouldn't it be something if you won again?'"

Hayes is also hoping to strike rich again -- she bought 10 tickets at a Dirt Cheap liquor store on her way home Tuesday while speaking with an Associated Press reporter. Unlike many big winners, she has kept a visible public profile instead of going underground, appearing on a 2007 reality TV show ("Million Dollar Christmas"), writing an online Life After the Lottery blog and self-publishing a short book, "How Winning the Lottery Changed My Life."

"We have this drawing tomorrow, and if somebody wins, God bless them," she said. "They're going to need those blessings."

___


Associated Press writers Grant Schulte in Lincoln, Neb., and Josh Funk in Omaha contributed to this report.



Increase your money and finance knowledge from home

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Add a Comment

*0 / 3000 Character Maximum

22 Comments

Filter by:
dmickeyde

Why spend it all on frivolous things, instead try sharing with a legitimate agency that can provide food and hope to the really poor children in the world , stop the greed and what makes me really angry are the big winners who keep playing the lotto . Try giving that loosing ticket money to a poor family who can provide food and shelter for a few dollars a week .

March 17 2014 at 12:18 PM Report abuse rate up rate down Reply
w_diago

A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated.

http://www.reversemortgagelendersdirect.com/reverse-mortgage-loan/
http://www.reversemortgagelendersdirect.com/reverse-mortgage-rates/
http://www.reversemortgagelendersdirect.com/reverse-mortgage-calculator/
http://www.reversemortgagelendersdirect.com/new-jersey-reverse-mortgage/
http://www.reversemortgagelendersdirect.com/reverse-mortgage-information/
http://www.reversemortgagelendersdirect.com/reverse-mortgages-pros-and-cons/
http://www.reversemortgagelendersdirect.com/how-does-a-reverse-mortgage-work/

September 20 2013 at 1:26 AM Report abuse -1 rate up rate down Reply
Carolyn Sommerville

Most of these people spend their winnings rather than give to charity. When I win the multi-lottery, most of it will go to charity. I already have all I need.

April 04 2013 at 8:41 PM Report abuse rate up rate down Reply
Dave

I won a great deal in Powerball. Played with 15% and put 85% into 5, 10, 20, 30 year tax free muni bonds @ 4%. I have a wonderful monthly income. No one can touch the principal and beg me for money and I just continue to re-invest. I quietly help those who need help; Donate a good deal to charity; family is steadily taken care of in addition to the small chunks of their own with my initial winnings; I quietly surprise friends with mortgage payments or education funds for their kids; and most importantly, I confidently and humbly say no thank you to everyone with their greedy hand out.

March 26 2013 at 6:22 PM Report abuse +1 rate up rate down Reply
1 reply to Dave's comment
Bob and Mindy

Dave, did you have a winning strategy of winning, please do tell,,,,,glad you won!

June 15 2013 at 10:25 PM Report abuse rate up rate down Reply
Brady Boby

If you win the lottery go to a printer that makes business cards and have them print you cards that state:
I do not do business with people that seek me out, family or not, Period.
I do not give money to charities/people that seek me out, no matter what the charity/people.
Charity is a personal matter don't ask me who I give to it is none of your business.
Don't send me mail it will be thrown out.

March 23 2013 at 5:29 PM Report abuse +2 rate up rate down Reply
Brady Boby

The picture of the women in this story is a woman given advice, I had seen her story and out her 6 million she got after taxes she already can not account for 1.5 million that she thought was stolen from her account they investigated and found she spent it on boats and junk.

She wanted to go into the shoe business and invest 3 million dollars but she has never ran a business before, because she had a dream of being in the shoe business, she was advices not to do this, I think she took their advice.

It is hard to read a story of a woman given advice when she spent 1.5 million on stuff she didn't even know she bought given advice to others and that 1.5 million did not include things she knew she had bought like her house and cars, that is 1.5 million she did not know she spent in like 2 years, she thought someone was stealing from her account.

March 23 2013 at 5:24 PM Report abuse -1 rate up rate down Reply
leggomarx

Hey, why do people take the cash payout instead of the annuity? With the annuity, even if you spend the entire giant check, there's another one coming each year for the next couple of decades. First thing I'd do is pay off my mortgages and all the debts of the nonprofit that has employed me for the past 12 years. Then wait for next year's check.

November 29 2012 at 1:45 AM Report abuse rate up rate down Reply
1 reply to leggomarx's comment
Brady Boby

With an annuity you lose money. The reason is the money does not collect interest and as the dollar keeps dropping your money becomes worth less.

A 300 thousand check 10-20 years ago will be more like 200-250 thousand so see you lose money.

You do not get any more money by taken the annuity the amount you collect is the same as if you took the lump sum.

With a lump sum you can decide for yourself where to put your money where it could grow with interest.

The only time you should take an annuity is if you think you can not say no to people or cant manage the money or you are afraid people will still it from you or just take it.

If you didn't run a company before you won the lottery you will not be able to just because you won the lottery.

March 23 2013 at 5:15 PM Report abuse rate up rate down Reply
1 reply to Brady Boby's comment
forkliftman53

sry but ypur wrong it does collect intrest

December 09 2013 at 2:25 PM Report abuse rate up rate down
jesse taylor

if i win i help every person that realy need it

November 28 2012 at 7:31 PM Report abuse rate up rate down Reply
2 replies to jesse taylor's comment
Exedor

And that's why you'd be broke again very quickly. Did you read the article?

November 29 2012 at 4:12 AM Report abuse rate up rate down Reply
Brady Boby

And you would lose your money very fast.

March 23 2013 at 5:15 PM Report abuse rate up rate down Reply
PeopleSmoks

Wow, just think of all the porn I could buy with all that money.

November 28 2012 at 5:17 PM Report abuse rate up rate down Reply
2 replies to PeopleSmoks's comment
freethedems2012

Jimlapdance, I couldn't find that poem I wrote for you. I'll write another.

November 28 2012 at 7:07 PM Report abuse rate up rate down Reply
pat50n

think of all the porn you could star in

December 12 2013 at 3:52 PM Report abuse rate up rate down Reply
thegrrrr8est

If you're a poor money manager now, you'll be a poor money manager after winning the lottery. If you're a drunk now, you'll be a rich drunk. If you spend every dime you have decorating your body and your house now, you'll blow it all on more expensive crap. If you have an unhappy relationship now, you'll have an even unhappier one after winning.

I know lots of rich people. Lots of them millionaires. Funny. People aren't ringing their door bells asking for a share of their wealth. I'd find it easy as pie to say no. My money, my choice of where it goes.

The truth is, all of my friends and relatives have hit life's lottery. All live in nice homes, wear nice clothes, take nice vacations. Some more than others, but all doing well on their own steam. They are not where I'd put my winnings.

If I were to hit the big one, I'd certainly live nicely and travel first class. Other than that, there are a hundred causes that I'd love to support. There is far more joy in making someone else's life easier than there is in getting yet more stuff.

November 28 2012 at 5:12 PM Report abuse rate up rate down Reply