Let’s face it. When it comes to things like lottery jackpots, personal finance experts and writers tend to be wet rags. We usually put lottery ticket purchases in the same category of money sins as bottled water or spending $5 for a cup of coffee that can be brewed at home for 25 cents. But whom among us has never splurged for a one-pump mocha grande latte?
So what about lottery tickets? Do we really practice what we preach there?
[Credit Check Tool: Try Credit.com’s Free Credit Report Card]
I decided to query some of my personal finance peeps to find out whether they’re not just a little tempted to sneak out to their local 7-11 and pick up a few tickets for today’s Mega Millions lottery jackpot. I didn’t think I’d find anyone trying to buy $700 worth in one pop like MTV celeb Rob Dyrdek allegedly did before the last drawing. But I figured I’d find a least a few who like to play once in a while.
Almost all of those who responded to my completely unscientific poll said they don’t play the lottery. Mary Hunt from DebtProofLiving.com was the most blunt: “Lottery tickets are a tax on stupid.” Neither does Credit.com credit card expert Beverly Harzog who says, “I’m not morally opposed to it at all, just kind of indifferent compared to the rest of the world. Really, it’s a matter of what I can spend time on right now. I’m such a numbers geek, I’d spend too much time trying to beat the system! ” Liz Weston also says she won’t be playing, “although I’m embarrassed to say I have in the past, because it really is a stupidity tax.”
David Bakke, a contributor for Money Crashers Personal Finance admits he’ll buy a few tickets: “I usually take a pretty frugal approach to money, and I’ve always been fairly anti-lottery. However, at $540 million, I figure it’s worth a shot.”
But he does have some lottery ticket stub skeletons in his closet. ”Many years ago, buying lottery tickets was one reason why I fell into substantial personal debt. However, that was when I was much younger and much less mature.” Bakke now uses a personal rule of thumb to determine when he plays: “I only play once the jackpot goes over $300 million. That way, I know I’ll never fall into my old habits. Once it gets past this level, I buy three tickets. And I buy one more ticket every time it goes up another $100 million. Therefore, I’ll be buying five $1 tickets.”
Others shared their experiences with playing the lottery in the past. Steve Rhode of GetOutofDebt.org, who warns that money doesn’t always buy happiness, recalls, “I once bought some scratch-off tickets to demonstrate on a radio show that you are not likely to win anything. I won $100. Kind of screwed up the example.”
And J.D. Roth of GetRichSlowly says he won’t be buying a Mega Millions ticket, but he did buy scratch-off tickets once in a while back when he was still in debt. “I was looking for a way to get rich quick. It was never a habit, though. Just a few times a year,” he notes, adding that he never won more than $50. For kicks, you may want to try the GetRichSlowly.org Mega Millions Lottery Simulator.
A Generous – and Cautious – Bunch
Both Rhode and Roth said that if they did win, they would use their winnings to fund projects they care about, though Rhode added he would splurge on at least part of it. “Why win it if you can’t enjoy it?” he asks.
Liz Weston suggested I check out Chuck Jaffe’s column about how lottery fantasies can help you plan your financial future. ”Back when I did buy tickets, I dreamed about helping relatives…so I decided to do that. I wasn’t able to buy them new houses or cars, but I did help pay for some vacations and other goodies,” she says. “And that felt good.”
Hunt said her first expenditure would involve hiring a really good financial planner while Bakke offered the most comprehensive list of what he would do if he won:
- Before I even claim the prize, I’d probably hire a lawyer to handle the media.
- Quit my job.
- Claim the prize.
- Possibly hire a financial adviser, although I haven’t thought that one all the way through yet.
- I would not take the lump sum. I could bank an additional $100 million by taking it in annual payments, so this is a no-brainer. Plus, with each annual payment being almost $14 million, who needs more than that?
- I’d invest almost all of it. I’d give in to a few splurges here and there, but I’d invest at least 90% of it. Then, once the interest starts roiling in is when I’d make any major purchases. I’d buy a new car (not sure what kind), and take a trip around the world.
- The remaining 10% would be used for gifts for family and possibly friends, and I’d also like to establish a foundation of some sort to help others that are less fortunate than me.
As for me? Many years ago, I had a one-year subscription to the lottery that automatically bought me one ticket per week. During the entire year, I won nothing. Zip, zilch, nada. That pretty much turned me off to playing. And even if I wanted to, I couldn’t sneak out and buy a Mega Millions ticket. They aren’t sold in my state.
Image: stopnlook via Flickr