I have won the lottery: Now what?

^^ this post is awesome.

Congrats! Wouldn't be the first poster on LetsRun.com to have a jackpot experience, see Jsmoogie's post in the Craziest Stories thread:

http://www.letsrun.com/forum/flat_read.php?thread=3733314&page=6

Secure new jobs that may be more fun or at least doable, and quit your old jobs once you have secured the news ones. Paying off the house will really depend on if you want to keep that house or move. What is keeping you in your location now?

Pre-tax 6 million is a lifechanger, but it is not a rich-for-life-so-lets-spend-all-we-can amount. It will provide you a lot of comfort and the prospect of permanently being out of debt.

You should take a set amount that you feel is reasonable ($10K?) and enjoy it. Perhaps spend $3-4K on a really nice vacation as a form of celebration if that is your thing, and then another $6-7K on something luxurious which will be more permanent that you can continue enjoying (ie, home theater system). That will allow you to feel the sense of enjoyment for your new found fortune within a set limit to prevent you from overspending.

If you are religious or charitable, decide upon a set amount that you will donate as an initial lump sum and then decide upon how much you would like to give annually.

Perhaps pick one or two nice things that you enjoy but do not partake in right now due to cost reasons, plan the annual cost to do them, and if you feel you can afford it, implement them. Perhaps you buy store brand cheese to save, or never go to the movies because it is too expensive. If you take some of these luxury upgrades that you have been skimping on and figure they will only cost you a few hundred bucks per year, it will be worth it to start doing these things if they feel they will make you happier. This way, in the long term you can always have some little way you can say your life is enhanced, but that little luxury is not eating away your fortune. Otherwise, people tend to make too many little upgrades, completely changing their lifestyle into something financially unsustainable. Make one or two low cost changes for the better to start.

It is better to go on a quick celebratory spree with predefined limits and then return to a relatively normal life with some minor low cost upgrades, than to chronically spend the money in an uncontrolled manner on frivolous things without keeping track of it and find you cannot afford to live as a lottery winner.

6.4 million looks like alot until Uncle Sam takes his share.

Pay off debt, give yourself economic freedom to take up a fun career.

Ever wanted to be a high school coach? want to spend a year seeing how fast you could run a marathon if you trained your all?

but like has been said repetitively, live frugally, and this can be a great boost. waste it on a ferrari and buying a mansion and you'll be back to your old standard of life in a decade.

The 6.4 million is after taxes. We live in the western region but really want to move back east to NJ. Its home and we miss it.

Then you should definitely head back to Jersey. You certainly have the cash to do that.

I have an interest-bearing account that earns 2.25% right now. The rate floats and has been as high as 6.5% and the lowest it's been is 2.25%. GMAC Demand Notes, they renamed it Ally Demand Notes or something. Had it about 15 yrs.

Teh 6.4 is AFTER taxes so if you got into an account like this, or a diversified collection of interest-earning accounts is better, you would earn $144,000 a year without ever using the principal. You would be taxed on this as normal income (NOT capital-gains tax as someone else said).

Do what some have said and try to work at something else and that should keep the income at ~$200,000. Off of that pay off your debt. Think how well you can live off $144,000 when you have no debt and no house payment? It might take three years and some discipline, but do it.

How in the f*** do you have that much CC debt and student loans when one of you is 50? I would expect that if you got a professional degree when you were older that you would make more than $96k? Not being a dick, but seriously how do people with jobs live with more than $10k in debt? unless it is $20-30k on your cars and nothing else that is too much debt.

What to do??? wrote:

but I really respect the opinion of those on this board and would really appreciate your feedback.

Seriously? On THIS board? HAHAHAHAHAHAHAHAHAHAHA. That's the funniest thing I've read so far this year on this message board.

"I just won 6.4 million dollars. I am moving to New Jersey."

God creates all different kinds of people in this world.

is there a way to anonymously claim a lottery prize? so that you don't get people coming out of the woodwork to "help" you spend it?

Flagpole wrote:

2) Let's assume you end up with $3.2 million after taxes. If you put that in a mutual fund made up of 50% bonds and 50% stocks (you should be conservative) and take just 4% of that total, that is $128,000 annually. I'd do that and then over the next year use that extra income to get rid of the credit card bills.

If you believe that we're getting ready to enter an era of high inflation, you'll sleep better at night staying away from bond funds, which will lose value as interest rates go up. With inflation and interest rates as low as they are right now, there's really only a down side ahead for bonds. Once investors start moving their money out of losing funds, it forces the managers to sell bonds at a loss, which then becomes a self feeding cycle encouraging others to follow suit and invest elsewhere.

Can I borrow $10,000?

I didn't say he had to keep stuff like that forever. If interest rates skyrocket, then he can move stuff to CDs. If CDs bring 12% like they did in the 80s, then he can do that.

You have 6 million dollars.

Just do want you want without hesitation.

Or you could try to make a bionic man.

stop the spam wrote:

is there a way to anonymously claim a lottery prize? so that you don't get people coming out of the woodwork to "help" you spend it?

I've always dreamed how I could accept the money anonymously if I won the lottery. I bet they have it in the contract that you have to be available for press conferences, advertising and stuff like that. If they lotto gives away millions they want a face to go with it.

If I won I would legally change my name to something like "Harry Cox" and change my appearance. After I got the lump sum I would legally change my name back.

X-Runner wrote:

You have 6 million dollars.

Just do want you want without hesitation.

Bad advice. That's how many lottery winners end up broke in a few short years.

Let's assume the lump sum does come in over $6.4 million (for lottery winners, it can sometimes come in a little lower than what the lottery tells you). Without knowing much else about your situation, I would pay off the cards, the student loan, and the mortgage, even with the good rate. (If you have car loans, pay those off too.)

That leaves you with around $6.1 million. Take $100,000 of that and set it aside, especially if you want to start your own company instead of working for the man. That leaves you with about $6 million to invest.

I agree that you probably don't need an attorney right now ... estate tax minimums have just gone up, so there may not be a need (yet) to set up things like family limited partnerships and other legal vehicles to minimize taxes. You will need an accountant and a financial planner for sure, however.

Simple math on the $6 million: Assuming a portfolio that is half equities and half fixed income, you can certainly approach $200,000 a year of mostly tax-free income. Some small % of the bonds should be higher-yielding BB taxable bonds, but the vast majority should be A and AA munis with a short duration (longer duration portfolios will get whipsawed as rates rise). On the equity side, you should strive to keep it relatively safe - and it is pretty easy these days to maintain an average dividend yield of over 1.5% while keeping a decent growth component. Dividend tax rates are very low until at least 2013, when the government will next address the issue. That should get you close to $200K a year without much of a tax bill along the way, and with relatively low risk.

On the jobs - I would stay in them for a little while longer even though you hate them. First, you don't actually have the money yet, and second, if you have an entrepreneurial mindset, it is better to come up with ideas and lay the groundwork while still on someone else's payroll. (Also think through your benefits). Give the jobs at least three months after the money hits your account at least.

Disclosure - I am president of a planning/asset management firm based in Florida with several excellent CFPs on staff. Please let me know if you need more help.

You people realize that the current max tax rate is 35%, right? Don't understand why people think taxes would be half the income.

Flagpole wrote:

X-Runner wrote:

You have 6 million dollars.

Just do want you want without hesitation.

Bad advice. That's how many lottery winners end up broke in a few short years.

You assume that he will want to spend it recklessly.

I don't.

I am just saying now he doesn't have to think twice about any purchases he was mulling over.

I am assuming that doing the things he wants to do will still leave him with a few million.

You REALLY need a financial advisor. Pay off the credit card bills first (highest rate first). Decide what you actually WANT to do, and how much it will cost to do it. If you love travelling to exotic locations, you don't have enough money! The crucial issue for retiring early is safe/smart investing, and living within your means.