Unworthy

Bad News

The story of the film so far:  woman puts money into a lottery machine, gets bumped by rude asshole, accidentally pushes the wrong button on the machine and gets a single (and expensive) card, different from the cheap ones she normally plays.  Okay, that kinda sucks.

Then she does the scratchy thing and discovers that her “accidental” card has just given her a $10 million payout.

Hooray, hoorah and all that.

But here’s where the story takes a nasty turn:

Edwards said she is going to use her winnings to buy a house and start a nonprofit organization.

Oh FFS.

Let’s start at the top.

  1. That $10 million turns to $5 million immediately, as the FedGov and the Golden Shower State take their respective pounds of flesh off the top;
  2. Being a Los Angeles County prisoner resident, she’s going to have to drop about $2 million if she wants to get anything more than a two-bed / one-bath bungalow;
  3. If she doesn’t invest the remaining millions properly, she won’t have enough income to afford the property taxes on that big new house, unless she wants to keep working at (rough guess) the DMV for the rest of her life;
  4. And all that’s after the res’ of da fambly — some of whom she never knowed was fambly — comes calling with their hands out (her first name is LaQuedra:  connect the dots);
  5. So much for the non-profit.

She could always start a non-profit and pay herself a decent salary as the president thereof;  but the salaries for the rest of the staff (all fambly) will drain her coffers dry within at most two years — and the IRS takes a dim view of that kind of thing, anyway.

None of this is important to me — it’s not my money and well done to her, I say — but it’s a good example of stupid people pissing away their good fortune.

9 comments

  1. I’ve heard that most of the big lottery winners are broke 2 years after winning.
    Me?
    I’d purchase 1000 acres some place where people are rare and live the rest of my days there. heven on erf

  2. When I lived in RI a local guy won some huge lottery. A few years later the bank was getting is annual payment, deducting costs for the year and handing him a check for about $50k. The check started out just shy of $1 million though. He invested in a golf course and a restaurant I recall.

    Invested right and that 10 mill could be a nice nest egg. Even at a 1% return that would be 100k a year. That’s a nice chuck of change in the right area of the country and California isn’t it.

    JQ

  4. One nit to pick: California does not tax lottery winnings. Otherwise, your analysis is spot on, as usual.

    1. Right, came here to say the same thing.

      So, worst case, her $10 mil is $6 and change. Likely a bit over $7 if she has a decent accountant.

      And I doubt LaQuedra is buying property in a high-dollar neighborhood, she’ll stay in the hood she knows. Just in a nice house that in two years will be a dump.

  5. Well, that’s one thing we’re luckier than you in.

    In Australia, a lottery/Lotto win is called a “windfall” and is NOT taxed.

    You WILL, however, pay tax on any earnings from that windfall.

  6. another issue that is not clear from the story is how this prizse will be paid. Most big number lottery winnings are based on the payout if you select the annuity pay out. So if you win $ 10 miilion that means an Annuity paid out over 25 years or more. If you opt for the Lump sum payout it’s a much smaller number.

    So the proper strategy would be to Take the annuity and write the mortgage against the annuity. Plus It would avoid the proposed “Billionaires Tax” which would Take an even bigger slice of any lottery winnings.

    But of course she won’t do any of that. She will go for the lump sum payout at the highest tax rate and be worse off in 10 years than if she had not won anything. ….. or Dead like many lottery victims.

  7. Immediately move to Nevada, build a house off grid in the middle of nowhere and say zilch to anyone about your weapons collection and survival bunker. Yeah, sometimes God does bless fools with the concomitant train smash.

  8. I’ve played this game as a mental exercise. Between Federal, state, and local income taxes where I live, I’d be looking at about 40% tax. So I take half the money (the legal maximum) and “donate” it to a “charitable organization” under my control.

    The purpose of said organization is to promote the precision black powder shooting sports. 🙂 The $500K I donated goes into investments – expect a 4% average annual rate of return ($20K/year). I donate around $5K to black powder shooting organizations. They’re dirt-poor, a few thousand dollars per year would be a big help…and they’ll vouch for me. Spend some of the rest on “operating expenses” such as sending myself to the World Muzzle-Loading Championships (aka keeping track of what’s being done with the contributions). Pay myself some money…or my family members.

    It’s about keeping $200K in money that would otherwise go to taxes. At my tax rates, every penny counts.

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