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Old 03-22-2007, 10:31 PM   #1
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Exclamation Lottery Winner & Bankrupt?!


I thought I'd drop a thread about this. A lot of people seriously don't know just how fast money can go when you don't know how to manage large sums of it.

Most lottery winners lose their fortunes through various common means. The biggest way to lose your mills is by going out on the first day to buy a house, new car, a boat, and let the taxes eat you alive because Uncle Sam WILL get his share even though he already got some when you collect your prize.

Another method to rob you of your treasure is not learning how to say NO to the vultures who come knocking at your door when everyone learns you hit the big one. It takes a whole 24 hours or less before you start seeing the palms of every deadbeat you've ever met.

Among the first things you wanna do with your fortune is remind yourself that your money is not going to be limitless if you don't be careful with it. You must set spending limits for yourself and have the self-control to stick to it! The first thing you'll be tempted to do is quit your job. Quitting work entirely is never advisable. It would be best to either continue working a less demanding (or more enjoyable) job. If you know anything about business management, you may want to open a business of your own with your winnings. This can serve as a fair investment if you know what you're doing.

Secondly, you'll want to pay off ALL of your current and past debts which is great and advisable. The smart spender will then take a considerable amount of the winnings (between 1/4 and 1/2) to put into a long-term investment program of some kind. This has become your nest egg to invest in your long-term future.

Now, the first rule of investing is diversity. Invest in several programs of varying degrees of risk and payoff. If you are the type, you may want to donate some to charity. This gives you a tax credit and it's just the nice thing to do. Be CAREFUL!!! Active charity programs WILL be pestering you on the phone and by mail. If you want to donate to charity, pick one or two of your favorite charities and donate a small, but generous, sum to them. Do not be afraid to tell all other charities who contact you, "Sorry, but I have already donated everything I am prepared to donate to charity." and tell them that it is not necessary to contact you any further. Do not let them strike your conscience because you didn't donate to them all! You are not obligated to prove to everyone that you are charitable beyond reason.

After all of this, you can then begin to do some fun things with your money. Open a mortage on a house with a reasonably long duration on it (10-15 years or more), but do NOT pay it off right away. You're asking for tax problems if you do. If you want a new car too, do the same thing there! Remember that you are also keeping your spending limits in mind, so you should NOT be able to do ALL of this in one day or even one week.

These are simple tips and much of it is common sense. I am no financial expert, but I think these are good tips to keep in mind should you ever hit the big one!
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