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Old 12-28-2006, 01:27 AM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 10,105,942 times
Reputation: 921
Default Is there any "rules" or "guidelines" how much of lotto winnings spend on house?

Is there any "rules" or "guidelines" how much of lotto winnings spend on house?


Just in case me or someone I know wins! I hear the 10% guideline thrown around alot. If you are already retired, older or win a very large amount then you can spend as much as 20-40% of your lotto winnings on a house and still have enough to live the rest of your life without going broke. I have read several stories of people losing all their lottery winnings in a few years.

They buy the biggest house they find without thinking about property taxes, insurance(you can self insure instead at your own risk) HOA, repairs, maintainence and utilities that come with a big, expensive house. Some even take a mortgage despite having the money then they go broke and their house ends forclosed!

If you win and get annual payments, you are not yet a millionire till you actaually have that much in assets. You may get $50k a year for 20 years. Save all of that into funds and keep your job, especially if its a high paying job. Build your retirement nest egg and retire early.

You may give money to friends and family but make it a one time gift, if they waste it too bad, you arent an ATM machine and they need to learn from their mistakes and not drag you down with them. I will tell them to wisely invest what I give them and not to touch it except when buying a house or when they retire. Use what you make on the job, my gift to them is to be saved and invested!

Florida's lottery is at $20m. If im the sole winner, I should have about or almost $7m after lump sum and taxes. Ill give my parents like $1.5m, my bro and sis $150k and the rest of my relatives several thousand each to help them pay off their bills and mortgage. I will keep about $5m. I wont rush and buy the first nice house I see, ill visit many cities all over USA and carefully consider what I want to do with the rest of my life. Ill spend 10% of my fortune or about $500k on a house, probably more like mansion! The rest, ill be investing in funds which appreciate around 10% per year. I can always upgrade my house or buy a second house several years from now when I have many more millions thanks to funds.

A half million house or mansion is more than enough for me. I wont be staying in Florida because houses are way overpriced, depreciating and the risk of hurricanes can cause me to lose it all! Ill likley want to live in a quiet suburb or town in a huge house or mansion with lots of land and a short commute to the city for my shopping needs.
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Old 12-28-2006, 08:45 AM
 
Location: Southeast Idaho
4,081 posts, read 10,556,719 times
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Don't ask me. My money needs to go to other places than the lotto/lottery.
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Old 12-28-2006, 04:22 PM
 
Location: Burlington VT
1,405 posts, read 3,253,519 times
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Quote:
Originally Posted by cleosmom View Post
Don't ask me. My money needs to go to other places than the lotto/lottery.
I agree - these games sadden me. Most people who play should be spending thier money on, ...well, saving for a downpayment or paying off credit card debt. Or on food.

You're far far more likely to be hit by a latvian zamboni driver - in Florida - than win the lottery.

The state should be advertising the miracle of compounding and the rule of 72's rather than promoting gambling.
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Old 12-29-2006, 06:25 AM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 10,105,942 times
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I spent $2 on two lotto tickets. You cant buy anything with $2 except a quick snack and if I win, ill get a piece of the $20m jackpot then ill retire for the rest of my life. Read my first post for more info.
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Old 12-29-2006, 07:42 AM
 
Location: Southeast Idaho
4,081 posts, read 10,556,719 times
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Quote:
Originally Posted by Need_affordable_home View Post
I spent $2 on two lotto tickets. You cant buy anything with $2 except a quick snack and if I win, ill get a piece of the $20m jackpot then ill retire for the rest of my life. Read my first post for more info.
However if you were doing that on a weekly basis and won nothing, you could have placed that $104 into a retirement fund or an interest bearing savings account.

To borrow an old adage- " A penny saved, is a penny earned"
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Old 12-29-2006, 08:24 AM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 10,105,942 times
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I play about $2 a month on average. Its not an investment, just something I do for fun. The excitement of a chance to win is well worth $1 a ticket
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Old 12-30-2006, 01:41 AM
 
122 posts, read 264,869 times
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Wink Someone is having pleasant daydreams...

It's fun to daydream, eh? Sometimes I wonder what it would be like if I were a vampire. Not being able to go out during the day would suck, but I think the immortality bit would make up for it. It would be hard to be a vegetarian, so I don't think vampirism is for everyone. I think I'd have a herd of cows to feed on, 'cause sucking human blood would be gross. But, back to the lottery...

You've gotta remember, if you give too much money to someone in one year, you have to pay a gift tax. The limit is either $11,000 or $12,000, I'm not sure which. You could buy a house and let them live in it, it wouldn't be in their name, but you wouldn't have to pay gift tax for giving it to them either. Maybe you could transfer a portion of the house to them every year until they own it.

I don't think I'd blow all the money on an expensive house. To me, that's just dumb. Sure, I'd buy something better than if I had to earn the money, but not at 6-7 times the price! It's better to spend the money on not having to work, like not having to worry about losing a job or failing in a business venture. Peace of mind is more important than an overpriced mansion.
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Old 03-25-2010, 10:29 AM
 
2,549 posts, read 1,454,489 times
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Default File under fantasy

But should one win...The most conservative thing to do, assuming a lump sum payment, is compute the net value and handle the tax aspect. The remaining amount can be viewed as the principal. I've often thought I'd keep it completely intact and live off the interest (tough in these days of minimal interest) so I could quit my job and be free to do whatever I want, including any charitable endeavors. Let's say $8,000,000 net earns simple interest of 1.5%. That would be gross interest of $120,000. After tax that would be around $6,200 a month assuming you keep a little over 60% of the gross (average for all tax incl federal, state, social security etc.).

So lets say you buy a house for $500,000. You can pay 100% cash and have no mortgage. That would leave you with $7,500,000 principal and the gross with the same interest would now be $112,500 and the net monthly $5,813. So about a $400 reduction in monthly cash flow. The house will still cost you. In CA, property tax (approx. 1%) will be about $500 a month. There are utilities and maintenance too. You also have the option of putting a downpayment on the house and paying a mortgage. This will cost you more per month but will reduce your tax liability some.

...you buy a house for $1,000,000. You can pay 100% cash and have no mortgage. That would leave you with $7,000,000 principal and the gross with the same interest would now be $105,000 and the net monthly $5,425. So about another $400 reduction in monthly cash flow. The house will still cost you. In CA, property tax (approx. 1%) will be about $1,000 a month.

...you buy a house for $3,000,000. You can pay 100% cash and have no mortgage. That would leave you with $5,000,000 principal and the gross with the same interest would now be $75,000 and the net monthly $3,875. So another reduction in monthly cash flow. The house will still cost you. In CA, property tax (approx. 1%) will be about $3,000 a month.

All this is assuming no other income sources, which of course has to be considered if applicable.

So you can play with numbers and eventually, the price of the house and its ongoing care can be matched against income coming in such as in the last scenario. And the income coming in will not be adequate to handle your budget. This is the most common mistake of lottery winners. They spend too much on assets such as houses that continue to cost them and eventually they run out of money (liquid assets).

Hope that helps...
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Old 03-25-2010, 10:33 AM
 
24,495 posts, read 14,127,595 times
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10% is what most mortgage companies or banks require as a minumum downpayment on a home loan or what is typically put down. That may be where you heard that percentage.
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Old 03-25-2010, 11:38 AM
 
8,681 posts, read 7,426,107 times
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Default Oh yeah!

I don't understand the criticism you're getting. Lighten up, folks. A dream is worth the occasional two bucks, and I'm sure there's not a soul here who hasn't spent two bucks on something the OP would find to be a complete waste of money.

Anyway, I would take the lump sum. My sister would get a little something in accordance with tax laws, but I'd be more inclined to buy a property as an investment and let her live there. Not sure what the tax laws about that are, but I do know that what CandyApple said about cash gifts is true.

I'd buy a normal house. To me, a big house is just space for more things that have to be dusted and more rooms in which to lose things. The one requirement would be a large sunny room for my birds. Okay, and maybe I'd want a basement worthy of turning into a wine cellar. And the house would have to be "green." And have land so I could have a good vegetable garden. I'd rather pay a gardener than a housekeeper. Okay, and I might have a trainer, too.

The rest, I'd just live on as I wrote the next Great American Novel. I love to travel, and I have friends on several continents and it would be nice to see them again.

And finally, I'd buy a new car, as I'm driving a 14-year-old Altima. I like the new Altimas, and see no need for a fancier car. Maybe in burgundy. Definitely hybrid.

A gal can dream.
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