Why Windfalls Make Many People Unhappy

FMF pointed me to this article from the Washington Post on the sad end of Bud Post, a lottery winner from Pennsylvania:

William “Bud” Post III, 66, whose $16.2 million in lottery winnings brought him debt, despair and heartache, causing the kind of trouble often recounted in country-western songs, died of respiratory failure Jan. 15 at a Pittsburgh area hospital.

“Everybody dreams of winning money, but nobody realizes the nightmares that come out of the woodwork, or the problems,” he said in 1993, five years after winning the Pennsylvania lottery.

His problems included a brother who tried to hire a contract murderer to kill him and his sixth wife; a landlady who forced him to give her one-third of the jackpot; and a conviction on an assault charge, after Mr. Post fired a shotgun at a man trying to collect a debt at his deteriorating dream house in northwestern Pennsylvania. He went bankrupt, came out of it with $1 million free and clear and spent most of that windfall, too.

Obviously, Mr. Post made a number of poor decisions along the way – divorcing at least five times and associating with criminals, for two.

However, there’s a deeper thread here. Mr. Post’s “deteriorating dream home” is mentioned, as is “bankruptcy” and spending most of a second windfall. It’s fairly easy to conclude from this story that Mr. Post spent his money buying stuff that was beyond him to maintain.

Money buys you three things: it buys fun, it buys security, and it buys time. The only problem is that if you neglect one of these three things at the expense of the others, you lose them all.

Mr. Post, as many people who win the lottery, focused on buying the fun. He bought his dream house and tons of other material items – the article mentions a twin-engine plane (even though he didn’t have a pilot’s license), two additional homes, another truck, three cars, two Harley-Davidson motorcycles, two 62-inch Sony televisions, a luxury camper, computers and a $260,000 sailboat, among other items.

The only problem is that when you focus entirely on the fun, you miss out on both security and time. If you load your life with fun things, you no longer have the time to actually enjoy each fun thing – instead, they go to waste, falling apart and neglected. Similarly, if you avoid proper spending on securing your future, you wind up right back where you started – in Mr. Post’s case, on a $475 a month disability check.

This idea is true for any income we bring in. After all, earning $50,000 a year for 30 years amounts to a $1.5 million windfall.

Instead of spending all of your money on every little thing you imagine you might enjoy, you’re far better off putting some of your money into a small handful of things you truly care about and will enjoy over a long period of time and putting the rest into ensuring that your situation will be provided for over the long haul.

In other words, when you bring in money, it’s fine to spend some of it on something fun. However, you’re usually better off buying or experiencing one or two high quality things – things that really mean something deeply to you or will provide many, many hours of enjoyment – than lots of things, because if you own lots of things, the time you spend on each one is lessened and the time you spend maintaining your things goes up, reducing your overall enjoyment by quite a bit. The rest of the money is usually best spent securing the things that you do have, so that you don’t wind up without any resources when luck eventually turns against you.

Fun, time, and security – keeping them in balance is the best way to maximize the money you bring in, whether it’s a big windfall or an ordinary paycheck.

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