Updated on 10.26.09

Why Windfalls Make Many People Unhappy

Trent Hamm

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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  1. d_2 says:

    are there statistics on how many lottery winners this actually happens to?

    we read about the bad cases in the news because they are “news-worthy”.

    the ones where people sock it away for a rainy day are boring, so we probably won’t ever hear about them.

    any idea the percentage for each category?

  2. Kathryn says:

    Well, it is said that what is in a person’s heart comes out in how they live.

    A lot of folks with little income live by spending all they have & then waiting for the next paycheck. Hard to believe you can live that way when a paycheck is millions of $$$, but folks have shown time & again that they do.

    I personally have known one multi-million winner, a former client of mine. She used the money wisely, continued working for another 10 years & retired to her dream after continuing to work toward it.

  3. Adam says:

    A co-worker’s brother won $29 million, and because his name was publicized he was the victim of a kidnapping threat against his children as well as other extortion from some Mexican criminal syndicate (while living in suburban Montreal). Thankfully, the laws were changed and now the winners are not made public. But I would rather have my children’s safety than $30 million.

  4. brad says:

    i dont think its fair to call what you earn every year over the course of x years a windfall. that kinda runs contrary to my personal definition of a windfall.

  5. Christina says:

    Where did it say that he associated with criminals? It wasn’t his fault that is own brother tried to hire a hit-man to kill him!!

  6. lurker carl says:

    The idea presented IS true for income, earning $50,000 per year for 30 years is definately not the same as a $1.5 million windfall. The daily routine of my trading goods or services for money over the course of three decades is not what I consider to be an unexpected event of good fortune.

  7. Matt says:

    People who let multi-million dollar lottery winnings ruin their lives frustrate me greatly. Give me $16 mil and after the initial shock, I’ll use my common sense to turn that $16m into something to guarantee my financial freedom for life. That amount, earning even a very modest 2% annually, would amount to a yearly “salary” of more that I could likely ever hope to earn at a normal job.

    With such a huge windfall, you’re given a very real opportunity to plant yourself a Money Tree. You can either choose to live like a spoiled king for a brief flash, or like a comfortably well-off person for the rest of your life. I know which one I’d choose.

  8. Jules says:

    That’s a really good way of putting it!

  9. valletta says:

    My husband’s childhood neighbor won a lottery jackpot of $35M.
    He was 80 years old at the time. Already wealthy, he played the lottery every week.
    Too bad my husband was the Dennis the Menace of the neighborhood :)

  10. Johanna says:

    I think there’s another aspect to stories like this that the article hints at and Trent doesn’t mention at all: Huge windfalls like this can cause other people to treat you differently, either because they’re greedy for their “cut” or because you can now afford things that they can’t.

    The article says that some of Post’s first purchases with the money were business investments to help three of his siblings, and that a year later he was estranged from all three. It’s not clear what actually happened in between, but it sounds like the money had an adverse effect on his family relationships in ways that weren’t entirely his fault. It does look like he made some poor decisions, but I’d bet that some things would have turned out poorly no matter what he’d done.

    And that’s why it frustrates ME greatly when people like Matt are *so sure* that if they received a windfall like this, they’d handle it flawlessly. You don’t think there might be some resentment built up among the people closest to you if they knew that you were sitting on millions of dollars that you didn’t earn while they were (maybe) continuing to struggle with their ordinary financial lives?

  11. CB says:

    I wonder how intelligent Mr. Post was. Maybe he wasn’t smart or educated enough to figure out how to live the way that a savvy person would with a windfall.

    I knew a game developer who had millions in stock options, which he saw dwindle rapidly one day during one of our recent bubble bursts. He was able to get out with one million, which he put into a 5 percent savings account (this was the dot com bubble). He could easily live off the interest. I’m sure that the ROI interest has been reduced, but he also kept up his personal interests, and learned a lot about selling.

  12. greg says:

    Money buys you fun, time and security? I don’t get it. For example, if I buy a fridge, is it fun because I can grab a cold beer from it, it it time because refrigerated food lasts longer, or is it security because because I lessen my chances of food poisoning? I’ll stop here, but I could list another thousand items that I just can’t fit into the fun/time/security trichotomy.

  13. getagrip says:

    Unlike other types of windfalls, winning a lottery seems to bring the worst out of people. Many folks seem to think that because the winner got all this money “for free” that they not only should share it, but that they must share it. You don’t get that attitude (or at least nowhere near as much of that attitude) if you earn it, inherit it, or marry it. With the lottery the very people you would think would help and support you, often are the ones turning on you and trying to take advantage of you. It’s a real emotional hammer and it shouldn’t be a surprise that some folks don’t do well in dealing with it.

  14. Kyle says:


    It buys you security (yes, the decreased chance of food poisoning is important) and time, because you are able to have more foods on-hand and don’t have to go out looking for meals each day.

  15. Martin says:

    I’ll also add that I have a friend whose brother won a lottery. It split the family permanently because some family members felt the $10K gift they recieved at Christmas that year should have been at least in the $100K range if not a million, because they were after all, family.

    Long time friends and cousins they had grown up with and trusted tried to take advantage. Some times it was bringing an agent to try to buy out the lottery win (most always a bad idea), where the friend or cousin would hide the fact he would get a “finder’s fee” if the brother signed that day. Most of the time it was along the lines of “hey, I got a great idea, why don’t we start/open a business, you put up the money and I’ll run the shop.” or “my trucks in the shop again, could you loan me a bit so I can get a new one”. In their eyes you’ve become the bank for “their” dreams and “their” needs. So if you think about how most people react when the bank turns them down for a loan, imagine how many of your family and friends would act. Additionally, unlike the bank, they get to nag you every time they see you. They bring it up again and again and again, until you tell them you don’t want to hear it, then you’re the greedy one, you’re the selfish one. Or even worse, you give them the loan, and they not only don’t hold up their end of the bargin letting the money evaporate, but they come back for more.

    Soon every time they see you, you refused to support their dreams, or they owe you money like they’d owe a bank and its a reminder. How comfortable are those get togethers going to become?

    If you somehow think this won’t happen, you’re kidding yourself. It happens to every winner to varying degrees. Eventually they go broke, learn to say no, or insulate themselves away from these folks.

  16. Beth says:

    I’m with Johanna here! Who knows what all of us would do with millions, even if we had good intentions to start with. Would it be my fault if I told my family, and they told their friends, and it got around to the wrong person and I ended up getting robbed or something worse? Could anyone really look at their family and say, I’m not helping you, I’m putting this money away to earn 5% interest on it for the rest of my days while you can work. And if you do give in and give some money to your family or close friends, what is stopping them from asking again and again. And when you say no eventually is there going to be a relationship ruined over money? I always am the person who says I don’t want to win the multi-million jackpot, I would be very happy to just enough so people wouldn’t ask for much of the money I won!

  17. ChrisD says:

    I always thought a pretty smart thing to do with lottery money would be to spend it all. Have a big party for friends pay off all the mortgages for my nuclear family and give a lot to charity. Keep enough that your pension funding is well under way, but not an order of magnitude more than it would be otherwise. After all I am well enough educated that I should always be able to have good jobs and free rent in the paid off house would be a good support. Then just go back to my old life, but a bit better.

  18. Cambo says:

    People who are aware of the psychology of money (ie TSD readers) would probably react and behave differently than someone who stumbles through life moneywise.

    That being said I’d still make sure the money was out of my reach for 6 months, speak with a few non-commission financial planners and apart from perhaps buying modest accomodation (which would improve the cashflow from my wage anyway and what was my rent could be the ‘fun money’ every month) structure it so most was invested to stop me blowing it like the guy in the story did because we all like to think we would take winning in stride but who really knows?

    I wouldn’t mind finding out though!

  19. Kelly says:

    I live near where Mr Post is from. As someone alluded to in a previous post, he was not a very well educated man. One of those people who play the lottery religiously and his numbers finally came up. It’s sad to see how his fortune played out.

    I wouldn’t mind finding out if I could handle a windfall either. I’m pretty sure I could but, I’ll probably never know.

  20. Jenny says:

    I don’t play the lottery or gamble in similar ways, but if I did and won a lot of money I would not buy things “for fun”. I would quietly do things to improve the lives of other people. It would take a lot of planning to do this, but it would bring a lot more happiness to me than material things.

  21. Kevin says:

    I don’t think I’d want to win the lottery. Winning the lottery means you’ll never get to have a normal relationship ever again. In the back of their mind, every friend or family member will always be thinking about the money you won (but didn’t “earn” and thus don’t “deserve.”)

    Think about it. Imagine you won the lottery. If you went out to dinner with some friends or family, would you pay for their dinner? You’d have to. Imagine what your friends and family would be thinking if you didn’t. They might not say it, but deep down, they’d expect you to pick up the tab, since you’ve got all that money that you don’t “deserve.” Could you live like that for the rest of your life, with all your family and close friends implicitly considering you their sugar-daddy? Would it ever end? Do you honestly think you could eliminate that expectation without hurting any feelings?

    That same expectation is there with people who DID “earn” it, but to a far lesser degree. There is still envy and resentment, but without the corrosive feeling of unfairness that dooms normal relationships tainted by large wealth disparities.

  22. GayleRN says:

    50,000 a year is considerably less after taxes. And since I earned it and I have to live on it there is no way it can be considered a windfall. I can see the wisdom of living on one income and saving the other but I don’t happen to have that choice.

  23. We knew two plumbers in New York who won 3 million bucks in a lottery. They took less than 2 years to go thru all the money, and now they are plumbers again today. One day at lunch they were overheard talking, and one said to the other “hey, remember when we used to be rich?”

    John DeFlumeri Jr.

  24. Walter Daniels says:

    To me, the crux of the problem is not having any plan at all. I’ve played the Indiana Lottery since it started (along with Powerball). I have alweays had a plan for what I would do with any winnings. Starting with 10% to charity. Then, incorporation to cut taxes, and start some dream projects. The money would be outside my control, so I could say. “Talk to So and So, and see what they say.” Not mentioning that their instructions were to say no.
    The “project” would have most of the “left over” money, to keep it going until it could support itself, and hopefully me as well (investment return). IOW, plan, plan, and plan more again, to keep it controlled.

  25. deRuiter says:

    Bud Post was stupid about money. Most people who play the lottery heavily are POOR people. This means that the majority of lottery winners for large jackpots are poor people. Poor people tend to have terrible money management skills and as a result, most lottery winners end up in debt, money gone, toys broken and worthless. As a landlord with a lot of low income tenants, it’s easy to see that they don’t prioritze their regular income, so they aren’t inclined to use a windfall wisely. One tenant had $2,000. in credit card debt. He lived on a modest social security check and a small part time job cutting grass and raking leaves. This man played the lottery every week, while he owed $2,000 (the max) on his credit card. Every month he paid the minimum on the card and when he had even $50. paid off on the balance he would charge that amount. He won the lottery for $1,800. and I suggested he pay off most of the balance on his credit card, then pay off the rest, and not hemoraghe interest to the cc company every month. That’s what I would have done. Instead he SPENT the whole amount on hunting equipment (of which he had plenty already!), eating meals out, and other frivolous things. The man continued to pay all that interest on his credit card and to resent others who were not in debt. If this man had hit the lottery big, he’d have become impoverished again in a couple of years because he was stupid about money. If Trent or I won the lottery, we would invest, pay off debt, give to charity, and have most of the money left, we’d not go bankrupt. But then, Trent and I are not stupid about money.

  26. Georgia says:

    I’ve always felt you should have a plan in place if you played the lottery. I don’t usually, just once in a great while. But, if I did win, it would go as follows: 50% to the church and/or charities;enough to my children and brothers and sisters to buy a house; and the balance to a certificate that was locked in so I couldn’t get it without a penalty, and it would be in a trust account type of situation to go to various charities when I died. I would live on the income from the certificate. And I would let all my family know how it was tied up and why.

    I’m a very strong headed person. I don’t usually give money out to individuals, but to places that help many people with the money I share.

  27. Jeanne says:

    Years ago, a relative won a $1 million settlement as a result of an accident that took the life of her husband and left her disabled. Within 5 years she was living on welfare. I agree with deRuiter that poor people have poor money management skills. It was a sad joke in our family that this relative wasted a great opportunity to finish her life in decent comfort.

  28. Bill in NC says:

    The best approach to playing any lottery is only to play in those few states that still allow the winner to remain private (where an attorney or bank trust officer collects the winnings for you).

    Then take the annual payout (NOT the lump sum), consider moving to a state with no income tax, and tell no one.

  29. Steve in W MA says:

    @ “Think about it. Imagine you won the lottery. If you went out to dinner with some friends or family, would you pay for their dinner? You’d have to. Imagine what your friends and family would be thinking if you didn’t. They might not say it, but deep down, they’d expect you to pick up the tab, since you’ve got all that money that you don’t “deserve.””

    Is this what you would expect if you went out with a friend who happened to have won the lottery some time back? I don’t know about other people, but I would expect to split the bill, in fact would be extra scrupulous in splitting the bill because I would want to let them know that I still consider them a friend and not a bank, and that’s how I treat my friends. I’ve got enough cash to pay for dinner out a couple times a month, so why would I expect someone to pay my way jsut because he or she has a lot more money than me?

    If they invited me out to something really swanky that didn’t fit in my budget I’d jsut tell them I’d love to come but can’t afford it. If at that point as friends they want to pay for it then I’d consider it a gracious gift and go out with them as friends. People do need friends, after all, even lottery winners and rich people.

  30. Charles Cohn says:

    Looking at all these posts gave me the idea for how to handle a lottery jackpot:

    First, take your winnings as a series of yearly payments rather than as a lump sum. That saves a lot in taxes by having more of the income taxed at your lowest rate.

    As each installment comes in, hold out enough to pay the taxes and pay off all your debts (and don’t incur any new ones). With what remains, purchase a lifetime annuity from a reputable company like TIAA-CREF or Vanguard. This will assure you of getting the most out of your winnings throughout your life, and make your fortune less accessible to others.

    Then, become a health nut and take really good care of yourself so that you live long enough that the annuity company loses money on you. (The book I strongly recommend for this is “TRANSCEND” by Ray Kurzweil and Terry Grossman.)

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