Most people win the lottery and blow it all on expensive cars, lavish vacations, over-the-top mansions, general misspending and bad lending (believe it or not, a good chunk of lottery winners end up making bad loans to friends, family and business partners that have no intention of paying the loan back).
This story is different. It’s about a $2,000,000 Australian lottery jackpot winner. In his own words, instead of “blowing it on [drugs] and [women]”, he chose to spend it wisely. That said, this article should really be called, What One Lottery Winner Can Teach Us About Money.
It’s so easy it’s almost not even worth dedicating an entire page to but it’s also so brilliantly simple that we had to share it… so here’s how the Aussie winner that goes by the nickname iDidWinIt did it…
Pay Off Debt
When you come into big money, the knee-jerk reaction is to go crazy and purchase everything you want (notice it didn’t say need). Problem is, that’s what likely got you into debt in the first place, no? This winner used his lotto winnings as a second chance to get his finances under control and started paying off his debts.
He had acquired about $400,000 in debt from car loans and mortgage loans and understood that he needed to end his debt cycle if he wanted to free up his money for savings, investments and to [eventually] live it up.
Today he has no debt and lives worry free.
Do You Really Need To Upgrade So High?
Many people that win the lottery make huge upgrades to their lives. They go from living in a studio or efficiency apartment to a multi-bedroom mega mansion or penthouse. There’s two reasons this doesn’t make sense.
First, the cost of a home isn’t just the physical home itself. You’ve got to calculate maintenance and upkeep. Furniture, cleaning, landscaping, pool maintenance, etc. It’s difficult to know how much you’ll spend on these things but they can quickly add up and end up being a far greater expense than the home itself.
iDidWinIt “got it”. Although he was surely tempted to make a dramatic upgrade, he realized the only way he’d stay afloat for the long term was to maintain the modest lifestyle he had before winning the lotto. “We do have nice holidays,” he wrote online, “but most of the remaining money is now invested.”
Another thing to keep in mind is that no one likes people that flaunt their wealth. Don’t be “that guy / that girl”.
Start Your Retirement Savings Early
After paying off his debt, he invested most of what was left. He knew that if he wanted to have a considerable retirement fund, he’d need to start early and really, anyone with $1000 can do the same.
If $1K is a bit out of your reach right now, that doesn’t mean you’re out of the retirement savings game. Check with your human resources department at work. Most employers offer retirement investing options and will match what you invest per pay period (up to a certain amount, of course). The general advice with employer-matched investing is to invest as they will match to get the maximum benefit. Your HR manager has all this information so check with him / her ASAP.
Keep The Cat IN The Bag
This lottery winner admitted that not very many people knew about his winnings. We assume this to mean that only his direct family was made aware of the big win. He wrote, “We kept it quiet and have ever since.”
Smart advice given the fact that even people with the best intentions can turn into bad debt liabilities and no one wants to lose friends and destroy relationships over money. Keep that in mind should you come into extra money regardless of how small you think that extra may be. People can, and will, have expectations of what you should do with your “newfound” money that may not be what you had in mind. The best way to avoid this is by staying tight-lipped (and remember that loose lips sink ships).
Congrats to iDidWinIt. He’s a lottery winner that was able to make his winnings positively affect his life, and not just for the short-term. He’s also left a guideline for anyone looking for a simple yet effective way to manage their money.