Since Mega Millions reaches $ 1 billion, winning doesn’t mean a happy ending
No wonder people are hoping for the richness of the microwave. People fear that a recession is coming or it may already be here and worry about how to deal with rising inflation and consumer prices.
But lotteries don’t favor the masses. Big winners are extremely rare and sometimes these mega jackpots can ruin lives. Gambling sells dreams of instant wealth which, unfortunately, appeal to the people who can least afford to gamble.
In fact, more people are likely to get windfall gains from an inheritance, insurance payout, or litigation. Maybe your tax refund will be unexpectedly large next year.
A quiz about your bad chances of winning Mega Millions
If handled well, this cash bonus can do some good. Otherwise, your sudden wealth could leave you broke just as quickly.
Several callers on my toll-free line (1-855-ASK–TO SEND or 1-855-275-7678) asked how to handle a windfall.
“I waited four years to get a legal settlement that required me to be fired from my job,” said Rebecca Ebaugh, a Maryland resident, when she called the toll-free number. “Now that this is becoming a reality, I don’t even know if I should try to invest it with the economy so dangerous right now. What would you do with nearly $ 100,000?
Here’s what I would do and do after receiving a boon.
– Pause. Put the brakes on the urge to spend now. Even if you are deeply in debt, wait.
Don’t rush any decisions until you’ve gone through your entire financial situation. Maybe you need to build your own emergency fund as I explain here – even just a little bit – rather than using all the money to get rid of your credit card debt.
You still need a rainy day fund. Otherwise, if a financial crisis hit you with no savings, you would be in debt again.
Getting bonus money might make you a little reckless, so a break gives you time to consider how to best use the funds.
We also tend to think of unexpected gains differently, as if it were not real money but just for fun. Taking a break helps you resist the urge to waste it.
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– Park. Put the money in an interest-bearing account at a bank or credit union. You want something safe and short-term while deciding what to do with the money.
This is what Ebaugh did. He parked his balance on a money market account.
Two sites to find the best deposit accounts are bankrate.com and Investopedia.com.
– Floor. Take some time to develop a financial plan. Consider future financial needs, such as college tuition for your children, retirement, charitable contributions, or relatives you would like to assist. After thinking about things, you may realize that your first instinct to indulge in the luxury of an expensive car or luxury vacation is not the best use of funds.
The Mega Millions jackpot is $ 1.2 billion. Here’s what people would do with it.
– Pay for professional help. Find a tax advisor and financial planner.
The taxman could come for some of your money. Generally, money received from legal action settlement and other legal remedies is taxable income unless exempt, according to the IRS.
“For damages, the two most common exceptions are the amounts paid for certain discrimination claims and the amounts paid for physical injuries,” the agency explains on irs.gov.
Ebaugh, 67, whose claims against his former employer included discrimination based on age and disability, said he is consulting with his accountant to determine his tax liability. He’s set aside 30 percent of the tax break, just in case.
If you are unsure how to manage a large sum of money, consider hiring a financial planner. You can find a paid financial advisor by visiting the National Association of Personal Financial Advisors website (napfa.org).
Ebaugh spoke to his financial advisor and invested his funds wisely.
– Put philanthropy in perspective. When money falls into your hands, it’s amazing how many hands start asking for help.
Charitable donations can be part of your unexpected financial plan.
He won the lottery. Then he shared his fortune with strangers.
But be careful that your giving does not allow irresponsible family and friends. If you decide to share your wealth, set aside a specific amount of money that you are willing to lend, not lend. Respect that limit.
Give your extra. Don’t get caught up in guilt about giving more than you can afford.
– Party. It’s okay if you’re not bogged down in debt or overdue on your savings goals to have fun with your bonus money.
Ebaugh said her long legal battle made her very reluctant to celebrate his victory.
I encouraged her to spend a little.
“My husband made me promise we were going to have a great meal, and we will,” said Ebaugh.