The MegaMillions lottery, scheduled to be drawn on 10/19/18, is expected to pay out $364,514,000 as a lump sum. That’s A LOT of money!
While it can be fun to spend a few bucks here and there to play the lottery there are some people that continue to play and lose, spending a higher percentage of their income than others.
There are many psychological reasons that people continue to play the lottery that makes total sense. But why does is the lottery so popular among the people that can’t actually afford to play?
In this episode, Michael also talks about the fun side of the lottery. How many Bugatti Veyrons or cheeseburger happy meals could you buy if you won? If you invested most of it, how much interest would you gain in 30 years?
You’ll find out in this episode of the Fiscal Fitness Podcast.
Notes from the Episode:
- In the US, there are many different lotteries at the state and national level. In 2014, Americans spent $70.15 billion on lottery tickets. That’s about $630 for every household in the United States.
- Players lose an average of 47 cents on the dollar each time they buy a ticket.
- It’s widely stated that the lottery, more specifically scratcher tickets, is actually a tax on the poor.
- The net cash payout for the Megamillions in Arizona is $364,514,000. If you took the annual payment you would get $21.3 million per year for 30 years netting $639 million.
What could you buy with $365,514,000:
- 467.3 million Kit Kat bars
- 231 million Costco hotdog meals
- 130.6 million McDonald Cheeseburger happy meals
- 68 million Grande Pumpkin spice lattes
- Eat at Old Country Buffet breakfast, lunch and dinner for 35,000 years
- 2.2 million bottles of Dom Perignon
- 18,000 Honda civics
- 1,458 Tesla Roadsters
- 243 Bugatti Veyrons
- Buy the Arizona Coyotes and still have $124.5 million leftover
- Pay for 729,000 cows to be donated to Heifer International families
- Donate 24,300 deepwater wells to WorldVision
- You would officially be 1/400th as rich as Jeff Bezos
- You could buy the ENTIRE cracker barrel menu every single day for 1,125 years
But since we’re financial coaches and we like our clients to spend with intention, here are a few more responsible ways to use all that cold hard cash:
- If you took the lump sum $364,500,000 and invested it for 30 years with a 7% annualized return you would wind up with $2,774,666,963.05 ($2.78 billion)
- If you committed to living on a total of $39,000,000 ($1,200,000/year for 30 years) and invested everything else with an estimated 7% annual return you would come out $456,328,189.08 ahead if you took the lump sum payout vs. the annual payout.
- The danger of taking the lump sum is in having the discipline to not overspend! Even though it’s a ton of money, history shows that if you don’t learn how to manage it, you can wind up back in the same place you were before winning.
- Lottery winners are more likely to declare bankruptcy within three to five years than the average American.
Want to learn more about? Here are a few resources to get you started:
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