A few days ago, I wrote a post about a why I wouldn't want to be rich and wasn't surprised by many of the comments. There were a few comments that stuck out that I would like to address.
First of all, when I mentioned the word rich, I'm wasn't talking about people who were born into money or have accumulated wealth over a long period of time, I'm talking about an individual coming across hundreds of thousands of dollars or even millions in a short period of time. I didn't want to be one of those people because many of them end up losing it all very quickly, even those who invest or open up businesses, so I apologize for not making that clearer.
According to USA Today research, people who come across large sums of money (athletes, lottery winners, inheritance, etc) in a short period of time, end up spending all of it and filing for bankruptcy.
As an avid NBA fan, one incident clearly stands out, former
NY Knicks star, Latrell Sprewell who
turned down a $21 Million contract extension at the tail end of his career because he wanted more money, citing "I've got to feed my family". The NBA players association then in 2008 released a statement that stated, almost 60% of former NBA players file for bankruptcy five years into retirement.
But it doesn't end with athletes or celebrities, everyday lottery winners fall into the same trap. USA Today
listed 4 cases of everyday people who hit the lotto but lost it all soon after.
- William "Bud" Post, who won $16.2 million in the Pennsylvania Lottery in 1988, had a brother who tried to have him killed for the inheritance. Post lost and spent all his winnings. He was living off Social Security when he died in January.
- Two years after winning a $31 million Texas Lottery in 1997, Billie Bob Harrell Jr. committed suicide. He had bought cars, real estate, gave money to his family, church and friends. After his death it was not clear whether there was money left for estate taxes.
- Victoria Zell, who shared an $11 million Powerball jackpot with her husband in 2001, is serving time in a Minnesota prison, her money gone. Zell was convicted in March 2005 in a drug- and alcohol-induced collision that killed one person and paralyzed another.
- Evelyn Adams, who won the New Jersey Lottery twice, in 1985 and 1986, for a total $5.4 million, gambled and gave away all of her money. She was poor by 2001, and living in a trailer.
And of course having new money means more responsibility and enemies, especially when it comes to winning the Lotto. Research shows that 1/3 of lotto winners file for banruptcy or are left in worse financial situations than they were before becoming rich.
Either way, I just wanted to clear that up with most of our readers. If you're born into old money, that's great because you're family has been doing something right all these years to continue being rich, but I wouldn't want to be one of those people above.
Paying for kids college tuition, and traveling doesn't necessarily mean you're rich or wealthy. I know plenty of people who travel regularly, save for their kid's future and live comfortably on a teacher's salary.
How much would you ideally like to make in a year? Would you consider your figure poor, comfortable, or rich?
Comments (2)
Damn. |: I wouldn't mind coming into money all of a sudden like that, but if I were to do that.. I'd definitely be very picky about where my money went. What they do is they get a ton of money, and think, "Wow! I've got a ton of money, I'll splurge."
Well.. the problem isn't the initial splurge, it's the fact that they don't stop. That large sum of money does seem like it can never run out, but it can. Obviously. If they were to exercise control they wouldn't end up bankrupt.
I don't have a certain dollar amount that I want to make in a year. I want to have enough money to pay my bills and live comfortably, while still putting money in the bank to just keep every month. So, probably over 30k a year. So long as I'm comfortable, the dollar amount doesn't particularly effect me.
The problem I believe is not being instantly wealthy, but not being good managing your finances.
People who have little money may squander instant wealth through lack of knowledge.
Being born into old money is not the solution because the new generation may have no clue how to manage money...think of Paris Hilton.
If you are disciplined in balancing the budget with little, you shouldn't have any problems managing greater sums.