IAP Political Forum

This story would have to go down as one of the great personal financial mismanagment exercises of the year.

This guy won $21.6 million in lottery four years ago, and has since blown all of it on cars, holidays, and other luxuries.Not only that, he has racked up a debt of $4.5 million and faces bankruptcy.He is now looking for a job and has joined the queue for council housing.

Part of me feels sorry for the guy but part of me also can't believe how stupid he was. He was given a gift from god given the odds of winning lotto, and has blown that gift and struggle free lifestyle that he could have had, and now has to struggle again.Its a real tragedy in a way, but a self inflicted one. Still he still has his children, his health etc so these are more important than any amount of money could be.

http://news.ninemsn.com.au/article.aspx?id=378690

Maybe he should buy some more lottery tickets.

What are the odds of him winning lottery twice? haha

hmm.  I depends did he take the lump sum?  And if so, thats like 40% tax right?  Be probably didn't take certain things into consideration.  Oh well easy come easy go...

It all depends on if he had to pay the tax in cash or if it was a deferred payment. If that 40% tax was deferred it would make sense to make it seem like he blew all the money and then file for bankruptcy. I am sure that there are many safehavens where 20 million can be made to disappear.

Lottery Wins are tax free in the UK.  :)

As it was a UK resident in a UK lottery, there is no tax to pay.There is no tax on lottery wins in countries such as Australia, UK, Canada, Ireland etc.

I am not sure what happens when it is in a country that taxes lottery wins. Do they tax it before it gets into the hands of the recipient? If not, I could imagine a situation as described by yourself above, to commonly occur.

Here in Turkey all winnings from lotteries and similar chance games is taxed at the time of payment. The tax is deducted from the prize and paid into the revenue service. But in case of grants and inherritance, which lottery and similar games of chance is regarded in the same tax code, a "stopage" of 15% is deducted and put in escrow at the bank and the tax accounting is settled in 3 months.

Lottery wins should not be taxed but in a situation where it was going to be taxed the person in question here is still stupid.  Tax is always a percentage, so if you win a million dollars and it's taxed at 40% you still have 600,000 dollars that you never had previously.  is is considerably less than the person in question won.

The best thing to do with money of that quantity is to buy a house, invest the rest in high interest bank accounts and live from the interest.  Considering a bank can offer 5% interest per year this guy would still be making 600,000 dollars per annum approximately, assuming the capital was not taxed, if it was taxed then he would be making about 360,000 dollars if capital tax was 40%.

Since there would be no tax on the interest the monthly income could be from 30,000 dollars to 50,000 dollars.  What more can anyone want or need?

It doesn't surprise me. In my line of work, I encounter the personal financial situations of all kinds of different people from the very rich to the very poor. It is amazing how many people with astronomical annual incomes are completely broke.

Recently, I was working on a home loan for a prominent physician. His salary was $400,000 per month. Not per year, per MONTH. I could not get him approved because his debt-to-income ratio was too high. He had several exotic sports cars (on loan), a $4 million mortgage, numerous credit cards with balances in excess of $100,000 each, and a bundle of other installment and bank loans with huge balances and payments.

Despite depositing more than $100,000 each week in his checking account, his average daily balance was negative. Best of all, when I had to inform him he was declined for a loan because the bank felt he was too overextended on credit already, he acted like he couldn't believe anybody would turn him down for a loan. 

Sort of like the US treasury I'd say...  :D

If you spend more than you make, and owe more than you can save the solution to the equation becomes obvious....

I'v heard that such a story is not rare at all. It's even common that lotery winners burns all their money in an average of 5 years and are left with nearly nothing.

That's normal because playing lotery is a stupid action and realy poor financial management in itself already. Poeple who plays lotery are all the most likely to lose their money wether they won it or not.