You Lucky Devil, You

You're suddenly wealthy. Should you buy a new car? Buy a new home? Quit your job? Engage in wild spending sprees or unbridled philanthropy? If you answered YES to any of those questions, this article may not do you any good. Suspend any euphoria you may have for the moment and read some sobering truths about instant cash windfalls.

The first thing on your "to do" list should be to calm down. Take several deep breaths ... slowly. And once you feel clear-headed, it's time to proceed with the rest of your life.

What do you want to do with the rest of your life? If you're thinking about quitting your job, you need to ask yourself what you'll be doing with all that free time BEFORE you quit. I'm close enough to retirement that I know what I plan to do. Many, however, cannot answer that question easily. If you can't, call in sick for a few days and immerse yourself in soul-searching and thought before you take the leap of quitting.

Some almost immediately say they'll start their own business. If you're one of those people, ask yourself if just "becoming rich" provided you with any more business knowledge than you had before you became rich. If your answer is NO, you may be about to make the biggest financial mistake of your life.

Happiness is not a dollar amount. Never has been. Never will be. It can only be achieved by persons in charge of their own time clock - and only if they know what they want to do with that time. Personally, starting up one's own business doesn't fall into that category since it merely ties you down to a place and a time clock of your own making. I'd prefer a more spontaneous existence ... allowing the freedom to change my mind at will. So, if I were to experience a large cash windfall, my first stop would be financial planning.

Notice that I didn't say you should "hire" a financial planner. Why hire one when you can be one? A number of educational institutions (ie., Boston University in Massachusetts, Bryant University in Rhode Island, etc.) offer self-paced financial planning courses you can take online in the privacy of your own home. These courses provide the educational component necessary to become a Certified Financial Planner - though the CFP board has other requirements such as a bachelor's degree, passage of an exam, and good ethics. But those additional requirements are only important if you want to hang up a sheepskin and go into business as a CFP. If you just want the "knowledge" to be a CFP, these courses are the ticket.

Why train instead of hire? Most people know who Bernard Madoff is. Many persons including those you'd think of as intelligent (ie., Steven Spielberg) trusted him with their money - only to see it vanish in the wind. Even banks like HSBC and universities such as Tufts University trusted this man. So, just because an adviser has an impressive client list doesn't mean they'll handle your money wisely or give you wise advice. Shakespeare once said, "To thine own self be true." And in today's world of financial shenanigans, that advice is probably the best advice to take.

On investing, I think the KISS method (keep-it-simple-stupid) is the best approach. To protect your capital, invest it only in insured vehicles. They might not earn as much money as a growth fund recommended by an "expert." But the only way you'll lose your principal is if the U.S. government goes bankrupt. And if that happens, it won't matter much where you have your money invested because it would all be worthless anyway. So, Treasury securities and high-yield CDs come to mind. And on the Treasury side, be sure to consider TIPS. TIPS is an acronym for "Treasury Inflation Protected Securities." If you have your money invested in a TIPS note and the inflation rate skyrockets to 10%, guess how much interest your note will pay. Yup, 10%.

The rest of this article will primarily deal with winners of lottery jackpots. However, some of the advice I give can be used by anyone experiencing a cash windfall (ie., a sudden inheritance).

Let's say you just checked your lottery ticket and discovered you won the BIG one. Anyone who has ever won the lottery will tell you that anonymity is the best course. It is. The first thing you should do before redeeming the ticket is find out what your lottery agency's rules are regarding redemption. Some states like Kansas guarantee a winner's anonymity if they request it. This law even supersedes the state's open-records law provisions. But, a few states require you to participate in a publicity event (press conference, photo shoot, etc.) as a condition of redeeming the ticket. Most states, however, are merely required by law to release your name, your city of residence, the amount of the jackpot, and the store from where the ticket was purchased. But, such states will "try" to get you to do more ... such as pose for them with a stupid euphoric smile while holding up an oversized check. So, if you want to retain your anonymity, learn to say "no" as often as you're permitted to say it. And if a lottery agency suggests you're required to do something you don't think you're required to do, hire a lawyer before redeeming the ticket.

Here's another anonymity tip. Many lottery winners, as soon as their names are published, end up becoming the quarry of media hounds looking for a story, businesses who want to sell winners products or services, charities looking for handouts, con-men, con-women, friends, relatives (some you may not know), and coworkers. An ex-spouse may also consider hiring a lawyer to renegotiate a divorce settlement. But, if you live in a state that doesn't require you to submit to a photo shoot, you can keep all those people in the dark. How?

A lot of winners are hounded so badly that they end up changing their names. To me, this is putting the cart before the horse. In almost all cases, lottery agencies allow 180 days (or more) to redeem your ticket. So, instead of redeeming the ticket first, legally change your name first (a 90-day process in most cases). True, such name changes are published in local newspapers. But it's also true that almost nobody reads that part of the paper. And even if they did, they'd just know that someone with your name changed their name. If you haven't redeemed your ticket yet, few people (if any) would bother with the information. It would be out of sight and out of mind almost immediately. Then, after you (George Doolittle) redeem your ticket (as Peter Franks), simply reverse your legal name change (to George Doolittle again). After that comes the hard part - keeping your mouth shut about winning.

Even if you live in a state that requires a photo shoot or press conference, you can still keep interested persons in the dark. Whenever a BIG one is won, winners are required to redeem the ticket at a main or central office of the state lottery commission. And all such offices are in major metropolitan centers. So ... after you legally change your name, visit this metropolitan center. And your first stop should be a salon or theatrical group that can do "complete makeovers." Add a beard, a mustache, a wig of a different hair color than your own, or even fake tattoos. Wear clothing you wouldn't normally wear and present a whole different persona to the lottery commission when you redeem your ticket and pose for photos. And if you have to do a press conference, only give short answers and (ahem) BS them as much as possible.

In short, the only person who can "give you away" is you.

So, when you get a big cash windfall, determine what you'll do with your free time, quit your job, train yourself to be a good money manager, and retain as much anonymity as you possibly can. Oh, yes - and continue to keep your mouth shut.