Aug
16
2009

  Lottery App

I'm thinking about creating a Lottery App. I'm always thinking about what I'd spend the money on if I won the lottery. This week I got the idea to hire a nail technician to make a house call every Friday morning so I could start each weekend with a fresh manicure & pedicure. I know there are people around here who make house calls for that sort of thing, but I'm not sure what they charge. Probably $75 per visit is my guess. If that IS the cost, I guess that's reasonable if it's something I need for a one-off occasion, say I've got an event in NYC that I'm attending straight from the airport and I don't have time to go to the salon in Cville before I leave. But it does seem a bit extravagant for a weekly thing.

However, if I won the lottery, extravagance will be de rigueur.

Now that I'm no longer in NYC much, having a full-time driver is lower on my lottery-winnings priority list. Here, I'd rather have a full-time personal assistant who could also drive me around if I needed to go anywhere. But I could avoid a lot of trips that way by sending them out to shop instead of doing it myself. And anytime I got bored of dealing with William, I could hand him off to the assistant so THEY could entertain him.

I alarmed Terry today by musing aloud how old William would have to be before I could just put him in the woods to let him explore and entertain himself, while looking out at the woods for a likely spot. While I KNOW he's too young for that now, sometimes it IS a tempting solution. Other kids have been raised by wolves, right? He'll be fine.

But back to my Lottery App. First of all, it would use the same rates to calculate the lump-sum or annuity payments that the lotteries use, so you could plug in the current jackpot and it would tell you how much you'd gross.

Then it would take out the Federal & State taxes, assuming you quit your job and had no other income. Close enough for our purposes. Once you have a good idea of your net winnings, it would have the costs of various things, or allow you to plug in the costs. First off I'd list the basics, mortgage, utilities, automobile, insurance, etc., since presumably many people would want to quit their jobs.

Then, based on your age, you might want to budget some contributions to fund your retirement. For example, if I won and took the 20-year payout, it would be gone before I hit traditional retirement age, and if I spent it all already, it would really be a bummer to have to go back to work when I'm old. I think many lottery winners overlook this. Twenty years is a long time, but life is typically much longer.

Mostly the point of the app would be a reality-check for people who dream of winning the lottery. It annoys me sometimes when the jackpot is $1 million, and people say, "oh, if I won then I'd buy a helicopter."

No, you wouldn't. First of all, with a $1 million jackpot, you'd need to take the lump-sum option. Say you get about $500K gross from that. Then you lose about 50% to state & federal taxes (could be more under Obama, Congress hasn't finalized the tax increase yet). So you've got $250,000 cash. If you spend any less than the whole thing you'll probably wind up with a spindly death-trap of a helicopter. And if you do spend it all, you're still not going to get anything luxurious, and what will you use to cover the operating costs??

I KNOW that people talk about "if I won the lottery" more in a metaphorical sense than literal, and that the practical impossibilities of their dreams shouldn't bother me. But I guess it's just the accountant in me that is offended by this. And that I project the larger societal problem that people don't know how to responsibly manage their money and that is why the economy is going all socialist (so they can manage MY money badly, and benefit from it) onto the problem that people don't know what they can realistically buy with lottery winnings.

Ech, really I need to get over the whole socialist thing. Realistically, I'm probably going to manage our investment income so as to avoid getting socked with the most egregious tax rates. And depending on how the laws are crafted, I might be able to come up with some loopholes to exploit so *I* can be the beneficiary of other people's money.

That's right. Don't forget I cut my teeth at Arthur Andersen back in the day, and know how to find the loopholes. And I know enough to not only interpret tax laws as written by Congress, but also to read the Tax Court case history to find relevant precedents and make an educated decision about what interpretations of new laws are likely to be deemed valid, and which interpretations are risky.

Personally, I'd rather that Congress did away the monstrosity that is the current tax code and put in something simpler, like a VAT tax. But as long as Congressmen insist on promoting their personal social issues through tax incentives, I'm going to take advantage of the fact that they often do it badly.