This guest post from Tina is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. If you enjoyed this story, please consider joining our facebook community at our Get Rich Slowly Facebook Page.

Although I know the schadenfreude of reading a lottery winner’s tale of woe, I want to share a more positive perspective. I also think that windfalls are more common than we realize, whether they come from inheritances, settlements, or tax refunds. So here’s my windfall story.

The year 2009 was a rough one financially for my husband and me. We dealt with a job loss, the birth of our first child, a very expensive medical emergency, and an unexpected move across country for a new (much lower-paying) job all at once. Fortunately, we had a 12-month emergency fund ready, no debt, and knew how to adjust to more frugal living. (We’re long-time Get Rich Slowly readers.) We surprised ourselves by how calmly we accepted the drastic changes to our circumstances.

But you never know what life has in store.

My husband settled into his new job and joined a $5/week state lotto pool with a few co-workers. Yes, I know that the lottery is a fool’s tax with astronomical odds (1:~5,000,000 in this case), but he viewed it as a bit of fun at an otherwise stressful job. My view was that it was $5 down the drain, so imagine my shock when he called to tell me the office pool had won the jackpot!

After going through a roller coaster of emotions, we met a fee-only financial planner and devised a plan.

  • First, we avoided publicizing our name by claiming the win with a trust. (Tina isn’t my real name, in case you were wondering.)
  • Then we planned for taxes. The initial prize was over $10 million, but after taking the lump sum, dividing it between winners, and setting aside 40% for federal and state income tax, we were left with a million and some change. Not enough to retire on when you’re 30 (we’re keeping our jobs), but we can’t complain!

Now that we had more assets, we had to worry about protecting them.

I work in a medical field with some chance for litigation, so I greatly increased liability and umbrella insurance. We set aside one-third of the cash to custom-build our dream home (not a McMansion; a 2500 square-foot ranch home on a half acre). Then we maxed out a 529 college fund for the kids (bonus: the contribution is tax-deductible in our state). A portion was allotted to charity and we were left with quite a bit of cash to invest.



We decided on an 80% stock/20% bond allocation (we went more aggressive because we are relatively young and have no mortgage). We had always maxed out retirement accounts, but now needed to start taxable investing. We’re using a passive, indexed approach; our retirement accounts are composed of a total bond market fund, and the taxable account is split between a total U.S. stock market fund, an international fund, and a tax-exempt bond fund. It has been an adjustment to watch our balance fluctuate by $50,000 when we have a volatile week in the market, but the plan is to stay the course, rebalance when needed, and do lots of tax-loss harvesting (we need it this year!).

I’ve read the studies that have found no significant increase in happiness for lottery winners. Overall, I agree. We really are just as happy as we were before all this, and our lifestyle really hasn’t changed. However, it’s very nice not to worry about finances if we have an unexpected car repair or want to take a family vacation.

The lesson I’ve learned is prepare for anything! Just when you think you have life on auto-pilot, life throws some turbulence your way.

Reminder: This is a story from one of your fellow readers. Please be nice. After more than a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are. Henceforth, unduly nasty comments on readers stories will be removed or edited.

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