Why It’s Okay to Buy a Mega Millions Ticket (Even After You’ve Done the Math)
Recently I outed myself as an occasional lottery player and as a person who thinks that lotteries in and of themselves aren't so bad.
I don't think they're good. Rather, I think they're not-too-terrible in the way that potato chips are not-too-terrible. Enjoy a few every so often and you'll likely be okay. Eat nothing but chips? Problem.
A number of readers admitted they sometimes buy in, too. But one responded in this way: “I wish the people who spend more than a dollar or two a year would put their money to a better use, such as donating to a soup kitchen or to the Salvation Army.
“Alternately, I wish they would save their money and put it in their emergency fund. Yes, I have bought a chai latte or two in a year, but at least I receive value for the money spent.” (emphasis added)
Here's what I think about that:
- What makes you think lottery users don't donate?
- What makes you think they don't have EFs?
- What makes you think they don't “receive value for the money spent” in terms of the amusement factor, the daydreams, the laugh with friends?
(I know some people have mega-problems with the Mega Millions, i.e., they have unrealistic expectations. I'll get to that in a bit.)
I have an emergency fund, I continue to save for retirement and I donate to a lot of causes. But I don't save or donate every dollar I earn. Neither does the commenter, apparently; some of his dollars go to things like chai lattes.
It's the same with me: Some of the money I earn I spend on treats. Six or seven times a year, that treat is a pair of $1 lottery tickets — one state Lotto, one Mega Millions.
A preferred form of escapism
Plenty of writers, including J.D., think the lottery is an investment for fools. In that article he cited a couple of disturbing factoids:
- 30% of people without high-school degrees consider the lottery a wealth-building strategy.
- Households with income of less than $12,400 per year spend an average of 5% of their earnings on the lottery.
I've got nothing against J.D., even though I thought he'd be taller; the dude signs my paycheck, which I truly appreciate. But when writers use words like “fools” or “stupidity tax” (the latter is from my friend Liz Weston of MSN Money), they're tarring with a highway-wide brush.
Personal finance sites are full of tips on the best ways to use the money you have. You don't see blog posts about why you should never ever ever have any fun until your mortgage has been retired and every student loan is paid in full.
Instead, we tell people to use Groupons to go out to dinner or get a massage, or to dig up a rock-bottom airfare and a house swap for a week away. That's not foolish, it's frugal. That's not stupid, it's a smart use of available funds.
Well, suppose my preferred form of escapism is to buy one lottery ticket a week. If I can afford it, will $52 a year send me to PF purgatory?
Understand: In no way do I advocate overspending on lottery tickets, or on anything else if it breaks your budget. And yes, if you plan to retire on your winnings you are deluding yourself. The folks splitting the $560 billion Mega Millions kitty didn't have to go to work the next day unless they wanted to — but millions of other ticket-buyers did.
A dollar and a dream?
A frequent criticism is that money spent on lottery tickets is “wasted.” To which I reply: Do you expect everything you do to provide some kind of financial return?
Personally, I think that cigars, spray-on tans, wine collections and designer handbags are wastes of money. But I don't get to decide what you buy. If you want those things, then budget for them and enjoy them.
In fact, J.D. did acknowledge that the Mega Millions et al. can be harmless fun for some people. His real beef was with those “who view the lottery as a legitimate path to wealth.”
“Sadly, there are many such people,” he noted.
I agree that a reality check is needed. I feel the same way about young people who won't even consider starting a Roth IRA or contributing to a 401(k) plan. That's something they'll do “later.” They don't know or don't care that compound interest really wants to be their friend right now.
We need better ways to approach finances. Better math skills wouldn't hurt, either.
What we don't need? Divisiveness. Most of us allot money for the things we want: opera tickets, comic books, amateur athletics, daffodil bulbs, power tools, a movie plus refreshments. People tend not to get tight-jawed about new soccer cleats or a summer blockbuster plus Raisinets, though. But suggest a quick-pick or a scratch-off and the Money Police descend — and declaim:
- The lottery is a tax o
How to donate your body to science (for money?)
A basic burial averages close to $6,600 in the United States. Many people worry about the financial burden this places on their families. There is a way around this besides opting to be cremated and carrying enough life insurance: whole-body donation.
It's estimated that at least 20,000 bodies are donated each year. I'm considering it myself. The idea of contributing to medical education and research intrigues me — and I also like the idea that it potentially means a no-cost funeral.
That sounds like the lowest form of cheapskatery, but hear me out. I'd planned on cremation, since my personal desire is not to take up any real estate after death. I'd rather leave this mortal coil to the folks who are still alive to enjoy it. But even a bargain-rate cremation runs about $750, and if surviving family wanted a chance to say goodbye first it would cost more. Maybe a lot more. Continue reading...
20 Ways to spend $20
If you draw a paycheck, you're due an extra $160 in January and February thanks to the Temporary Payroll Tax Cut Continuation Act of 2011.
What're you gonna do with your windfall? Maybe not much. It's pretty easy to miss $20 more in salary, especially if fixed expenses (groceries, insurance, child care, gasoline) keep going up.
Note: This is not a political column. I repeat: This is not a political column. I really don't care what you think about the payroll tax cut. Please keep all your #$@!# dumb-o-crat policies or #$@!# con-man-servative hatefulness comments until a later date. Like, um, never. Get Rich Slowly is a personal finance site, not a flame-throwing political forum. Thank you for not foaming.
Buying Wine Online: Savings Tips for Frugal Sips
More than one million wineries currently operate worldwide. Each produces at least three different wines, and plenty of them stomp out 20 or more.
That's a lot of potential hangovers. But if you sip responsibly you can enjoy the taste, the history, and the geography of the grape without any concurrent headaches.
And if you have champagne tastes but a Boones Farm budget? Buy the fruit of the vine online. A discount comes in handy at this time of year, given the expenses associated with the holidays. In the next couple of weeks you might be:
That’s a Wrap: Some Alternatives to Traditional Gift-Wrapping
Looking for a greener Christmas? Re-think your gift wrap. According to Stanford University:
- If every U.S. family wrapped three gifts in repurposed materials, the gift wrap saved would cover 45,000 football fields.
- If every family reused two feet of holiday ribbon per year, the ribbon saved could tie a bow around Earth.
Feeling like a planet-despoiling bastard yet? Don't beat yourself up too badly. I use some holiday paper myself. But I obtain/use it in very specific ways:
- Buying during post-holiday clearance sales — they're practically giving the stuff away
- Re-using wrap when possible
- Using non-traditional wrap
- Getting paper and gift bags in non-traditional ways
You can frame the “to wrap or not to wrap” question in three ways: frugal or eco-friendly, or both.
Why I still pick up pennies
The most-read piece I ever wrote for MSN Money's Smart Spending blog was an essay called See a penny? Pick it up! It got more than 1,657,000 hits before MSN changed blog platforms. After that, the penny essay and most of the other things I'd written went to live on a farm, where they can run and play with all the other articles.
And me? Still gleaning dropped coins. I pick up road pennies with copper coatings ravaged by traffic. I fish nickels out of puddles. I've spied dimes glinting across parking lots. I rescue quarters from bus-stop gutters.
Occasionally I find paper money, usually one-dollar bills. This year was unusual because I found a $10 and a $20 bill along with 23 quarters, 52 dimes, 15 nickels and 288 pennies.
Got the Urge to Splurge? Use These Strategies to Fight It (or Not)
This just in: Sales of bleach and fertilizer are down, but U.S. consumers can't seem to get enough of cosmetics and wine.
According to a recent New York Times article, we're also buying more shoes, handbags, premixed cocktails, and meat pies. (Meat pies? Who knew?) Cheesecake sales are up by 22%. Vacuum-cleaner bags are down by 19%.
We'd rather eat, drink and dress up than clean the house? There's news.
Free money from banks! (but watch the fine print)
I earned $200 in less than an hour the other day, without removing any of my clothes. A bank gave me the money (or will, a few months from now) in exchange for opening a business checking account.
Why would a bank or a credit union give away that kind of money? To get people through the doors.
Once you're there, bank officials hope you'll take advantage of their other services, making you a loyal and profitable customer. Not to make that $200 sound like a gateway drug, but once a bank has you chances are you'll be hooked. (Not always, though. More on that later.)
How much do we owe others? (and when should we walk away?)
During my trip to the East Coast I spent part of a weekend with “Monica” and her family. (Names have been changed to protect the profligate.)
When we made a Wawa* run, Monica didn't want me to pay for my own Tastykake.** She threw it in with her own order, which totaled a little more than $34 and which included a coffee cake, a box of doughnut holes, and a $2-plus bottle of iced tea.
Why I love the megabus: A closer look at a seldom-used (but cheap!) way to travel
I'm in the middle of a month-long trip to the East Coast: a little work, but mostly tourism. Although the conference I attended was in New York City, I flew to Philadelphia because it'll be easier for me to get back there after I've hung out with family and friends.
That meant I needed to get myself from Philly to New York, from there down to Washington, D.C., and then back up to Philly to do my visiting. The total cost of those three trips was — wait for it — three dollars and fifty cents.
That is not a typo. I spent $1 for each of the three tickets and 50 cents to book them.
