How I Would Spend a Major Lottery Jackpot

"I spent 90% of my money on women and drink. The rest I wasted." -- George Best

Periodically, I buy a lottery ticket when the cash jackpot exceeds $100 million. Even with such a large jackpot, I know that hoping for a lottery win is a very, very bad retirement plan. The odds of winning a Mega Millions jackpot is 1:175,711,536 and the expected return on a $1 lottery ticket is about $0.60 for a $100 million cash jackpot.

Basically, I like to think of a lottery ticket as entertainment. For a few hours, I have a chance to become an instant multi-millionaire. Also, for entertainment purposes, I've thought about what I might do if we did win a major lottery jackpot.

For reference, my spouse and I have agreed a winning jackpot would be split into three parts, one for each of us and the third portion would go into savings. Here's what I would do with my part:

Give my mom private nursing care in a place close to us. I would pay cost of a home close by, the moving costs, and private nursing care so that my mom could be comfortable and closer to us. While she is lives in a good nursing home near my sister, I think she would appreciate her own house and private nursing staff. Unfortunately, she doesn't have sufficient funds to cover the latter.

Buy fractional ownership in a private jet. Since 9/11, using commercial airlines has become much more tedious, due to restrictions, and security precautions. I just want to be able to show up at the airport and get on my plane immediately. Having a chartered private jet seems like a good way to achieve my goal.

Have a hired driver. One of the best things about living in Japan was not owning a car. The public transportation system allowed us to go anywhere for a reasonable cost. In the U.S., my initial solution would be to hire a limo. I would start with long trips and special events. If I liked it enough, I would hire a driver to handle all my transportation.

Purchase VIP seating at various events. I'd like to attend events like the Super Bowl, World Series, hit Broadway shows, etc. at least once. It would be great to get the "best seats" and not worry about the cost.

Charitable contributions. I would make a large one time contribution to my church and my school. I would also make larger regular contributions to various charities we've supported in the past. Finally, I would make some large contributions to charities in which friends have direct involvement.

Invest in a business, stocks or real estate. Although the third portion will likely cover investments, I would also like to use part of my funds to try a franchise business, rental real estate, or managing my own portfolio.

If I won a lottery, I would not buy a new car, a new house, a vacation home, or a new wardrobe. For now, I don't want any more "stuff." As for travel, I expect my spouse would spend part of her portion on that, and I'll get to tag along, just as she would tag along for my VIP seating :-) Finally, the money for our daughter's college education would come from the third portion, which goes into family savings.

UPDATE: In the evening after publishing this post, I came up with a few more spending ideas. I will publish the addtional ideas next week, since I don't expect to win anytime soon;-)

For more on Reflections and Musings , check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Childhood Money Misperceptions

"Money doesn't grow on trees." ~ idiom

Most children know that money doesn't grow on trees. However, based on my experience, young children sometimes have ideas that are very similar to money growing on trees. Here are some of the misperceptions:

Credit cards - When I was seven, I thought credit cards let people get things without using money. My dad had a gas station credit card and I thought he got all his gasoline for free. One day, my visiting uncle paid for gasoline with cash. I became frantic because I thought he was wasting money. I waved and screamed at him from the inside of the car to use my dad's credit card. After a few minutes, my dad finally figured out my message. He explained to my uncle and they both had a good laugh.

ATMs - One of my colleagues shared a solution that her children offered for spending cutbacks being considered in their family. They suggested that she go to the ATM to get more money. Her children believed that everybody could get any amount money they needed at an ATM.

Parental funds - Our five year old daughter believes that she will never need to earn money. As she explained to my mother-in-law, there is enough unclaimed loose money in our house to meet her financial requirements. Therefore, why waste time working to earn money?

After writing this, I realized that some children do not grow out these beliefs :-) Fortunately, I did learn my childhood perception about credit cards was wrong. Hopefully, my daughter will also learn she needs more money than she finds around our house.

For more on Crossing Generations check back every Thursday for a new segment.

This is not financial or parenting advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Our Three Financial Measures

"You get what you measure." ~ old adage

In our household, we measure three values to determine our financial health: investment income, total savings, and total debt. I believe these values will show whether we can maintain our early retirement status or not. To make the values relevant to our pre-retirement income, I divide each value by my salary prior to retirement for a ratio. Here is why these values are important to us:

Investment income. This value is important since we would like to live entirely on the income from our savings. Our target is to generate 80% of my pre-retirement salary through investments. This gives us an investment income ratio target of 0.8. If the ratio is significantly less that 0.8, we need to consider other options for generating income, such as doing part time work or returning to full time employment.

Since we have paid off our mortgage and reduced other expenses, our income needs are about 0.5 of our pre-retirement salary. Thus a target of 0.8 gives us a comfortable margin of safety.

Total savings. We have estimated that a savings total equal to 20 times our pre-retirement salary is needed to maintain sufficient inflation adjusted retirement income through our nineties. This calculation was done when our target income was 0.8 of our pre-retirement salary. At this point, we are not doing a recalculation, even though our monthly expense needs are at 0.50 of our pre-retirement income.

Total debt. Our target debt is zero. Debt creates additional expenses, which we want to avoid in retirement. For example, paying off our mortgage reduced our monthly expense by 24%.

For reference, we do not include the value of home, cars or other personal items in any of our financial measures, since these items do not generate income.

I track these measure on a quarterly basis to determine if we are on track and to take action when we are not meeting targets. For the latest quarterly review, see Wealth Builder Ratios - Q1 2010 Update , or check the right sidebar.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From May 18 to 24, 2010

Here are links to the Carnivals in which My Wealth Builder participated from May 18 to 24, 2010:

Festival of Frugality #280

Money Hacks Carnival #116

Baby Boomers Blog Carnival #40

Carnival of Financial Planning #142

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Some Jobs are Gone Forever

Some U.S. jobs aren't coming back by The Wall Street Journal reports that some jobs may not come back even as the economy recovers. Jobs lost and not returning are occuring in the following fields:

1. Contruction
2. Financial sector
3. Publishing
4. Office administration

In the first two cases, the economic boom made both these fields much larger than normal. With the great recession, the number of jobs declined significantly and will not likely return to boom times. Job in the last two fields are declining to due technology, which has increased productivity and reduced the number of people needed.

Unfortunately, it seems this situation will contribute to a continued jobless economic recovery, requiring some workers to get retraining before rejoining the workforce.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial, career or job advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Life Extending Habits

Bad habits can age you by 12 years reports that combination of four bad habits can increase the risk of death for an individual. The study evaluated the effects of smoking, alcohol, exercise and diet and determined that achieving certain threshold levels improve a person's health. The behaviors, thresholds and my experience are summarized in the table below.

	Target Levels
Behavior	Healthy	Personal Experience
Smoking	Never or had quit	Never
Drinking Alcohol	Fewer than 3 glasses (men) or 2 glasses (women) per day	zero to five glasses
Exercise	More than two hours per week	two to four hours
Fruits and Vegetables	Eating 3 servings of vegetables and fruit per day	one to five servings

It appears that I am doing just well enough in two of the four behaviors, with room for improvement in the other two. Of course, doing better is no guarantee of a longer life, but I still consider it a good idea to reduce intake of alcohol and increase the amount of fruits and vegetables to reduce health risks.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From May 11 to 17, 2010

Here are links to the Carnivals in which My Wealth Builder participated from May 11 to 17, 2010:

Carnival of Financial Planning #141

The Bobo Carnival of Politics

Festival of Stocks

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, political or investment advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Signs of a Short Layoff

Someone I know, who was unexpectedly laid off in April, landed a job in about a month, in the same field and for the same pay. Based on what I heard about the job search, I expected him to be very marketable. However, even I was pleasantly surprised about how fast he was successful. Here are some of the signs that the layoff would be short:

Good opportunities with relocation. The recruiter commented that there was a 100% chance of a job offer by moving to certain regions. The person didn't want to relocate, but it was a good backup option.

An interview within two weeks. I know people who have made hundreds of inquiries and waited months, without getting an interview. Not only did he get an interview, he received two, and both are within commuting distance.

Another reason is his profession is in a field that has strong demand in a few industries. While his previous company was struggling, there are others that are growing even in the slow economic recovery.

Overall, it is good to see some people rebounding quickly from a job loss.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial, career or job advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Getting Old isn't for Wimps

“I find getting older a lousy deal. There is no advantage in getting older. I’m 74 now, and you don’t get smarter, wiser, more mellow or kindly. Your back hurts more; your eyesight isn’t as good. It’s a bad business. I advise you to avoid it if you can. ”~ Woody Allen at Cannes 2010

To me, the problem is my body parts break down more frequently and heal more slowly as I've become older. In addition, replacement parts require surgery, and often don't work as good as new. And sometimes, replacing a part just isn't possible.

Until my early forties, my body held up pretty well. I played football and baseball in my teens; rugby in my twenties; softball, volleyball and running in my thirties; and tennis in my forties. Although the level of physical impact declined after 30, I felt my body was still in relatively good shape. I had few injuries, recovered quickly, and barely saw my doctor every 2-3 years.

However, something happened in my forties. My joints began to hurt more. Something always seemed to be in pain. Healing took longer, seemingly forever. In addition, foods I used to enjoy were now giving me stomach and intestinal problems. At this point, I'm not looking forward to getting the future "signs of aging."

Of course, aging can bring on more serious issues. I'm dreading the possibility of getting a major injury from an accidental fall, or worse yet, an everyday activity. Hopefully, I will be able to avoid having a major illness or chronic disability, which has happened in my family. In his seventies, my dad caught pneumonia, went into a coma for several months, from which he briefly recovered before dying. Shortly afterwards, my mom broke her hip and is now in long term care at a nursing home.

Of course, aging isn't all bad. There is a silver lining to getting older. It definitely is better than the alternative:-) Also, with age comes experience, which has lead to better judgement. I am fortunate to have the more financial assets than when I was younger. Best of all, I got the opportunity to retire early.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or aging advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Part-Time Jobs - Short Term Overload

After struggling to get more than one part time job for the past two years, I now have the opposite problem - too many part time jobs at the same time. I had five seasonal part time jobs in March, down to four by the end of April, and was trending to three by June. However in early May, I received an offer for a short term part time job to which I applied in 2008. So, I'm back at five part time jobs for the rest of this month.

I don't have an issue with the work load. However, I'm learning there are some issues which may prevent me from working five part time jobs in the future, even for a short time.

Too Many Hours - The most recent part-job requires a minimum of 30 hours per week. Fortunately, they have been flexible about when the hours are worked since they are open 24/7. However, it is likely I will work over 50 hours for some week during the next two months, which is the duration of this job.

Being retired for over two years, it just feels working 50 hours or more cuts too much into my personal time for family, entertainment and projects :-)

Competing Priorities - Every part time job would like me to give them top priority. Priority management is pretty easy with two to three jobs. Four jobs is still manageable, when the hours are between 5-10 per week for most jobs. However, managing priority for five jobs is testing my capability, especially since one job would like 30 hours per week.

Schedule Management - Only one of my jobs has a set schedule and one job has no schedule. The other three make a weekly schedule about one week in advance. Thus, I have to juggle three jobs schedules when submitting preferred work times.

Paycheck Tracking - Although three of my jobs have been accurate in paying me, my fourth job has already had two paycheck errors. The most recent part time job has recommended up front that I confirm I'm being paid the correct amount with each paycheck. I've also learned that some employees from this new part time job have already experienced incorrect payments.

At this point, I plan to complete the work period for all five jobs. I made a commitment for a specific time period when I accepted the offer for the fifth job and plan to keep it. However, if they offer to extend my work session, I may decline. Finally, I may decide not to apply for a short term event part time job, which I was offered last year but couldn't work last year. If this job requires too may hours per week, I may pass on it for this year, even though I would love to attend the event for free.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or job advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC