The Smartest Ways To Really Use a $96,000 Lottery Ticket Win

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The smash Broadway hit “In the Heights” is now one of the most hotly anticipated movies of the summer. The story chronicles a New York City family whose bodega sells the winning $96,000 lottery ticket as they pinch pennies and dream of a better life. 

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If that better life came to you, would you be ready? 

GOBankingRates talked to experts in the field to find out what to do if that incredible stroke of luck happened to someone in real life. You might never win the lottery, but it’s certainly possible that you could inherit a windfall or win a settlement. If you do happen to come into some cash, you might one day be grateful for the real-life lessons that apply to this fictional scenario

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Do Nothing — Then Call in the Pros

If you come into money, do absolutely nothing until you’ve consulted a financial professional. A mistake as simple as depositing the money in the wrong kind of account could cost you thousands in tax penalties.

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“This has the potential to be a life-changing amount of money if you put it to work in the right way,” said Rob Phelan, CFEI, a high school personal finance teacher, the author of “M is for Money,” and the co-lead personal finance curriculum writer for ChooseFI International Foundation. “According to the National Endowment for Financial Education, about 70% of people who win a lottery or receive a large windfall of money go bankrupt within a few years. $96,000 may be a lot of money, but it is not enough for you to never have to worry about money again, and it certainly isn’t a sum that you won’t burn through pretty quickly if you don’t take care of it.” 

Tax laws are complicated. Large sums of money can shrink quickly. This is not something you want to DIY. 

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“The first thing that you should be doing is hiring a public accountant and a tax attorney,” said Sai Blackbyrn, a certified financial analyst and the CEO of Coach Foundation. “These two individuals will be critical for you as they can help you manage your money and minimize the tax payments upon it.” 

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Pay Down Debt — But Only the Right Kind of Debt

Once you get the image of that new Ferrari out of your head, the responsible part of your brain will tell you to invest as much of that $96,000 as possible. That’s smart — but if you’re hemorrhaging money through finance charges on revolving debt, stop the bleeding first.  

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“If you have credit card debt, the best thing to do with lottery winnings is to pay off the debt,” said Aviva Pinto, a managing director at Wealthspire Advisors in New York City. “Credit cards are charging 24%-plus in interest. If you are carrying interest, you are paying more than you could ever possibly make by investing the money in a diversified portfolio.”

For most people, housing is the biggest monthly bill. It might be tempting, then, to pay off your mortgage outright, but that might be the wrong kind of debt to eliminate. It won’t leave much left over and you don’t want to wind up house rich but cash poor. There are probably squeakier wheels for that money to grease.

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“If you have a mortgage and it is at 3-4%, assuming you refinanced, keep the mortgage,” Pinto said. “It is a low rate and you can use the excess cash to invest. Put the money in an IRA or 401(k) or 403(b) through work and let it accumulate tax-free so that you have money saved up for retirement.”

The Market Is Hot — Get Some Skin in the Game

Teddy Stavetski, a personal finance writer and founder of Do Not Save Money, wants the family from “In the Heights” to put as much of that money as possible into the greatest wealth-generation machine in history — the stock market. 

“The stock market is the best place to reliably grow wealth,” Stavetski said. “In five to 10 years, this $96,000 could very well have grown into almost $250,000.”

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Registered fiduciary, investment advisor and founder of Life Income Management Melody Juge backs up that sentiment.

“Remember, money will double at a 10% return in seven years,” Judge said. “So your lottery winnings, when well invested, will provide a wonderful future nest egg to add to your retirement.”

See: Do You Invest Like These Millionaire Stars?

That doesn’t, however, mean that you should dump it into the market all at once. 

“By investing a small portion each month, the family can protect themselves from any sharp market downturns,” Stavetski said.

Build an Emergency Fund — and Draw a Line in the Sand

The pandemic reminded the world that stuff happens — and sometimes it happens for months and months and months on end. Before it’s all gone, dedicate some of your winnings to starting an emergency fund. 

“This fund has enough money to cover your expenses for the next six months in case you go broke, lose your job or your business goes down the drain,” Blackbyrn said. “It’s never too late or early to start an emergency fund and surely your lottery winnings will be a huge help.”

Read: The (Minimum) Emergency Savings Needed in Every State

Blackbyrn also issues an unfortunate but accurate warning — with new cash comes outstretched hands. 

“Learn to say ‘no,'” Blackbyrn said. “A lot of people will be coming to ask for handouts. Whether it’s your aunt or your mother’s cousin’s neighbor’s friend’s sister, you have to be cautious about giving money to anyone who just asks. Remember that you do not owe anyone anything. While the lottery is pure luck, this was your luck and you have every right to keep it all.”

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Last updated: June 10, 2021

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for, a financial publication in the heart of Wall Street's investment community in New York City.
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