Last week I saw a preview of an upcoming Oprah show about what happens to people when they experience a financial windfall. As most people that read PF blogs would guess, it doesn’t usually turn out too well. I finally got a chance to watch the Oprah show that I had Tivo’d last week and found it pretty interesting.
First there was a lady that built a successful clothing business in NY. As her business did better and better, she made more and more money. Needless to say, she also spent more and more money. Never, throughout her experience did it ever dawn on her that the money could run out. She saved nothing. To make matters worse, she ended up with a tiny cocaine habit. ($600 per day). Her rock bottom was living in the train tunnels in NYC. As I heard the woman say that she never thought about putting money away for later, images of a couple people I know came straight to the front of my mind. Regardless of whether you experience a windfall of a large amount of money or just make an average annual income, it is extremely important to plan for the future. Maybe your income will continue for the rest of your life, but most likely, you will go through a number of changes in your lifetime and you’ll need some money working for you.
The most interesting guest on the show was a homeless man. He had agreed to let a film crew film him day after day to see what his life was like. Little did he know that as the filming went on, the film crew would lead him to $100K (of Showtimes money). The first thoughts he had were of how this money would change his life. He could get an apartment, get transportation, and get a job. Well, when reality finally kicked in for him, he had nothing left. He blew the money on a $34,000 truck, bought a car for his friend at the aluminum can recycling center, and gave much of it away. He is now living on the street again and wishes that he hadn’t had the money given to him in the first place. You could tell that it was a stressful experience for him. Oprah stated a figure that 70% of people who experience a windfall, end up with nothing in the end.
It is tragic that we don’t teach simple money management skills in school. It is even more tragic that so many people in our society can’t let a dollar stay in their pocket. The reality is that if everyone magically started saving 10% of everything they made, we’d go in to one hell of a depression. I could get all “Oliver Stone” about it and think that there are so many people in high places that don’t want the citizens to save, but I won’t.
My parents just recently received an inheritence. They have never had that much money their whole lives. Of course they say they would have done things differently if they had the chance. I know that it isn’t that easy. I said I am sure they would still end up where they are at if they did have another chance. It is hard for them to understand that. Anyway, once they got the money, they were going to take their time and not make any big decisions, but even before they got the money, they were in a car dealership trying to buy a car. Luckily, my mom had called me while they were there and I talked them down from the ledge (he he). They don’t get that the money is more valuable in their accounts than spending it on stuff. You have options when you have money, not after it is spent. You can create income that can be used to buy stuff. The homeless man didn’t understand that money is a valuable tool rather than something that needs to be spent to be worth something.
I saw the same show, simply incredible and also sad. From what I gathered, the homeless man sounded like he wanted to be homeless, collecting aluminum cans and sleeping under an overpass. I think I can chalk this up to us being creatures of habit and how hard it is for us to change. We get too comfortable.
I saw the show too…very interesting. I would be more interested in a show where people been living off million of dollars trust fund and never had to work suddenly lost it all, i wonder how they would live.
$100,000 probably wouldn’t be enough of a windfall for me to be stupid like that, but give me $100,000,000, and it would probably be different. It’s all in orders of magnitude.
Yeah. I worry that I’ll get a windfall and I won’t take care of it, so I’ll just leave it in the bank in a CD and let it gather interest and keep on working. Well, if the windfall is less than a $5 million dollar lottery payout… But I can’t imagine not working. I’d keep working. I go batty being idle for more than a month.
I think the homeless man was a people pleaser,just wanted to be cared for and loved,unfortunately he did recieve what he wanted but it all wasn’t real,I feel very sad for him,now he is left with anger and resentment from the people who took advantage of him for his money.Been the done that,enough said!