75 is the new 125
In 5 weeks we’ll give out our Man Of The Year award. There’s no formal set of criteria for it, but it’s fair to say that we give it to someone who does a lot with less than a lot.
Nor are there formal criteria for nomination, but we recently discovered the least qualified candidates in existence (non-government category.)
If you read Control Your Cash with any regularity, you’ll know that our opinions on gambling are unambiguous. Don’t.
Meet Violet and Allan Large of Truro, Nova Scotia, who spent $11 million of their gambling winnings in 3½ months. And people are commending them for it. If you needed any further proof that Canadians are monotonal, obsequious milquetoasts who enjoy being acted upon, this is it.
The Larges played Canada’s iconic Lotto 6/49, in which you pick 6 of the first 49 positive integers. Odds of winning are thus 13,983,816 to 1. The Larges nailed it and took home $11.2 million. Canadian lottery jackpots aren’t subject to tax, the eminently reasonable argument being that you paid the tax when you bought the ticket.
Ma & Pa Large “took care of family first”, according to an amateurishly written story that doesn’t specify how many family members that entails. The story also claims the Larges “don’t gamble”, leaving open the question of what activity buying a lottery ticket should be classified as. Then, the Larges cut checks (excuse us, “cheques”) to firemen, churches, hospitals, cemeteries (cemeteries need money?), the Red Cross, the Salvation Army, etc.
If a pro athlete did this with jewelers instead of cemeteries, hack sportswriters across North America would proselytize against it. Bob Ley would devote an ESPN Outside the Lines special to it. But if some astonishingly dull couple does it, people want to beatify them.
The Larges kept $200,000, or $100,000 apiece. Let’s assume Violet dies in the next couple of years: she doesn’t have the hairstyle of a woman with a lot of time left. Is the remainder really going to be enough to keep everyone comfortable? Self-made multimillionaire Paul Stanley put it best:
“ALRIGHT! I KNOW EVERYBODY’S HOT! EVERYBODY’S GOT…ROCK AND ROLL PNEUMONIA! SO LET’S CALL OUT – DR. LOVE!”
Sorry. He did say that, but more to the point, he said:
“The best part about having money is not having to worry about having money.”
Contrast that with Violet Large:
“What you’ve never had, you never miss.”
The self-contradictory old kook borrows her philosophy from ancient bromides and fortune cookies, adding that “Money can’t buy you…happiness.” If the recipients of her largesse share that belief, they aren’t acting as if they do.
Were Control Your Cash an ordinary personal finance site, this is the part of the post where the author would write, “Would you give away $11 million? What would you do if you won the lottery?”
We don’t care. Here’s what you should do.*
Sell liabilities. Buy assets. No matter how much money you have, that never changes.
At least the Larges don’t appear extravagant. (No, really, they don’t. In case you didn’t notice.) We can only hope, maybe assume, that they own their house free and clear. And it’s true that staring at each other across the kitchen table costs little.
If you’ve got any kind of overarching debt that incurs large interest, and you come into a windfall, pay that debt off in its entirety. If you need the cash to capitalize on an investment with a larger return than the return you’re giving the lender on whatever it is you’re borrowing, then maintain the status quo if it involves a spread you feel comfortable with. In other words, if you finance a $50,000 car at 11%, but you’ve got $50,000 in an investment with a guaranteed 12% return, enjoy your annual $500 profit. But such examples are rare in the real world. When you’ve got the cash, it’s almost always better to pay the debt off, start again at 0 instead of at -11%, and start looking for an investment that pays you more than a net 1%. Which shouldn’t be hard to do.
And if you’re so devoid of ambition that you can’t think of a single exotic place to visit or an experience to enjoy that requires you to spend a few bucks, join the Larges in Nova Scotia and together you can watch the ground freeze.
P.S.: They’re still buying lottery tickets.
*Someone, possibly that disagreeable Nancy woman from that one blog, is reading this and saying “How dare those arrogant people tell us what we should do with our hypothetical money.” Fine, we’ll refund your blog-reading fee.
