Experts tell how to stay rich after winning the lottery

Jet, March 25, 2002

Over the years Blacks have won millions in the lottery, but because of their kindness of heart, lack of financial savvy and failure to have a plan for the future, they wound up richer for the experience of once being a millionaire rather than remaining one.

It's been said that with more money comes more problems. Winning a multimillion-dollar lottery has a way of attracting estranged family members, numerous charities and even strangers to ask for or demand financial gifts and loans; this can quickly drain your newfound wealth. Then of course there's the ever-present Internal Revenue Service taking its percentage, and judiciously watching your every financial move.

Curtis Sharp knows what it was like to be rich. In 1982 he became the nation's most famous Black millionaire when he won $5.6 million in the New York Lottery and became an overnight celebrity.

But Sharp was unprepared for the personal and financial snares and pitfalls that come attached with instantaneous wealth.

"I was really too free-hearted [with the lottery winnings]. I gave away a lot of stuff," admits Sharp, who has become a minister at Priest Lake Community Baptist Church and now resides in Nashville, TN. "There [were] ... people trying to use me. A lot of people wanted me to go places and do things for them. I was just happy-go-lucky, spending money loosely. I didn't take care of my money like I should have."

But Sharp wasn't completely rash; he kept his then $30,000-a-year maintenance job (albeit with less hours) and that allows him to collect a pension after his lottery checks ran dry.

He said giving away money, and a series of bad business and financial investments, including getting caught in a tax shelter scam, bought him more ill than good. Now, at 64, Sharp says he's turned to God and places his trust in Him, not man.

"Thank God I [began] serving the Lord, because I didn't know what I was going to do [after losing my lottery winnings]," says Sharp. "God brought me through all of this because I started serving Him for real. Money's not everything, and God knows we need it. But it's not the money you have, it's what you do with it."

His advice to anyone who hits the lottery: "Pay your tithes. If you win, get yourself right with the Lord, then you will be able to help others and be blessed. Take a vacation and go away for a while, and get your thoughts and things together; then get a reputable accountant and a lawyer and take charge of your finances yourself. Don't let people talk you into funding their ideas. Because people will come at you saying they can make more money for you. I did some of that and it didn't work."

Sharp says that if he won the lottery again, he would do things differently. "I would make sure that the Lord had his 10 percent of what I won. Then I could help people, through the church or reputable organizations, people who needed help. I wouldn't be so much into houses or cars jewelry as I did before. I've learned that without Christ in your life, you are not going to go that far. Money can't solve everything ... I feel richer now having Christ in my life than I did when I had money. I have joy and happiness that no one can take away from me ... I have been enlightened to the glory of God. I can deal with life now."

Washington, D.C.-based economist columnist Dr. Julianne Malveaux says: "Before lottery winners do a single thing, they need to consult with a financial planner about their goals and how they will use their winnings to change their life.

"A financial planner can help them with their tax liability, investment plans, and charitable giving. Most [lottery winners] should pay off bills before doing anything else. Then, it makes sense to develop a balanced portfolio that includes stock, bonds, and property," advises Malveaux. "Some of the money should be set-aside in relatively safe investments, especially if other money is used in risky investments or in a business. If the winner gets 20 installments, instead of a lump sum, under no circumstance should he or she borrow against the next installment. While it feels good to splurge and to buy gifts for family and friends, all of that should be put into perspective. The temptation for many is to treat lottery winnings like free money. When that happens, too many people end up losers. Easy come, easy go. Instead, using a planner to help structure the way lottery winnings are spent will most likely generate positive returns for both the winner and his or her estate."

Duane Davis, founder of the Coalition of Black Investors, points out that pragmatism and planning are paramount when deciding how to keep your millions after winning the lottery.

"In your mind, immediately cut your windfall in half. If you win $1,000,000, you might as well start telling yourself that you just won $500,000 because the first thing to realize is that you have to pay income taxes. Your tax liability might not be exactly 50 percent, but this way you'll be pleasantly surprised when you get to keep more. Don't quit your day job! It takes approximately $250,000 of principal to generate $1,000 of monthly income. If your monthly living expenses are $6,000, you'll need to invest at least $1,500,000."