Lottery isn’t wealth-building tool, just ask rich

Dave Ramsey Comments 1
Published: June 18, 2009

DEAR DAVE: Do you think it would be a good idea to budget a little money each month for playing the lottery? I spent $10 on scratch tickets the other day and won $100. I think it might be a pretty good idea to save $90 and put the other $10 toward more tickets.

Edward

DEAR EDWARD: Here’s a thought. Just stuff 10 bucks down your garbage disposal each month and save the cost of driving to the nearest convenience store.

Really, now, you can’t be serious!

The lottery is a tax on the poor and on people who can’t do math. I’m not riding a moral high horse. Research shows that people from lower-income brackets, folks who can’t afford to be throwing their money away on some ridiculous game, spend four times as much on lottery tickets as anyone else. Rich people don’t mess with this garbage, because they know the lottery isn’t a wealth-building tool. When was the last time you saw a line of BMW and Mercedes cars pulled up to your local convenience store to buy lottery tickets?

The only winners in the lottery game are the students. (Many states, including Oklahoma, earmark lottery proceeds for education.) But in reality, they are riding on the backs of the poor masses who gamble away their grocery money.

Lots of people think winning the lottery will mean life on easy street. The truth, however, is that it rarely works out that way.

Did you know that 65 percent of Lotto winners go bankrupt in less than 15 years? Your chances of winning big are about 125,000,000 to 1. You’re more likely to be bitten by a snake or die in a car accident on the way to buy the stupid lottery tickets.

If you’ve got money to throw around, do something smart with it, such as get out of debt. Do you have an emergency fund? Are you investing for your retirement or your kid’s education? If you’ve done that, give it to someone who’s hurting or invest it in your community. Don’t waste it on something as dumb as the lottery.

DEAR DAVE: Our daughter has one year left in college. She’s going to a state school here in Texas, and we’ve taken out two loans to help her. She’s living in nice apartment off-campus. She doesn’t work so she can concentrate on her studies. Should we get another loan for her final year?

David

DEAR DAVID: I’ve got a better idea. Keep in mind I said a better idea, not an easier idea.

She needs to be working full-time and then some, all summer.

If she does this and also works part-time during the school year, and you guys chip in a little, you may not need to think about another loan.

I really don’t give a hoot about her lifestyle while she’s in college. No college kid, especially one that’s not working to help make things happen, deserves to be put up in a fancy apartment while her parents go into debt or break their backs working to support them. I worked all the way through college, and so did thousands of other people.

Statistics show that the average, in-state cost of tuition for college in this country is about $6,000 a year. It costs about $5,000 to live in a dorm, plus you’ve got books and food and a few incidentals. So, the average total will be between $12,000 and $15,000 year.

That means you guys have to come up with $1,000 to $1,200 a month.

I really believe that if you’ll all work together and involve everyone in the process, you can make this happen without taking another loan. In the long run, you’ll all be happier if you do it that way.

E-mail questions for Dave Ramsey to davesays@daveramsey.com. For more financial advice, go online to www.davesays.org or call (888) 227-3223.