19 year old Rosa Dominguez won the lottery at some point this year. Not once, but twice. In the same week. The California lottery didn't say when she purchased her tickets, but she bought a $5 scratcher and won $555,555 and then a few days later in the same week bought another $5 scratcher and won $100,000 for a total of $655,555.
SACRAMENTO, Calif. (AP) — A California teen is celebrating two big lottery wins in a week.
The Lottery says Dominguez collected her $655,555 in total winnings recently and tells the organization she plans to go shopping and buy herself a new car.
I want to start by congratulating Ms. Dominguez on her big wins. I also want to issue a warning: don't spend it all in one place. Statistics show that 33% of lottery winners go bankrupt after winning, and a 19 year old with very little financial experience needs to acquire some wisdom very quickly to be able to handle a large amount of money. Even I would need some education, and I'm 32.
What a lot of people fail to take into account with a windfall like that is taxes. Ms. Dominguez is going to be in the nation's highest tax bracket this year as a result of this win. While lotteries tend to withhold federal and local lottery taxes from the prize payout, if the prize takes you into a high enough federal bracket, you might end up owing more than the withholdings. I'm sure California state taxes are the same.
This means that her $655,555 prize will likely be closer to $375,000 after taxes, then you have a car that's likely to cost around $30,000 plus tax and title (assuming a more economical vehicle) and a shopping spree, which can add up quickly. It wouldn't be hard to blow through that kind of money very quickly, and even be in a rough spot if she over spends and doesn't have enough to pay Uncle Sam come tax season.
This story is far from complete, so we have no idea how Ms. Dominguez will handle her money. My advice is to be frugal, use the money to set up a nice life in a less expensive (and more conservative) state than Commiefornia and work hard to stay in the lifestyle she's getting a taste of right now.
Hopefully she learns a valuable lesson without it causing her any long term financial problems. Unfortunately, our school system does next to nothing to help prepare someone her age to be able to handle money.
That's why, as parents, we need to teach our kids about finances and taxes.
Our tax system also needs some major reform.
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