Monday, December 15, 2008

Just maybe...

Maybe, just maybe, the economic downturn will be severe enough that my generation will stop acting stupid with money and grow a brain.

Good sign: Lottery ticket sales (which always go up, and typically shoot up during economic scares) are flat or down in many states, including Maine, Massachusetts, Missouri, Kansas, Iowa, North Carolina, California, Arkansas and Texas.

I heard that something like 30% of people in their 50's genuinely believe their retirement will come from a lottery win. That's insane. If you invested the $100 dollars a month over 30 years instead of spending it on lottery tickets, you'd have half a million dollars at retirement, and that's assuming a low interest rate.

The problem with the lottery is it preys on the hopes of the poor by promising to easily and instantly make them rich. The odds of winning, however, are so slim that it makes it impossible for the human mind to even grasp it. Here's the thing, the Powerball is played in 38 states, and offers a payout of $15+ million, twice a week. However, on average there are less than a hundred winners a year. Over 30 years, that means 3,000 people will win the Powerball. However, during that thirty years, over 80 million people will reach the age of retirement. So in all practicality, only 0.00375% of Americans should plan to retire via lottery tickets.

Maybe my generation is waking up to this non-reality. Maybe we'll start to make practical decisions about our money, like investing for the long-term, buying with cash not credit, and planning ahead. I highly doubt it. But buying less lottery tickets is a good sign we're moving in the right direction.

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