What If You Won a Fortune?

What would you do if you won the lottery, the Publisher's Clearinghouse Sweepstakes or some other contest where the prize was millions of dollars? Chances are you already know. If you don't, reflect a few moments before reading on.

The cliché answer is buy a mansion or an expensive car or pay off bills or travel or retire, etc. Those aren't bad things. The problem is people don't usually think about the realistic details. Let's look at the reality of actually winning. More people win a million dollars or five millions dollars than a huge jackpot. A million isn't enough to buy a mansion or even retire. But what if you won $5,000,000?

The federal tax rate for a lottery win is 39.6%(25% due immediately and the rest at tax time). State taxes vary. In my state it's 6%. Combined taxes would equal 45.6% or $2,280,000. That leaves you with $2,720,000. Let's pretend you bought a miniature mansion, a new car, various sundries, gave to relatives and charity and so on for $1,000,000, leaving you with $1.7mil. That's not $5mil, but it's still a decent amount.

Figures for upkeep on a mansion vary widely from around $10,000 a month to the ten of thousands and include various things. Let's pretend you have an energy efficient bargain that costs $2,000 per month for the basics such as heating and cooling and grounds keeping and so on, costing you $24,000 a year. That would cost about 1.412% of your total winnings. Year two would start out at a cost of about 1.432%. And that assumes no other expenses at all, including food. After ten years you would be down to $1,460,000 with a cost of about 1.64%.

Even if the prices stayed the same, the percentage of the total would increase over time. Inflation would also eat away at your buying power. These examples do not account for inflation. A real mansion with maintenance of $10,000 a month would cost $1,200,000 in upkeep over ten years, putting you on the path to bankruptcy. And this doesn't include new cars, food, clothing, travel, life emergencies, home repairs and redecorating, etc. This is a glimpse into why so many lottery winners end up broke. They don't look at the $1mil upkeep bill over ten years. They probably just look at how much they currently have, think, "I can afford that," and buy the mansion. This is also a glimpse into why we see so many celebrity mansions for sale in the news. Their big deals only come for so long. If you hit the big time, I want better for you. How can you win and have it all, too?

The wealthy don't spend their own money. They spend other people's money. To have it all, you would need to do that, too. Let's say you won $5mil, spent a million for a decent house, a new car and all those other things and then wanted to live off the remaining $1.7mil. Most people would budget something like a set dollar amount per year: $30k, $40k, $50k, etc., and spend it like it was a salary. That's spending your own money, money that would run out over time. I want better for you.

The wealthy invest their money and live off the interest. Easy to say, but how exactly do you do that? If you wanted to buy a car, instead of paying cash you would make an investment that would make the car payments for you. At the end of 5 years, you would have the car and still have the money. That's the kind of mindset you need. You need to spend money on things that make money. There are various ways to invest, depending on your level of risk. A savings account is the wrong way. The interest will never keep up with inflation. You may have more money on paper, but you always lose buying power due to inflation. So, think back to the large number of celebrities you've seen who buy or start restaurants. It's easy to understand. There's good money in it. Another way is rental property. Vacation rentals make more money than a family home. Buying and renting out an apartment on a beach could work. The stock market is another way, but be careful. Starting or investing in businesses is a way. Find the niche that appeals to you. Lending money makes money. Places like Prosper.com and Lending Club allow you to loan as little as $25. Basically, you act as a bank sifting through loan applications and assessing risk. These are some ideas that work, but I'm not an expert. At the end of the day, you would need to do your own research or hire a consultant with a much broader perspective than mine who could give you percentages and risk assessments.

Six percent interest is very conservative. In the teens or higher is getting into more risk, depending. Let's say you decide on at least an 8% return and find areas in which to invest that you like. If you invested the entire $1.7mil, you would earn $136,000 per year. If you went with the miniature mansion and your home expense was $2,000, it would cost about 17.65% of your earnings. Most importantly, it would be 0% of the $1.7mil. If you spent less than your interest earnings, the $1.7mil would continue to grow and earn more and more allowing you a better and better lifestyle over time.

Instead of thinking, I have $1.7mil I can afford a $50k car, the thought process needs to be, This car costs $50k. How can I structure an investment that pays for it without losing capital? If you already have investments, you can think, What percentage of my budget will this cost? Is it really worth it? That's how the wealthy stay wealthy. They don't use their own money. If you ever hit the big jackpot, now you're better prepared to join the elite and stay elite.

Is He Still Alive?

Rich Little was born in 1938 and began his acting career in 1963. I remember him from the 80s, when he was the master of voice impersonations(see YouTube), mimicking presidents and celebrities to the delight of all. I hadn't heard mention of him in a long time until I ran across his name the other day. It made me wonder, is he still alive? According to Wikipedia, he is still alive! And still working. He will turn 79 on the 26th, just a few short days away.

Lying Fake News In Action

I don't do politics here very often, but a piece of fake news in The Washington Post caught my eye that was so heinous I had to post. The title of the article is "Trump, who urged people to 'hire American,' secures 70 foreign workers for Mar-a-Lago". The article says, "President Trump recently won permission from the Labor Department to hire 70 cooks, maids and servers to work at his ritzy Mar-a-Lago Club for the tourist season...He’s contributing to an influx of 2,159 immigrant workers snapping up the temporary jobs in Palm Beach County."

My goodness that sounds terrible. But hold on. The article has more to say. Speaking about July the article says, "Mar-a-Lago was applying for H-2B visas to hire non-American workers. Mar-a-Lago is only open during Palm Beach’s winter season, when members descend from colder climates." Speaking about Mar-a-Lago and an unnamed golf course, the articles states, "It’s unclear whether the Trump Organization had made an extra effort to try to fill the jobs."

Hmm, that's a bit confusing. The title says Trump himself hired foreign workers. The article says Mar-a-Lago did it while also saying the Trump Organization did it. That's three different entities. Which one of the three actually hired someone? If the reporter who wrote this article is a journalist, he should be aware of current events. Apparently, he isn't. As widely reported in the press, such as Forbes, Trump is no longer involved in running his businesses. He has placed them in a trust to be managed by others while he's president. Even as late as April, this trust was in the news. He became able to withdraw money from the trust, since he's not taking a salary from the government.

Despite the title of the fake news article, Trump did not hire anyone. He's no longer involved. Even if he was, he would not be involved in day-to-day hiring. Journalists know this. But what if Trump had hired those people? It would prove he's not a racist! It would prove he accepts anyone regardless of ethnicity. But we should already know he's not a racist from history. He won an Ellis Island Medal of Honor in 1986 and posed with Muhammed Ali and Rosa Parks. More about this award here. A partial quote: The Ellis Island Medals of Honor embody the spirit of America in their salute to tolerance, brotherhood, diversity and patriotism. And in 1999 none other than Jesse Jackson praised Trump for his lifetime of helping the African-American community. Video here.

The media accuses Trump of racism despite his history of helping minorities while at the same time accuses him of hiring minorities. Am I the only one who finds this kind of double-think weird? Is Trump the racist who loves hiring minorities? This article is a deliberate attack. It's basically hate speech. A liberal journalist hates Trump and spins an article in a way that makes him look bad to his base. This is happening in the media all the time. I don't know how many stories I've seen in the press that slant facts to create a fake version of events.

If journalists no longer have the integrity to report facts, they need to find a different job. This kind of hate speech has gone on long enough. They lost the election fair and square. It's time they got over it and moved on. It's time they stopped the deliberate lying. This is not real journalism. This is real hate.

A Concrete Business Example

I've been talking lately about starting a business without being too specific. One idea I've had for a while is to start a paint manufacturing company making acrylic artist paint. It would sell by the tube and by the jar for maybe $10 to $15.

Artist paint is made from various materials in the earth, pigments, and a binder. It's basically pigment and binder. To get just the right consistency or color, quite a few artists buy the raw materials and make their own paint. It's not difficult. I've identified an easily available pigment material that I've never seen used as a paint color. The idea would be to use it to make my own pigment and specialize in that color as a niche market. If I wanted to do other colors, I would have to buy the pigments and manufacture from those. Alternatively, for the other colors, I could use private labeling, a tool that's widely used for a variety of products.

One of the drawbacks is cost of entry. Not only would I have to buy paint manufacturing equipment, I would have to buy the equipment to grind raw material into pigment powder. A certain amount of the paint packaging side of it I could do by hand the same as others are doing for their own paints, but I would need real equipment for processing the pigment. I would also need a place to set all this equipment up and store containers and labels and pigment, etc.  And if I got a lot of orders, doing things by hand, while fine for getting started, would not be a realistic option.

I mentioned Shark Tank last week. I've still been watching it. One of the questions investors ask business owners is, What's to stop the big companies from doing the exact same thing and crushing you? That's a huge drawback to the paint idea. If it's successful, anyone else could mine this material and make the same color. I would be first to market, but they have huge name brands already.

On the other hand I might could make a decent business selling raw pigment to paint manufacturers. If I was established and already making the pigment, it might make sense for them to buy from me. The goal with either business would be to build it up to the point where a big player would have to buy it from me.

Let's talk money. According to the internet, the average yearly salary in the U.S. in 2016 was $44,148. Assuming 30%(not a real number) profit per paint tube sold, I would have to make $147,160 in sales to make that. If the price was $10 a tube, I would have to sell 14,716 tubes a year or 40.3 tubes a day. Realistically, I would have to put a certain amount of the profit back into the business. Equipment upgrades or repairs, a part-time employee, advertising, etc. Those kinds of sales would likely not happen the first year and maybe not for a quite a while. Starting out, I might sell only a handful at first.

When I talk vaguely about starting a business, this is the kind of thing I mean. I'm looking at things I could start small and then grow into something. This kind of gives an idea of how complex and slow the process of building something really is. I'm trying to find something that's relatively inexpensive to start that wouldn't drive me crazy while I worked at it. Some businesses require specialized knowledge or the right contacts. There are so many factors involved.

Is He Still Alive?

Is he still alive is a new segment to the blog. I saw an interview of Groucho Marx on The Dick Cavett Show. I was very surprised to learn that Groucho Marx died in 1977. Growing up, I had the vague impression he was somebody from the 1930s, which he kind of was. He was born in 1890 and made multiple movies in the 30s. I heard of him all the time as a youngster, and people did impressions of him a lot. Hawkeye, Alan Alda, on M*A*S*H, for example. I would see people doing the impressions but never see Groucho. I assumed he had died a long time ago. Seeing the interview made me wonder how many of the people I used to see or hear about so much are still alive.

He was before my time, but occasionally I would hear and still occasionally hear mention of Dick Cavett. Is he still alive? I assumed he was dead, but no. He's still alive! He's 80. Congratulations to him for beating the odds.

Have a great weekend.

Business vs Hobby

I turned on the television one night, and Shark Tank was on. I don't remember ever watching it, when it was big. I never got into most of the reality or reality-type shows that people later found out were heavily scripted and not so real. One I did watch when it first aired was the Joe Shmoe Show, IMDB entry here. It was different than the others. Everyone on the show knew it was fake except one guy. He was the only non-actor on the show. If you like things that play with perceptions of reality, it might be worth a look. The original one, I mean. I never saw the later one.

Nevertheless, Shark Tank seemed interesting and isn't really a reality show like the garbage ones. If you haven't seen it, it's about people making pitches to investors to raise capital for their businesses. The investors are the "sharks". They either invest or don't while giving reasons why or why not. Since I've been looking at starting a business, I decided to leave it on in the background. Some of the advice is quite good. Mark Cuban gives some very insightful comments. I wish he was allowed to go further in depth. The show feels heavily edited for time. The flow was smooth, but I have the impression the pitches last a lot longer than what's aired.

One of the sharks is the "mean" one. He told one of the businessmen that if he wasn't making a profit after three years it wasn't a business; it was a hobby. At first I thought he was being mean for the show, but my first thought was of a company I know that's been around well longer than three years and has never had a profit. I realized one day that it wasn't a business. It was a hobby. What the shark said only confirms that assessment. So, I pondered that and my own efforts in life.

Instead of being mean, what I think he was saying is something like this. In three years an entrepreneur will find a way to make a business work. Three years will show whether the businessperson is truly dedicated and determined to succeed. There has to be a drive there that pushes someone to overcome all the obstacles and pushes him or her toward success. Within that time frame any flaws in the business model will become apparent. Whether changes need to be made will be apparent. The good things and bad will be exposed. If things aren't working after three years, there's a fundamental problem that needs to be fixed. An entrepreneur will find a way to fix the problems or move on to something that will actually succeed.

As I keep researching for my own business attempt, something I've kept in mind is whether I have the right mindset and drive for success. I've been looking at various options. Once started, will I have the determination to push through to the end? I have to choose the right path. Shark Tank is interesting. It gives me more things to think about.

I may have the business idea narrowed down to two concepts. I'm leaning toward one of them more than the other, but the risk is higher. Financially, I think I might be ready for something between January and March, assuming all goes well.

Have a great weekend.

Examining Excuses

The Cubs barely squeaked by the Nationals before going on to face the Dodgers, who have the best record in the majors this year, in the National League Championship series. I followed the Cubs this year but not as closely as last. It was too painful. They lost or traded some key players. David Ross retired. There was nothing that could be done about that, but I didn't like it when they traded Dexter Fowler away. Money decision? I don't know.

Before the championship series began, my first impression was the Cubs would be swept. Then I thought, no, they might win one game. Then I thought about the games against the Nationals and thought they would be swept. Then I thought, no, surely they'll win at least one. I finally decided they would either be swept or win one game. No other outcome. That was my final forecast. They lost three, won one and then lost the last one. Sad, but it's good to be right. At least I had that.

I got to that decision point by watching them during the year. The Cubs really struggled the first half. The excuse that kept being given was "World Series hangover". I didn't think so. The biggest problem I saw was the bullpen kept blowing the game, which is how they lost in the post-season. And the starting pitching wasn't as good as last year. But let's get back to the World Series hangover excuse. Think about that in other terms. "We're failing because of our success." "We're failing because we're the best." "Our success is the main reason for our failure."

When you hear people like politicians giving "reasons" for things along with elaborate explanations, it might be helpful to put what they're saying in other terms. The Cubs didn't lose because of their success last year. The lost because they didn't have the same caliber of players and not everyone on the team played as well as last year. It's okay to be honest. People can usually handle it.

Other Stuff
I've been waiting on some late feedback for AoE. I've considered asking for it, but it's hard to pressure someone for what at the end of the day is a favor. This week I continued forward with final corrections using the feedback I do have. I'm still considering what kind of cover to do that my painting skills would be adequate for.

I mentioned a surprise I wanted to do for someone I know who's having a hard time. It got delayed when the tropical storm passed through. I think I'm going to schedule that for December, assuming I can really pull it off.

I'm still weighing options on starting a business. It would be a major step. My tolerance for risk is very low, so I'm being very cautious.

Have a great weekend.

Negative People

There are a couple of people in my life who have a tendency to go immediately negative about things. If a topic comes up at random, they have a habit of become skeptical. I could cite a web site about whatever it was or various facts. It doesn't seem to matter. Their minds will close to the possibilities. Having a reasonable amount of skepticism in life is generally a good thing. I have a healthy skepticism myself but my goodness. Facts are facts. I may not always like them, but I don't close my mind down like these two people.

What do you do when people in your life have a toxic negativity? What do you do when it's continual about multiple areas and it's toxic? I keep having the urge to kick them both out of my life and to stop having anything to do with them. But I'm not sure that's the right thing to do, and it's not completely realistic. Everyone goes through seasons in life. This year, for instance, hasn't been that great for me. I've had some times when I was feeling really down. Regardless of how I felt, I tried to explore new possibilities. I wasn't always able to come up with answers, but I tried. Maybe they're in one of those seasons. Both of them? At the same time? It's possible.

I could keep being patient. I could point out the negativity and ask what the cause of it is. One of them would explode if I did that. I could see them as a test. I'm still trying to figure it out.

If that's too sad, I'll leave with some laughs.

Comedian Tim Vine.

Comedian Milton Jones.

Have a good weekend.

Tentative Plans

Can I be honest a minute? This has been a long year. I've been tired a lot. Things have not always worked out the way I wanted them to. I've had times of discouragement and times when I laughed better than I have in years. Let's hope this coming year is better.

I've been feeling somewhat burned out and like I need to get away and do something relaxing or maybe nothing to recharge my batteries. I've been thinking a lot about a real vacation. If you're a praying person, that's something to put on your list. At least once. It would be more expensive than I can afford at the moment for what I'd like to do. I would need a financial break in some area. And then there's the problem of who to ask to go with me. I have two candidates in mind, a first choice and a second choice if the first one said no. I don't know either of them very well at all. The plan would be to do stuff during the day and have separate rooms at night. I have no idea if I could get along with either of them for a whole week. They're acquaintances. That's something else for your prayer list. At least once.

So, it's time I got some real book covers. I've painted for years, but that's not the same as illustration. I'm not sure I have the technical skills to do a great cover, but I know I could do something. My plan is to create a cover for the YA book and the mystery/romance. The mystery/romance is something I'd throw out under a pen name and see what happened. I'm not sure it works. If it failed, it failed. If it worked, groovy. I'd probably do another one.

Here's something else for the prayer list. :) A while back I started an Amazon store but didn't have enough cash for the right kind of inventory I needed. I sold a few things but ended up shutting it down from lack of inventory. I've been saving a little every month and have started thinking about starting a business, especially if book covers don't improve sales. Amazon is an option, but I'm thinking of other things such as a retail location or a restaurant. Initial funding would be problematic. I'm pretty limited in what I could do. I've mentioned Uber and Lyft recently. Those might be something to try short-term. I have other ideas, too.

Right now I'm trying to collect ideas for perhaps getting something started after the first of the year or possibly later, depending on what startup costs would be and what it is. Amazon would be faster, but it's not the best thing. Where I live is experiencing a lot of growth. A physical store might work very well at this time. I'm trying to think outside the box. I'll let you know more as things develop, if they do.

Have a great weekend.