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Would You Accept Government Food Assistance If You Won The Lottery?

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Lucky Amanda Clayton, 24, recently won $1 million dollars from the Michigan State lottery. The interesting point about Amanda is that even after winning the lottery, she is still using her “Bridge Card” for food.  The Bridge Card is essentially a $200 a month state funded food program (food stamps) for people who have lost their jobs or fall under a certain income threshold.

When asked by a local reporter why she is still accepting food money from the government, she responded, “I thought that they would cut me off, but since they didn’t, I thought maybe it was OK because I’m not working.”



And when asked by the reporter whether she felt it was morally right to accept food money designated for low income people, she replied, “I feel that it’s OK because I mean, I have no income and I have bills to pay. I have two houses.

My initial reaction to the story was that of excitement for Amanda.  She was basically down and out, with no job and just won a million bucks!  Someone had to win the money, so it might as well have been someone most in need, rather than someone who is already rich right?  After all, a couple million people probably spent $2 in after-tax money to buy this particular lottery, thereby already helping fund the state once again!

A MILLION BUCKS IS NOT A MILLION BUCKS

The headlines say Amanda won $1 million dollars, but that is FAR from the case.  Amanda might have won $1 million gross if she accepted a graduated payment over a number of years.  Instead, she accepted a lump sum payment that reduced the total gross purse to $700,000.  If you slap on a 30% effective tax rate, Amanda is left with just $490,000 of her original “$1 million” lottery win!

$490,000 is still a lot of money no doubt.  However, $490,000 is still $510,000 less than $1 million!  In San Francisco, you can only buy a 800 square foot studio for $500,000!  Good thing Amanda lives in Michigan and bought her new house and car with cash!  So where the hell did the $510,000 go?  Back to the State Government of course!  When was the last time you paid a $510,000 tax bill?

WHY DO YOU CARE WHAT SHE DOES WITH HER MONEY?



There is a massive uproar over how Amanda has spent her winnings, and how she doesn’t feel morally wrong with continuing to legally accept $200 a month in food assistance from the government.  I understand the uproar, but how she spends her money is her own business.  It’s not like she put $500,000 down on a $2.5 million dollar house and now carries a $2 million mortgage.  Her two largest assets are 100% paid for!  How many people can say that?  Why are people so envious?

As Amanda said, she has no job, therefore she doesn’t have a steady stream of income.  Let’s say she spent $200,000 of her $490,000 already.  Her $290,000 sitting in the bank at a 0.5% interest generates her only $1,500 a year or only $125 a month.  Let’s say she invested all $300,000 in a 7-year CD at 2.25%, she’s still only receiving $6,750 a year in interest income.  $562/month is still not easy to live on, hence her decision to have a $200/month food supplement.

MORAL HIGH HORSE SMELLS

Yes, we should probably redirect the $200/month to families who need the food the most.  However, Amanda collecting $200/month even after receiving $500,000 is perfectly legal, and it’s not like she’s been collecting for years after she won the lottery.  She just won the lottery this year for goodness sakes!

I bet most people would keep on using their free $200/month food card if the money kept on coming in.  Amanda was just foolish enough to open her mouth on TV!



If you have paid tens, if not hundreds of thousands of dollars of taxes in your life, would finally getting back some money from the government in the form of a $200 / month food card be really that bad?  One could even argue that with no job, it would be financially irresponsible for her not to accept $200/month in supplemental income.

I fear that Amanda will spend all her money very quickly and be left with hardly any savings by the time she’s 30.  If this is the case, at least she owns her car and house free and clear.  Not bad.  Not bad at all.

Readers, would you accept government food assistance if you won the lottery?  I have a feeling all of you are going to say “no”. One of the main questions is, why not sell the old house and raise some more money?



Regards,

Sam

Related Post: “Millionaires Need Love Too You Know” is a case for letting millionaires collect unemployment.  I plan to make you a believer that we should not discriminate against rich or poor, given both rich and poor have paid into the system and deserve equal treatment!

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