January 16, 2014 – There’s no shortage of stories about people blowing large sums of money in a short period of time with little or nothing to show for it.

Professional athletes.  Rock stars.  Movie stars.  Everyday people.

While the high profile celebrity-types (who people generally don’t feel sorry for) are the ones who usually make the papers, sometimes it takes an extreme case with criminal implications to illustrate the underlying risks that accompany windfall sums of money.

And when the person is poor and disabled, we get angry.

Take the story of Malcolm Ramsey, a mentally incompetent St. Petersburg, Florida man living in an assisted living facility on government aid.  Winner of a $500 per week for life lottery prize, Ramsey chose the lump sum over the cash flow and managed to spend $170,000 – more than half of his after-tax net – within a few weeks.

This story did make the paper because so many unconscionable circumstances surround it.  Special thanks to my friend, colleague and lottery winnings expert Don McNay for calling my attention to this sad story.

But many less sad stories that don’t make the papers still involve the same ugly truths about windfall sums of money highlighted by this article:

“Friends” and relatives always seem to show up with their hands out

With so many consumer goods available for purchase, it’s virtually impossible to spend any amount of money too fast

There’s no substitute for professional guidance from someone who understands the problems windfall sums of money can cause

Several times a week, I am involved in situations where people have a choice between receiving a large sum of cash or guaranteed future cash flows tailored to their individual needs.

So many times they choose cash.

While there are seemingly many good reasons to choose cash, statistics from the National Endowment for Financial Education remind us:

“It is estimated that 70% of all people who suddenly receive large amounts of money will lose that money within a few years.”

People who structure some of their settlement proceeds over time CAN’T spend all their money in a few years.

Lottery winners who chose $500 a week for life over cash can’t either.

Given Malcolm Ramsey’s legal capacity issues, it’s hard to lay any fault at his feet.

But hopefully everyone else sees the irony in this story:  Windfall cash is the real gamble.