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Couple nickel-and-dime it after their lottery windfall
The Times-Picayune ^ | May 8, 2002 | By MARY JUDICE / The Times-Picayune

Posted on 05/08/2002 7:52:14 AM PDT by MeekOneGOP


Couple nickel-and-dime it after their lottery windfall

Financial security a foremost concern, despite win of millions

05/08/2002

By MARY JUDICE / The Times-Picayune

NEW ORLEANS - Since winning the $48.1 million Powerball jackpot last month, Jerry Berggren of Kenner, La., has come to know the upside and some of the downside of becoming an instant millionaire.

There's the new fishing boat he'll soon have at his back door and the wedding cruise he and fiancee Cathy DeMuynck will take to Alaska with friends and family. Mr. Berggren immediately gave up his business as an appliance repairman. Ms. DeMuynck, a customer service representative with an international transportation company, left her job and has traded up to a luxury SUV.

But Mr. Berggren is fast learning the downside of his newfound wealth. Total strangers approach him with hard-luck stories. And he has been offered ludicrous investment offers, like the Gulf of Mexico oil and gas well someone wants him to finance.

Mr. Berggren and Ms. DeMuynck are trying to manage the money the largest Powerball jackpot won in Louisiana carefully. They know how easy it can be to get caught up in the excitement of winning.

There have been enough instant millionaires as a result of lottery winnings during the last few years to cause television programs and authors to pounce on the subject of how winners manage or don't manage their riches. Ms. DeMuynck remembers hearing that a haunting 90 percent of lottery winners have gone through their money in seven to 10 years.

Psychologists have even weighed in on the subject. Psychotherapist Olivia Mellan of Washington said: "It's like being shot through with too much energy. It makes them ungrounded."

Sudden wealth makes fantasies go wild, and some people come to believe money equals freedom and power, Ms. Mellan said.

Her advice: Don't make any decisions quickly.

Winners need to sort out what money can do for them then set goals, short and long term, she said. And they need to take things slowly, perhaps reviewing goals more than once before deciding to stick with them, said Ms. Mellan, who is the author of Money Harmony.

That's exactly what Mr. Berggren and Ms. DeMuynck are doing. One of their first calls after learning of their win was to their financial planner, James Ewing, who is in the process of deciding how to invest the couple's jackpot.

Mr. Ewing's first piece of advice was to take the millions they had won as a lump sum of $17.9 million instead of in annual payments.

If they had taken the annual payments they would have gotten about $1.2 million a year, after taxes, for 25 years. Mr. Ewing did a series of calculations and figured they would do better having the lump sum and investing it. They could earn interest and see that interest compound year after year, he said, and the interest earned would make up the difference in the payment amounts.

The stream of annual payments over more than two decades would not produce such an opportunity to accumulate wealth.

Also, if the recipient dies before the payouts have concluded, the estate owes taxes on the remaining portion in a matter of months after the estate is settled, which would produce a huge burden for heirs.

Another reason they wanted to take a lump sum payment was so that they could make gifts to friends and family members.

Taking all of the money up front gave Mr. Berggren and Ms. DeMuynck an all-too-close look at just how much goes to Uncle Sam.

Because of the huge income they will report this year, they have been thrust into a higher tax bracket, which will cost them an additional $2.9 million in federal taxes.

"We ended up with less than a third, and they want more money," Mr. Berggren said. "It's deceiving how much you take home."

Mr. Ewing favors investing in tax-exempt bonds because of the couple's tax situation and their desire not to select risky investment. He has also gotten involved in such decisions as the best way to handle the auto purchases they have made.

Mr. Ewing earns his keep 0.75 percent to 1.5 percent on what the couple has invested, with the rate going down for larger portfolios.

The Kenner couple has been generous with family and friends. But the gifts come with a string attached. They know that not everyone knows how to manage money, and they want their beneficiaries to enjoy their gift for many years.

Ms. DeMuynck is no stranger to financial planning. Several years ago when her father died, she was left to manage a business and an inheritance and she had no family to turn to. She was trying to run the business long distance, had inherited investments she did not understand and had mutual funds that she did not know whether to keep or sell.

Ms. DeMuynck said she thought, "This has to last me the rest of my life." So she got help and now relies on the assistance of Mr. Ewing and an accountant.

For now, the couple are doing much of what they used to do. There are lots of phone calls to return, and they're finishing up old business. At one time they had mounds of laundry to do after the busy but exhilarating first days after their win.

As someone who grew up in a tough New Orleans neighborhood, Mr. Berggren is proud of his street smarts and doesn't plan to let down his guard now that he's a Powerball winner.

They're still using two-for-one dinner coupons and shopping at Big Lots and the Dollar Store.

A couple of weeks ago, when Ms. DeMuynck turned in a car obtained through a lease-purchase agreement to trade up to the SUV, she called to find out how much it would cost to terminate the lease and was ready to pay. When the dealer added another $250, she argued that she had an agreed-upon price and had been a good customer. The firm backed down.

The couple has been gambling on the Gulf Coast and recently traveled to a crawfish boil cook-off in Kiln, Miss.

Just for fun, though, they called Mr. Ewing after a recent fishing trip to find out how much they had made on the stock market while out catching red fish. It amounted to more than most people earn in a week.

Distributed by The Associated Press


Online at: http://www.dallasnews.com/texassouthwest/stories/050802dntexlawinners.4fa0b.html


TOPICS: Crime/Corruption; Culture/Society; News/Current Events; US: Louisiana
KEYWORDS: lifestyle; lotterywinners; moneymanagement; ripoffartists
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Jerry Berggren hugged fiancee Cathy DeMuynck
after a news conference in Baton Rouge. La.,
Tuesday announced he had won the $48 million
Powerball jackpot. (AP Photo)

1 posted on 05/08/2002 7:52:15 AM PDT by MeekOneGOP
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To: MeeknMing
Me thinks he should make a sound investment in a new 'piece'
2 posted on 05/08/2002 8:08:27 AM PDT by Phantom Lord
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To: MeeknMing
They're still using two-for-one dinner coupons and shopping at Big Lots and the Dollar Store.

This warms my inveterate cheapskate heart.

3 posted on 05/08/2002 8:14:46 AM PDT by VoiceOfBruck
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To: MeeknMing
Well, at least they are "mature." Will be interesting to compare them to the 20 year old gal who won - a few years from now.
4 posted on 05/08/2002 8:19:00 AM PDT by goodnesswins
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To: Phantom Lord
January 2, 2003 -- $ 48 million Powerball Lottery winner Jerry Berggren of Kenner, LA, has split from his former fiancee, Cathy DeMuynck, citing "irreconcilable differences." Ms. DeMuynck has hired noted palimony attorney Dewey Cheatem... developing...
5 posted on 05/08/2002 8:23:01 AM PDT by pabianice
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To: MeeknMing
They're still using two-for-one dinner coupons and shopping at Big Lots and the Dollar Store.

This brings back some memories (on a much smaller scale)of the time when I was just out of college. I landed my first teaching job but still could not get out of my college shopping mode at the Salvation Army. Finally, my boyfriend told me that I was earning money now and could shop and buy new clothes.

6 posted on 05/08/2002 8:35:19 AM PDT by Boxsford
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To: Phantom Lord
:O) I wasn't gonna go there! LOL......
7 posted on 05/08/2002 8:37:40 AM PDT by MeekOneGOP
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To: MeeknMing
Just to be clear, I was taking about his hair, not his women. His hair does not appear to be his own.
8 posted on 05/08/2002 8:39:00 AM PDT by Phantom Lord
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To: MeeknMing
and some people come to believe money equals freedom and power,

Yes, they learn the truth.

9 posted on 05/08/2002 8:43:24 AM PDT by StriperSniper
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To: Phantom Lord
To be fair, I think that picture was taken before he had collected any money. I'm sure by now he can afford a "toup" as good as Sam Donaldson's.
10 posted on 05/08/2002 8:45:24 AM PDT by Wolfie
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To: Phantom Lord
Ok, got it! :O)
11 posted on 05/08/2002 8:48:56 AM PDT by MeekOneGOP
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To: MeeknMing
I'd blow the whole pot in 5 years, and be glad I did.

Winners always say "We arn't going to let it change our lives", but it already has. They are being interviewed by the press, that is a big change.

You know how, at Jiffy Lube, the greasy kid comes into the waiting room with your air filter, recommending that it be changed? You say to him "nope, just blow it out with air, and put it back in the car". If I won the lottery, I go for the new air filter, too.

I read in interesting quote from previous lottery winners who shared their winnings with relatives. No matter how much they gave to their relatives, it wasn't enough. If they bought a $100,000 home for the relative, the relative would eventually say "it could have been a bigger (more expensive) house. Still, if I won, I'd share. Probably set up a trust fund for the grandkids and great grand kids to go to college.

12 posted on 05/08/2002 8:57:20 AM PDT by Lokibob
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To: goodnesswins
Boortz has predicted she will be living in a rented double-wide and driving a bondoed Camero in 10 year. . . .
13 posted on 05/08/2002 9:09:31 AM PDT by FreedomPoster
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To: Lokibob
Wealth demands responsibility, else it goes its' own merry way.....

Not speaking from direct experience, mind you! Never had that opportunity (yet). :O)

14 posted on 05/08/2002 9:15:11 AM PDT by MeekOneGOP
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To: FreedomPoster
From what I understand, a large number of lottery winners blow the whole thing and declare BK in a few years. True or Flase? I don't know. Never read a study on it, but i have heard it bandied about for a long time.
15 posted on 05/08/2002 9:18:52 AM PDT by Phantom Lord
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To: MeeknMing
Some conservative folks I have talked to believe that if you gave every poor person 1 million dollars they would be broke again within the year.
16 posted on 05/08/2002 9:26:26 AM PDT by VRWC_minion
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To: VRWC_minion
They would be. With very few exceptions, poor people are poor because they make bad decisions. Giving them a million bucks would not change this.

After blowing all their money on the full line of NASCAR models and velvet Elvis paintings they would be right back where they were before the money.

17 posted on 05/08/2002 9:30:25 AM PDT by Phantom Lord
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To: VRWC_minion
I wouldn't say 'all' of them.

But I would say 'over 50%'.

18 posted on 05/08/2002 9:32:25 AM PDT by Psycho_Bunny
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To: Phantom Lord
Me thinks he should make a sound investment in a new 'piece

Just to be clear, I was taking about his hair, not his women. His hair does not appear to be his own.

LOL! I guess we're all over the map on this one, I thought you meant a new GUN!

19 posted on 05/08/2002 9:38:55 AM PDT by Marie Antoinette
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To: VRWC_minion
That's easy. People do things to make them either poor or rich. That won't change if money falls in their lap. It doesn't change their (poor) decision making process.
20 posted on 05/08/2002 9:40:54 AM PDT by Wyatt's Torch
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