Powerball and Lotteries - throwing away your money
Powerball and state lotteries are a good way to say goodbye to your hard earned money. That's why they aren't part of my approach to frugal living. I suggest you save money instead by avoiding these government run pitfalls.
I'll give you a handful of good reasons to avoid the lottery craze, but it's up to you to stay away from it and save money. I can only point out the drawbacks here; you have to incorporate that information into your system of beliefs so you can act in your best interest.
Let's take a close look at what a lottery is, and how you win it. Then let's look at why you shouldn't get involved. There are more reasons than just to save money, but the basic idea of saving money should be good enough.
Whether it's powerball or one of the state lotteries, they all operate about the same way; you pick numbers in the hopes of matching the numbers drawn. Let's use California as an example in this discussion; it's one of the oldest and largest lotteries in the nation.
What is a Lottery?
A lottery is gambling where you arbitrarily pick numbers in hopes of matching what the state has selected randomly. It is an activity that requires no brains, no skill and no planning - just dumb luck.
Your odds of winning are incredibly low, yet there's lots of excitement generated by the lottery because of all the hype and hope associated with the activity.
Powerball and other lotteries are a "numbers game". "Playing numbers" is a common form of illegal gambling that your local vice squad spends a lot of time monitoring. Now, the state has made it legal, but only if you play the state's game to make them money. Otherwise you're still breaking the law.
Do You Really Think You Can Win?
Figuring out the odds of winning at powerball or a state lottery requires at least a basic knowledge of a math discipline known as combinations. It's something I learned in high school.
Take a good look at the math of combinations and see how the odds advertised in the California lottery just don't stack up. I sent a request to the lottery in California asking how they calculate odds. I'll post their reply if I ever get one.
The tomfoolery of the California State lottery can be seen in the following examples:
California's Fantasy 5 game - The Better Odds Lottery Game - boasts of odds of winning the jackpot to be 1 in 575,757, but my math shows the odds to be 1 in 6,909,840.
The name "fantasy" is probably the most truth in advertising you're ever going to see anywhere.
The Mega Millions game claims that your odds of winning the jackpot are 1 in 3,904,701. My math shows the chances of you winning to be more along the lines of 1 in 458,377,920.
Mega Millions brags about having nine ways to win. One way is to pick the Mega number only. We're told the odds of winning is 1 in 75. My math shows the odds are 1 in 164,490,480.
What do you think of powerball and state lotteries now? I think they are a great place to save money if you just stand there and watch others buy the tickets.
Why are Powerball/Lotteries a Bad Idea?
Let's look at the many reasons why you should save money by not playing powerball or any other lottery. Fair warning, lots of political commentary rapidly approaching in this section.
Do as I say and not as I do. The state can have a numbers game, but otherwise it's illegal. How does that make any sense? Gambling on numbers is illegal unless you play the state's game by their rules? Yeah right!
"Numbers games" are supposed to "hurt the poor" and ruin people's lives. Now, many states have decided that in the interest of raising more money, it's OK to "hurt the poor" and ruin people's lives.
Was it all a fib, or were we just mistaken all along about gambling? It was a fib, because "numbers games" are still illegal, while the states' "numbers games" aren't, and the players for both are still the same.
It's not the role of government. If you can't imagine state employees dealing you cards, serving you drinks, or checking you in at the state run casino, then you'll probably agree with me that the state has no business running a gambling operation like powerball or the lottery.
There isn't a competing operation allowed by law. The state has a monopoly on the "numbers game", and law enforcement sees to that. Competition is good. It lowers prices and raises quality, but the government has never been fond of that because it is always a threat to their empire.
For the benefit of all citizens that pay taxes, there should be a private sector equivalent for many government services. The reason there often isn't, when it comes to a lottery, is because state lotteries are so lucrative.
Why obtain just a small portion of wealth in taxed income and let a private enterprise rake in all the dough, when state lotteries can suck all the money into the government coffers for our "leaders" to spend?
Why give even more money to the government? The state takes money from you in many ways. You pay sales tax, property tax, income tax, registration fees, service fees, and the list goes on and on. The government consumes wealth, it doesn't create it.
Why would you want to give government more money in the form of lottery tickets, just for the hope of winning some of it back? Someone said: Money to the government is like heroin to a junkie, the more you give it, the more it will continue to demand. Save money and do your part to starve the junkie.
Are you aware that California only pays out about half of what they take in? Whether you take a lump sum or a payment over time, they only pay about half of the money in winnings.
Think of all the billions they should have amassed over the years, and all the interest they should have accumulated by investing that money. But, they haven't. They're broke, despite all the billions of dollars taken in by the lottery.
Powerball and state lotteries play on hope. We always hope that tomorrow is better than today, next year will be better than this year, and our new marriage will be better than the one we just got out of. Hope is what keeps human kind going from one day to the next.
A lottery plays on hope. "Let's just play one more set of numbers with the hope (and unrealistic expectation) that we will win big".
The greatest drawback in this area is that people replace job related initiative and enthusiasm, and interest in running their own enterprise, with the hope of winning at powerball or the lottery. If you save your money, you can invest it in something that is much more of a sure thing - your own enterprise.
Powerball isn't your financial future. Your financial future will be found in initiative for starting a business, and your own sense of frugality.
The odds are all stacked against you. No matter what they advertise, you have almost a zero chance of winning big. Indeed someone wins eventually, but the jackpot is based on sales, so fewer players means a smaller jackpot.
And, many times no one wins the jackpot. The jackpot may roll over and over numerous times, with no winner. Nevertheless, people keep playing in hopes of being the winner that is "one out of a million" (actually, the odds are way worse than that, as shown above).
If you want to see what state lotteries are claiming with respect to odds, search for yourself.
The money earned is wasted. California went into the lottery business in 1984 with the idea that about a third of the money earned was going to be set aside for supplemental funding of education. That's what the voters were told. Education was selected as the focal point for the sales pitch because we're a sucker for anything that we think might benefit our children.
If you believe anything you read, the California of today (2008) is broke. It's in debt. They're contemplating early release of prisoners so they don't have to pay to keep them locked up. What an inappropriate way to save money.
So what happened to all the money that California should have been stashing away? Gone. Gone with the rest of the money that the California government was suppose to use wisely. No sense in giving them any more. You work too hard for it to give it to the government by playing powerball or other lottery games.
It creates more government. To run powerball or any other lottery, you need a lottery commission. You need an organization to administer the lottery. You need an independent organization behind the scenes to make certain that things are on the level. You need an outfit to audit the lottery.
That's just a lot of layers of government that we don't need. We need better government, not more government.
I'm off of my soap box now, so just put your money back in your pocket, resume frugal living, and leave powerball and the state lotteries to others that have money to throw away. Your job is to save money for something that is worthwhile.
There certainly is a broad scope of topics here at Frugal Living Freedom. When you think about it, money permeates so very many activities in our lives, therefore, being frugal encompasses a wide range of interests, from being employed to taking a vacation, and just about everything in between. Enjoy the variety, pick up some new ideas, and start making frugality a part of your signature.
I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.
If you ever hope to see an abundance of wealth, you need to plug the hole in your boat. The wealthy don't necessarily make lots of money, instead, they know how to hang onto what they make, and make it work for them.