Debt and Lottery tickets – Is this the answer?

It’s funny the way the mind works. We can convince ourselves that we are justified in buying $10 worth of lottery tickets each week when we are up to our eyeballs in debt. We say to ourselves that if we win big that all our debts will be wiped out in an instant. This type of logic is fundamentally flawed. Yet why do we persist?

I’ve often heard the lottery referred to as a tax on the poor. I couldn’t agree more. Why is it a tax on the poor? I think it has to do with the fact that it is poor people who have the most to gain if they win the lottery. If they win they can go from a place of zero wealth to a place of massive wealth overnight. The dream is that all their problems can be magically solved overnight. It is poor people who have the most to gain materially from a lottery win. It is this dream that spurs us all on to buy lottery tickets every week. Ironically it is the people who can least afford to play the lottery that plays it most often.

The lottery by its very nature plays on the hopes and dreams of people. It is very effective at this – without even trying. People just see all those millions and start dreaming about what they would do with all the money. I’ve done it. On numerous occasions, especially for the really large rollovers, I have found myself planning out my future with millions in the bank and to be honest I really enjoyed the feeling that yes it could be me that wins this time. Unfortunately it never is me. I won’t say that I have given up on winning the lottery but week after week it did feel like I was banging my head against a wall so I don’t play that often anymore.

From a debt management point of view it would be very easy of me to say that this money spent on lottery tickets would be better spent paying down your debts. The simple fact of the matter is that you know it is true. If you spent $10 a week on lottery tickets then that is $520 a year that could be spent on something more useful. Tell me – how much have you won on the lottery in the last year? Was it over $520? No? Really? You know deep down that the lottery is a waste of time and money. The choice is yours as always but I would ask you to consider cutting it out or certainly cutting it down and diverting those funds to paying off your debts. In the long run the returns will be much better from paying off your debts.

Now before we go on I want to make it clear that my first instinct for someone in debt is to cut out all the luxuries and in my opinion playing the lottery is a luxury. What I’m trying to point out is that playing the lottery is something that brings a little hope and although you know deep down that you are not going to win there is a strong emotional attachment to the ritual of checking the numbers. This ritual can make it hard for people to break the habit. You have to accept the responsibility for your actions and if you decide to continue playing the lottery then you need to live with the consequences.

Ok lecture over.

Now here is the interesting part. If you are determined to continue playing the lottery then you need to do something to increase your chances of winning. Currently the odds against you winning the lottery are astronomical. In reality there is no point in even playing. But yes I agree with the logic of “You gotta be in it to win it” and it gives you a glimmer of hope in what can be an otherwise bleak situation if you are in debt.

The goal here is not to spend more money on the lottery but to use the money you currently spend on the lottery in a more efficient manner. So what I suggest is that you either form a syndicate or join one. For those who don’t know what a syndicate is it is essentially a group of people who come together and pool their funds so that they increase their chances of winning.

If you compare the your chances of winning with your weekly $10 against a syndicate of 20 people each with $10 for a combined $200 in lottery tickets, you can see that the syndicate will have a better chance of winning. You might argue that if you win with your $10 on your own that wouldn’t have to share your win with anyone and you would be correct. In a syndicate the winnings are split among the members. My thinking on this is that there is a trade off to be had. You will win a smaller amount with a syndicate but you have a much better chance of winning (the odds against winning are still huge). For example 5% of $20m is better than 100% of nothing.

I’ve been part of a few lottery syndicates mostly at work and to be honest they are quite a lot of fun. Ok we never won big but we all had this common thing to talk and joke about. It certainly helped to liven up the atmosphere especially when there was a big rollover.

Syndicates are not without their problems. To start one up requires a bit of organizing. There needs to be rules in place that cover things like how much is played each week, who looks after collecting the cash, who is in charge of buying the tickets. You need to make it absolutely clear from the beginning what the rules of the syndicate are and if you are joining a syndicate make sure you know the rules. How often have you heard horror stories about people who didn’t pay up in time only for the syndicate to win big and they subsequently missed out? Don’t let it happen to you.

I know most of you were probably expecting me to mouth off about cutting your lottery out and reducing your debt. I suppose I had initially set out to write about that but then I realized that we are all adults and that we can make our own decisions and that you don’t need to be spoon fed. For me the lottery is a bit of fun. I don’t do it that often anymore and I’m no longer part of any syndicates. When I think back over the times that I have played it then I certainly had most fun when I was part of a syndicate. What I will say is that if you do decide to continue to play is keep it small and keep it real and if you want to increase your chances of winning then use the power of numbers and let other people share in the fun.

Related posts:

1. Are you lottery class?
2. The windfall mentality won’t get you out of debt