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Big winners share lessons, risks of Powerball win

The National Endowment for Financial Education estimates as many as 70 percent of windfalls are lost within several years.

ERIK S. LESSER /EPA

The National Endowment for Financial Education estimates as many as 70 percent of windfalls are lost within several years.

COLUMBIA, Mo. — So you just won the $550 million Powerball jackpot. Now what?

Past winners and financial planners have some advice: Stick to a budget, invest wisely, learn to say no, and be prepared to lose friends while on an emotional roller coaster of joy, anxiety, guilt, and distrust.

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‘‘I had to adapt to this new life,” said Sandra Hayes, 52, a former social worker who split a $224 million Powerball jackpot with a dozen co-workers in 2006, collecting in excess of $6 million after taxes.

‘‘I had to endure the greed and the need that people have, trying to get you to release your money to them. That caused a lot of emotional pain. These are people who you’ve loved deep down, and they’re turning into vampires.’’

The single mother kept her job for another month and paid off $100,000 in student loans and a $70,000 mortgage. She spent a week in Hawaii and bought a Lexus, but six years later still shops at discount stores and lives on a fixed income — albeit at a higher monthly allowance.

‘‘I know a lot of people who won the lottery and are broke today,’’ she said. ‘‘If you’re not disciplined, you will go broke.’’

Lottery agencies are keen to show off beaming prize-winners hugging oversize checks, but the tales of big winners who wind up in financial ruin, despair, or both are increasingly common.

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There’s the two-time New Jersey lottery winner who squandered $5.4 million. A West Virginia man who won $315 million a decade ago on Christmas later said it was to blame for his granddaughter’s fatal drug overdose, his divorce, hundreds of lawsuits, and an absence of true friends.

The National Endowment for Financial Education cautions those who receive a windfall — from lottery winnings, divorce settlements, cashed-out stock options, or inheritances — to plan for psychological as well as financial needs. The nonprofit estimates as many as 70 percent of people who land windfalls lose the money within several years.

‘‘Being able to manage your emotions before you do anything sudden is one of the biggest things,’’ said spokesman Paul Golden. “There’s this false belief that no matter what you do, you’re never going to worry about money again.’’

David Gehle, 59, who spent 20 years at a Nebraska meatpacking plant before he and seven ConAgra Foods co-workers won $365 million in 2006, used some of his winnings to travel. He left ConAgra three weeks after he won and now spends his time woodworking and playing racquetball, tennis, and golf. But most of his winnings are invested, and he waited for several years before buying a $450,000 home.

In the first year after he won, Michael Terpstra, 54, would awaken many nights in a panic. Was he late to work the night shift?

He was terrified he’d lose the money and have to return to work. So he lives carefully off the interest from conservative investments.

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