How Not To Handle a Windfall

A reader sent me an email about this NY Times article Family's Fall from Affluence Is Swift and Hard
Its in the similar category of the Downsized TV show that I've been following.   I have episode #4 of Downsized waiting for me to watch it on the DVR at home.  

The NYT article is about the Martin family.   They had a large windfall twelve years ago and are now "broke" (more or less).  To me this story doesn't seem to really have too much to do with the recession and housing bust.   Mostly this is a story of a family that wasted a giant windfall by buying tons of stuff with apparently no real plan to support their lifestyle.

They got $14 million from their interest in the sale  of a family business.   After taxes they had $10 million left.


Here is a list of the things they bought with the dollar costs when known:

A house in England = ? $ unknown
1 horse = $173,000
2 other horses = $?
Mink coat = $7000
3.5 acres in Adirondack on Tupper lake  = $250,000
House in Vermont = $650,000
More money in Vermont property = $600,000
Building / remodeling of lake property = $5,300,000
Aston Martin car $395,000

Total amount spent accounted for $7,375,000

Not only that but they also apparently had mortgages of at least $1.1 million.   


It seems kind of obvious to me that if you have $10 million that you shouldn't spend most of it on 'stuff' without having a significant means of supporting yourself.   


I wonder how they thought they would support themselves if they spent all their millions?  They do talk that the husband wrote a novel which failed to sell.    So maybe they figured he'd have a lucrative writing career.    But they also mention him facing "margin calls" since he was tapping a credit line using his investments as collateral.   I'm guessing he had money in stocks and assumed he'd make enough off those to support their lifestyle. 


To their credit they don't seem to be making excuses.   Martin says "We spent too much".   And they have found work for relatively low paying jobs.   So its not as if they're just sitting in their lazy boy whining about how the world abused them.   Maybe they did have a realistic plan that would have worked out financially.   The article doesn't really talk about how they intended to fund their living.    But given how much they spent I don't see how they could have really fueled their lifestyle for very long.