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Would You Accept Government Food Assistance If You Won The Lottery?

Updated: 11/12/2018 by Financial Samurai 110 Comments

Lots of Cash MoneyLucky Amanda Clayton, 24, recently won $1 million dollars from the Michigan State lottery. The interesting point about Amanda is that even after winning the lottery, she is still using her “Bridge Card” for food.  The Bridge Card is essentially a $200 a month state funded food program (food stamps) for people who have lost their jobs or fall under a certain income threshold.

When asked by a local reporter why she is still accepting food money from the government, she responded, “I thought that they would cut me off, but since they didn’t, I thought maybe it was OK because I’m not working.”

And when asked by the reporter whether she felt it was morally right to accept food money designated for low income people, she replied, “I feel that it’s OK because I mean, I have no income and I have bills to pay. I have two houses.”

My initial reaction to the story was that of excitement for Amanda.  She was basically down and out, with no job and just won a million bucks!  Someone had to win the money, so it might as well have been someone most in need, rather than someone who is already rich right?  After all, a couple million people probably spent $2 in after-tax money to buy this particular lottery, thereby already helping fund the state once again!

A MILLION BUCKS IS NOT A MILLION BUCKS

The headlines say Amanda won $1 million dollars, but that is FAR from the case.  Amanda might have won $1 million gross if she accepted a graduated payment over a number of years.  Instead, she accepted a lump sum payment that reduced the total gross purse to $700,000.  If you slap on a 30% effective tax rate, Amanda is left with just $490,000 of her original “$1 million” lottery win!

$490,000 is still a lot of money no doubt.  However, $490,000 is still $510,000 less than $1 million!  In San Francisco, you can only buy a 800 square foot studio for $500,000!  Good thing Amanda lives in Michigan and bought her new house and car with cash!  So where the hell did the $510,000 go?  Back to the State Government of course!  When was the last time you paid a $510,000 tax bill?

WHY DO YOU CARE WHAT SHE DOES WITH HER MONEY?

There is a massive uproar over how Amanda has spent her winnings, and how she doesn’t feel morally wrong with continuing to legally accept $200 a month in food assistance from the government.  I understand the uproar, but how she spends her money is her own business.  It’s not like she put $500,000 down on a $2.5 million dollar house and now carries a $2 million mortgage.  Her two largest assets are 100% paid for!  How many people can say that?  Why are people so envious?

As Amanda said, she has no job, therefore she doesn’t have a steady stream of income.  Let’s say she spent $200,000 of her $490,000 already.  Her $290,000 sitting in the bank at a 0.5% interest generates her only $1,500 a year or only $125 a month.  Let’s say she invested all $300,000 in a 7-year CD at 2.25%, she’s still only receiving $6,750 a year in interest income.  $562/month is still not easy to live on, hence her decision to have a $200/month food supplement.

MORAL HIGH HORSE SMELLS

Yes, we should probably redirect the $200/month to families who need the food the most.  However, Amanda collecting $200/month even after receiving $500,000 is perfectly legal, and it’s not like she’s been collecting for years after she won the lottery.  She just won the lottery this year for goodness sakes!

I bet most people would keep on using their free $200/month food card if the money kept on coming in.  Amanda was just foolish enough to open her mouth on TV!

If you have paid tens, if not hundreds of thousands of dollars of taxes in your life, would finally getting back some money from the government in the form of a $200 / month food card be really that bad?  One could even argue that with no job, it would be financially irresponsible for her not to accept $200/month in supplemental income.

I fear that Amanda will spend all her money very quickly and be left with hardly any savings by the time she’s 30.  If this is the case, at least she owns her car and house free and clear.  Not bad.  Not bad at all.

Readers, would you accept government food assistance if you won the lottery?  I have a feeling all of you are going to say “no”. One of the main questions is, why not sell the old house and raise some more money?

Regards,

Sam

Related Post: “Millionaires Need Love Too You Know” is a case for letting millionaires collect unemployment.  I plan to make you a believer that we should not discriminate against rich or poor, given both rich and poor have paid into the system and deserve equal treatment!

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Filed Under: Big Government

Author Bio: I started Financial Samurai in 2009 to help people achieve financial freedom sooner. Financial Samurai is now one of the largest independently run personal finance sites with about one million visitors a month.

I spent 13 years working at Goldman Sachs and Credit Suisse. In 1999, I earned my BA from William & Mary and in 2006, I received my MBA from UC Berkeley.

In 2012, I left banking after negotiating a severance package worth over five years of living expenses. Today, I enjoy being a stay-at-home dad to two young children, playing tennis, and writing.

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Comments

  1. Paula Kenney says

    December 13, 2014 at 5:24 am

    First of all I am happy for Amanda winning the lottery. She was poor, and bought her houses and car. She must have felt wonderful to be free of debt, but after she spent on those items, she began to feel she would be poor again. She must have been accustomed to the life she was living before, and found it hard to give up her benefits after she won, but she was wrong not to report it, and is greedy. She bought two houses. She could have bought one house and one car, and have been grateful by reporting her winnings to the welfare department.

    Reply
    • Financial Samurai says

      December 13, 2014 at 5:53 am

      Unfortunately, Amanda died recently.

      Reply
  2. ap999 says

    May 31, 2013 at 6:53 am

    you are right about she has the right to do whatever she wants with her money. But she should of also been more responsible financially, maybe it would of been good for her to do some reading, read some financial blogs, books, get educated about money. Its great that she paid of her two biggest assets. But now she may barely have any money left. If i was her, I would of got caught up on all the loans payments, paid off any high interest loans and credit cards. Set aside the rest of the money for future home loan payments, and start looking for a job.

    Like some one else said before above. Now she has to worry about if she has enough money to pay property insurance, future utility bills, living expenses. This 500k could of been used better as great buffer instead while she looked for other ways to make money.

    Reply
  3. Jeff says

    March 15, 2012 at 6:04 pm

    Edit: There is proposed new legislation to require a cross-check between lottery winners and various assistance programs.

    Reply
  4. Jeff says

    March 15, 2012 at 6:04 pm

    What she did was illegal and she may be forced to pay it back.

    According to an article on Fox News:
    “The Michigan Department of Human Services (DHS) said Wednesday that the woman was no longer receiving benefits and warned that people who continued to receive handouts in such circumstances may face criminal investigation and be required to pay back those benefits.”

    Read more: https://www.foxnews.com/us/2012/03/08/michigan-woman-who-won-1m-lottery-but-kept-using-food-stamps-loses-benefits-141935620/#ixzz1pElcH1g6

    Under DHS policy, “a recipient of food assistance benefits must notify the state within 10 days of any asset or income change.”

    In addition, there was Michigan legislation requiring the lottery to disclose to DHS a list of winners to cross-check against people receiving assistance.

    Reply
  5. Allyson says

    March 12, 2012 at 6:28 am

    I find it completely shocking that both the sponsor of this site that calls itself “Honorable Personal Finance” and so many readers of “Honorable Personal Finance seem to think that welfare fraud is okay. The attitude seems to be “hey it’s free money, why not take it?” Sam even said that the only thing she did wrong was talk to the reporter. I ask you, where is the “honor” in welfare fraud? It’s a felony.

    Oh, by the way, I earn my living as a welfare fraud investigator for the State of Michigan.

    Reply
  6. Allyson says

    March 12, 2012 at 6:22 am

    @Shaun @ Money Cactus
    She was not eligible, as evidenced by the fact that her benefits were cut off the day after the story broke.

    Reply
  7. Don says

    March 11, 2012 at 3:25 pm

    Umm, if we’re paying for her to eat, why is she spending money on the lottery, and where is she getting that money to play the lottery?

    Amazing… As I shake my head and go eat a microwaved grilled cheese sandwich…

    Reply
  8. Ella says

    March 9, 2012 at 1:25 pm

    I think as long as she is eligible, she is entitled to it. The problem is that she is still eligible not that she is taking the money….

    Reply
  9. Kim @MoneyandRisk says

    March 9, 2012 at 11:17 am

    Just throwing this out there for consideration:

    Are you ok with taxpayer’s money supporting someone else who happens to have $300,000 sitting in the bank and 2 houses free and clear to get welfare and food stamps?

    What about if they had $2 Million in the bank and 2 houses?

    They would be in Amanda’s situation as well if they show no income. If it’s ok for her then it should be ok for them. They paid lots of taxes on income over the years too to accumulate those assets.

    Just an interesting tidbit. Another news source mentioned that she stayed on welfare as well but I don’t know how reliable that is.

    Reply
    • Financial Samurai says

      March 10, 2012 at 5:55 am

      Kim, I would not have a problem with it, so long as they don’t go on TV and boast about it. I do not know how much in taxes these examples have paid into the system, but probably A LOT, and way more than others.

      People have got to stop judging who gets to drink from the well or not. Nobody should begrudge someone who is poor whose paid 1/100th the amount of taxes to still collect benefits.

      Reply
  10. Orangee says

    March 9, 2012 at 10:51 am

    Is that Unemployment Benefits + Food Stamps + 2 houses? Wait she has one body does she really need 2 houses…people homeless out there.. How much does she rake in with unemployment and food stamps? Quite enough I’m sure, sounds like a spoiled situation and I don’t think she needs it. I don’t think I’ll see $450K in cash in my life!

    Reply
    • Financial Samurai says

      March 10, 2012 at 5:52 am

      Snapshot in time. I’m sure she will logically try and rent/sell her first house, although she probably should have done that before buying the 2nd house!

      Reply
      • Kris @ Everyday Tips says

        March 13, 2012 at 8:21 pm

        Why should she have tried to sell her house first? She had a nice full bank account and free groceries! What is the impetus to do what makes sense??

        Reply
  11. David M says

    March 9, 2012 at 10:11 am

    You know what I’m fearful of means testing Social Security benefits – if you don’t need it you should not get it!

    Well the reason I might not “need it” is because I saved a good portion of my salary. So if you means test Social Security – I get penalized for saving/investing and the person who spent all his/her income gets to keep their social security!!!

    Reply
    • Financial Samurai says

      March 10, 2012 at 5:51 am

      Yes, this is the case AGAINST discrimination based on wealth/income.

      Why should we punish people who saved and invested diligently, and paid taxes into the system? That’s just nuts!

      Reply
      • Kris @ Everyday Tips says

        March 10, 2012 at 6:16 am

        This is way I shake my head about those that get angry that millionaires receive social security benefits. Chances are, those very people contributed the max each and every year to social security. Why in the world shouldn’t they get their own money back?

        Reply
        • Financial Samurai says

          March 10, 2012 at 6:34 am

          Indeed! Unemployment benefits is capped at $1,800 a month in San Francisco, if you make at least $44,000 a year or so. But, if you’ve been making $500,000 a year, you don’t get 10X the unemployment benefits, yet you are paying way more than 10X the taxes.

          Hence, why are people so up in arms? The rich aren’t going to get $18,000/month in UI!

          Reply
        • Don says

          March 11, 2012 at 3:30 pm

          Doh, I used the same “shake my head” visualization down in my comment too. Honest I didn’t steal yours Kris!!!

          I totally agree with you Kris, social security benefits aren’t some welfare taxes to support everbody else that isn’t rich, that not what the program is for.

          Reply
  12. David M says

    March 9, 2012 at 9:57 am

    Amen! We Americans love to be mad at people/situations!

    Reply
  13. Travis says

    March 9, 2012 at 9:09 am

    So, if you have the means to be able to provide for yourself and family, why then is it ok to ask for a government handout but not ok to go to a charity or church and ask for one? We don’t blame the charity when someone scams them, why are we blaming the government? What happened to individual responsibility? Just because it’s not illegal doesn’t mean it’s not wrong.

    Reply
    • Financial Samurai says

      March 10, 2012 at 5:50 am

      It’s a snapshot in time. Let’s see what happens in a follow up.

      Reply
  14. Tim Grinder says

    March 9, 2012 at 8:50 am

    these “safety net” programs should be just that, a safety net.

    Reply
  15. Financial Samurai says

    March 9, 2012 at 7:19 am

    We just don’t know what she is actively doing. The reporter already painted her as an evil person, despite this just being a snapshot in time.

    Reply
    • Super Frugalette says

      March 11, 2012 at 8:17 pm

      At first I was very hostile toward Amanda. Yes, the truth is that we do not really know her situation. Why does she not have a job? Is she pursuing a degree? Is she uneducated and cannot find work greater than minimum wage? Is she in a career change, etc?

      I believe the state of Michigan makes the assumption that if you win the lottery, you can plan accordingly. You should be able to utilize the money to pay for food, clothing and shelter. Thus, with this assumption, and Amanda purchasing lottery tickets, she understood that she that she would be responsible for providing for herself and not using state benefits.

      Reply
  16. Financial Samurai says

    March 9, 2012 at 7:13 am

    The first thing I would do with a $490,000 after tax windfall is … NOTHING! Let it sit in the bank for 30 days before taking one cent out.

    Reply
  17. jesort415 says

    March 9, 2012 at 6:53 am

    How is this possible??!! In lovely New Jersey I have a family member who was recieving SSI for her Autistic son. As soon as SSA found out they had $1.00 over the 3000.00 they were allowed to have by SSA guidelines they cut them off. Forget the fact that one spouse lost half their income to a cut in hours, that literal $1.00 made them ineligible. Of course now they spent that 1.00 and have to reapply for SSI. The rep. said it was a welfare based program so having savings means you don’t need help.

    Reply
    • Financial Samurai says

      March 9, 2012 at 7:24 am

      Wow, now THAT is messed up and bullshit by the government!! $3,000 is such a low hurdle, that’s nuts!!

      Reply
    • Kris @ Everyday Tips says

      March 9, 2012 at 7:41 am

      The entire public assistance system is screwed. I want all the Amandas of the world to be caught so more resources can go to people that really need it.

      Reply
      • jesort415 says

        March 9, 2012 at 8:52 am

        Awww to make matters worse….she just texted me they want her to pay back the money they gave her before that 1.00 mess because they found she had an account she didn’t report with a whopping 2.13 from an old passbook account she thought was empty and closed in 1999. Now she owes SSA 4100.00. OH and that 1.00 that started this mess….it went with it’s 3000 brothers to local thift shops to replace the clothes, toys, furniture lost when their house flooded during Hurricane Irene (for 5 people) days after her SSI case closed.
        Yet I have another family member on Section 8, living in a mcmansion because she married in to a rich although corrupt family so the house is in FILs name & he just takes whatever S* gives him as rent. He paid her 10k+ bill to do IVF after welfare/medicaid paid for her tubes to be tied after she had 5 kids with 5 different men. Guess who paid all the medical bills for the pregnancy..Yup welfare. She has never reported her husbands wages (probably cause he works when he wants for daddy and is paid under the table). Yet because she has no income that can be traced she gets away with it!!!

        Reply
        • Financial Samurai says

          March 10, 2012 at 5:49 am

          Do we envy her or feel sorry for her? I’m not sure I follow your line of reasoning. thx

          Reply
      • Kris @ Everyday Tips says

        March 10, 2012 at 6:19 am

        What polar opposite situations, both of them very wrong.

        Reply
  18. Tim Grinder says

    March 9, 2012 at 6:48 am

    @Dave Hilton
    Dave, using your logic would you still find it acceptable if Amanda had won 300 million in the lottery and still chose to collect food stamps?

    Reply
    • Financial Samurai says

      March 9, 2012 at 7:23 am

      Sure, why not. If someone won a $300 million lottery, they will have paid close to $130,000,000 in taxes!

      However, if that was the case, of course that person isn’t going to be using that $200 Bridge Card anymore!

      Reply
      • Tim Grinder says

        March 9, 2012 at 8:38 am

        Ouch! this country is in deeper trouble than I thought.

        Reply
        • Financial Samurai says

          March 10, 2012 at 5:48 am

          That’s why it’s 4 more years baby!

          Reply
  19. wanda says

    March 9, 2012 at 6:48 am

    Well the truth of the matter is When she won the money she should not have excepted the food stamps.However how can you blame her when our own government let her get by with it the whole system is screwed up anyway they are not fair to the elderly people who mostly get $10. amonth then you have people who have found out the more kids you have the more food stamps and assistance you get. and everybody knows it. the programs that were intended to help the poor people are so widely abused and no one cares.

    Reply
  20. Kris @ Everyday Tips says

    March 9, 2012 at 6:22 am

    Ironically, I wrote about this today and I hadn’t even come across this post yet. (I haven’t been on the computer in a week, I have a lot of catching up to do.)

    I agree, Amanda will be back public assistance in record time. Legislation will eventually pass that wills top this type of scam anyway.

    What got me angriest was her attitude of ‘yeah, I deserve it, I have bills to pay’ instead of actually having some pride and wanting off the government’s payroll. She was caught using the bridge card, plain and simple, and it is long gone now because of the story.

    Reply
    • Financial Samurai says

      March 9, 2012 at 7:22 am

      She was caught off guard, and already demonized by the media before she had a chance. I bet she would speak totally differently in a normal setting.

      At least the money went to jobless Amanda, instead of somebody who has a big bucks job and doesn’t need it!

      Reply
      • Kris @ Everyday Tips says

        March 9, 2012 at 7:38 am

        If you aren’t doing anything wrong, then being caught ‘off-guard’ shouldn’t be a problem. I think the interview happened before the demonizing even happened. Obviously someone close to her had a problem with it because the tip had to come froms somewhere.

        She is 24 years old, not 16. I know that 24 is not old per se, but it should be old enough to know better. Believe me, I could have grown up to become an ‘Amanda’, but I chose a different path instead.

        And, I hope that anyone that has ‘big bucks’ and is receiving my tax dollars is caught as well.

        Reply
        • Financial Samurai says

          March 9, 2012 at 7:44 am

          So let me ask you this:

          Situation 1: You paid $200,000 in income taxes in 2011 and lose your job through no fault of your own today. You are eligible for $1,800 a month in unemployment benefits that you and your employer paid into. Is it not acceptable?

          Situation 2: You have a family of 2 kids and make $80,000 a year in Michigan. You have a fully paid off house and can save 10% of your after tax income. Is it OK to collect $2,000 a year in tax credit from the government, while your neigbhor, who makes $100,000 a year cannot?

          Reply
        • Everyday Tips says

          March 9, 2012 at 10:23 am

          Not sure what you mean in the first question. Are you implying that I have a bunch of money saved up because I made a good salary and therefore should not need the unemployment? Assuming that is what you mean, then yes, I should still be eligible for unemployment because I do not have INCOME. However, lottery winnings are income. (Yes, I know, there is a flaw in that Human Svcs does not list lottery winnings as reportable income, although I am guessing because it is such a rare occurrence. I am guessing that too will change at some point.)

          Situation 2: I can’t even answer about the specifics for taxes because I think the tax code is so screwed up. However, I am assuming your point is that she is doing what the government allows her to do, just like the tax code does. HOWEVER, getting 500k is a lot different than making 80k and being able to save 8k a year. Let’s say Amanda has the 300k after paying off her house. It takes that one family almost 40 years to have the same level of savings as Amanda.

          Reply
        • Financial Samurai says

          March 10, 2012 at 5:48 am

          First question is to help illustrate that just like a big income earner who pays a lot of taxes, Amanda also had a good windfall year and paid roughly $510,000 in taxes to the government. That money is used to fund public services.

          Second situation illustrates why we find it OK for one group to collect $2,000/year b/c they have kids, and not allow another group to collect just b/c they make $20,000 more? We should discriminate equally, or simply treat everyone equally imo.

          Reply
        • Kris @ Everyday Tips says

          March 10, 2012 at 6:14 am

          To me, Amanda’s payout of 1 mil is no different than if someone got a huge bonus one year. It is income. Just because someone pays taxes once doesn’t mean they are now entitled to milk the system for all they can. (I predict she will be a future milker anyway, as are many lottery winners that end up bankrupt and such.)

          I can’t even discuss tax laws because there are a million different variables, and many people are treated unfairly one way or another. Bring me some flat tax I say!

          Bottom line is this: Our system is flawed period. Had the system just stopped payments in the first place like logic says should happen, then none of this would have happened. In cases like that, I would hope that ‘doing the right thing’ would prevail. In my opinion, that did not happen. However, you and others may disagree, that is fine. I really believe if I had a windfall of that magnitude, I would have been calling the state or whoever and tried to figure out how to stop the bridge card payments, or I just wouldn’t use the card. I have seen so much abuse of the system that I guess it is something I feel very strongly about.

          Reply
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