What started as a quick stop at a local gas station quickly turned into a huge financial windfall for one Chicago couple.
On a recent episode of The Ramsey Show [1], a woman named Sarah called in with life-changing news: she and her husband had won $1 million from a scratch-off lottery ticket.
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“We’re still in shock,” admitted Sarah, who — along with her husband — opted for the lump sum payout of $600,000.
After expressing their excitement for Sarah and asking a few questions, co-hosts Dave Ramsey and Ken Coleman didn’t waste time delivering some advice. And their message was clear: before spending a single cent, call a tax professional first.
Here are the steps that Ramsey and Coleman suggest Sarah should take with her winnings.
Step 1: Figure out the taxes
In Illinois, lottery winnings aren’t as straightforward as the big number on the ticket would suggest, as both federal and state taxes apply.
With federal withholding, 24% is immediately deducted on winnings over $5,000 [2]. And when it comes to state taxes, Illinois imposes a flat 4.95% income tax [3]. On a $600,000 lump sum, that’s about $144,000 in federal taxes and $29,700 to the state, leaving roughly $426,300 after automatic withholdings.
However, depending on the couple’s income bracket, this windfall means they could owe more to the IRS when they file their taxes. That’s why Ramsey warned Sarah not to rely solely on the numbers provided by state lottery officials.
“The first thing we’re going to do is get a tax professional,” said Ramsey. “It’s going to be worth a thousand dollars, or whatever it is, five hundred bucks, to get some professional tax advice. That’s the first thing you do.”
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Step 2: Pay off high-interest debt
As Sarah explained on the show, her plan is to clear her and her husband’s debt after paying the taxes.
"I like those plans," said Ramsey. "Those are good plans."
Sarah and her husband have about $23,000 in credit card debt, as well as a mortgage with around $100,000 remaining. With their cars paid off and a modest household income of around $90,000 a year, the couple would be wise to eliminate high-interest consumer debt immediately.
This means the credit card debt should come first. The average interest rate on credit cards in the U.S. is 25.35% [4], which make this kind of debt a costly drag on building wealth. Next up should be the mortgage.
Step 3: Invest for long-term growth
The couple’s next step should be to make the remaining money work for them, and Ramsey suggested consulting with a financial advisor to craft an investment plan tailored to Sarah’s and her husband’s needs.
For a couple in their early 40s, Sarah and her husband likely have many working years left before they retire. With this in mind, their investment plan should focus on long-term growth potential through a strategic allocation of stocks and bonds.
According to T. Rowe Price Group, Americans in their 40s should allocate 80%-100% of their investments to stocks, while investing 0%-20% of their portfolio in bonds [5]. Stocks offer the opportunity for greater long-term returns compared with bonds, though stocks also come with greater risk.
This is why it’s important for Sarah and her husband to consult a financial advisor who can help them strategize their investments appropriately. Financial planners also encourage maximizing tax-advantaged accounts [6], such as a Roth IRA or 401(k), before investing in taxable brokerage accounts.
By sticking to a disciplined plan, even a conservative portfolio can grow significantly.
Step 4: Make every dollar intentional
Ramsey also urged Sarah and her husband to create a written plan before spending any of their winnings.
“If you write down where every one of these dollars goes… we’re going to put $150,000 in savings, we’re going to spend $50,000 renovating this, we’re going to go on a cruise for $10,000. I don’t care what it is, as long as when you total it all up it equals the amount you’re going to get,” said Ramsey. “Just make a list, down the page, until every dollar is going into something: generosity, investing, fun, upgrade the car, pay off credit cards.
“You’ve got a little time to get ready emotionally before the money arrives. And so when the check comes, it’s boring because you just execute your little list.”
Winning the lottery might feel like instant freedom, but without a strategy for spending and investing, that money can slip away quicker than expected.
"The things that get lottery winners in trouble is when they get half a million and they go and spend five million," said Ramsey.
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[1]. The Ramsey Show Highlights YouTube. "We Just Won The $1,000,000 Lottery Off A Scratch-Off Ticket"
[2]. NBC San Diego. “Powerball jackpot is $750 million for Monday’s drawing. Here’s the tax bill if you win”
[3]. Illinois Revenue. “Income Tax Rates”
[43]. Forbes. “What Is The Average Credit Card Interest Rate This Week? September 1, 2025”
[5]. T. Rowe Price Group. “Retirement savings by age: What to do with your portfolio in 2025.”
[6]. Investopedia. “Maximize Your Traditional or Roth IRA”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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