This challenge is based on the classic 80s movie, Brewster's Millions.

The object of the challenge is to see how quickly your sim can get to a zero dollar bank balance and no increase in net worth, without the use of cheats or mods to help you. As many of the sims in your life have your best interests at heart, they may try to “help” you out by investing on your behalf. So it is your job to spend that money as quickly as you possibly can, so that you are making a net loss and getting towards net $0 as quickly as possible.

Your sim begins on a modest unoccupied lot with nothing but the clothes on their back. The lot can cost up to $16,500 – the starting funds for a solo sim young adult out of CAS. Once there, pause, and make a note of the household's net worth, then set the family funds to $30,000,000. This money is yours to spend in any way you see fit, so long as you reach $0 in 30 days.

Rules:

1) Your household is only allowed to donate $1000 per day, total.
2) You are only allowed to buy 1 lotto ticket per day, total.
3) You are allowed to give gifts.
4) You are allowed to hire service sims.
5) Jobs are absolutely allowed, but they will definitely make the challenge harder.
6) At 10am on day 30, your net worth must be the exact amount it was the moment your sim moved in.

Points:

+1000 for meeting the win conditions
+100 if you meet the win conditions early, multiply it by the number of days away from day 30. So if you win on day 17, that is 30-17=13; 13x100= 1300 points.
-10 per simoleon of net worth over the day 1 net worth your household has at 10am on day 30.
-100 per simoleon in family funds at 10am on day 30.

So my sim got robbed. Because it works with the challenge to lose all that money, I didn't have an alarm and I just let him take what he wanted. Which apparently included about 20K in bathtubs and baby furniture, but not the million in luxury cars I left parked on the lawn as bait. FML!

So, my sim starts out with 16,500, spends 500 on an empty lot, so they start out with 16,000 on day 0. Then on day 30 at 10am, they have exactly 16,000, they score +1000 for meeting the goal, and then -1,600,000 (minus 1.6 million) points because they have 16,000 simoleans? Am I interpreting that correctly?

I don't think you read through the setup at all. No, that is not correct.