Here’s What You Should Actually Do With Your Payout Lottery Winnings

payout lottery winnings

Congratulations! You’ve just won the lottery.

Or, at least, those are the words you’re expecting to hear at any minute. Sure, your chances of winning may actually be one in a gajilion, since the lotto is the most popular and widely practiced form of gambling in the United States — but, as they say, you never know.

You probably have lots of lofty ideas about how you’d spend your huge payout lottery winnings. After a soak in a champagne-filled hot tub and an overindulgence in caviar donuts, perhaps you even have some practical plans. Maybe you’ll buy a new house, maybe you’ll be making an investment, maybe you’ll find ways to reduce debt and pay off that $3,761 that the average person owes in revolving credit loans.

But in reality, people often don’t know how to handle all of that money once they actually receive lottery winnings. Take a quick search through Google to read all of the horror stories about past lotto winners who lost everything to overspending, drugs, gambling, lawsuits, or any other kind of foolish spending.

Don’t be that person in the news. Have a real plan for when you hit the jackpot — just don’t expect it to be as glamorous as you might think.

Step 1: Hire a lawyer. Yes, this is the step you should take before you even claim your winning ticket. The moment you put yourself forward as a winner, you forego your privacy rights. Media outlets will want to interview you. Programs will want you to support them. Supposed long-lost relatives will want to “catch up” with you. Get a professional on your side before you set out into this new world.

Step 2: Lay low. This is harder than it seems. Again, everyone will be clamoring for your attention (and deep pockets). While your lawyer gets your financial ducks in a row, maybe take that trip to Siberia — or some other place where no one will bother you — you’ve always dreamed of.

Step 3: Decide how to get your money. Most of the payout lottery winnings are delivered in annual increments, or annuities. The most common are over 25 years or until death. If you’d rather have your money up front, you can sell that annuity for a lump sum payment and get cash instead through a financial institution. If you want the best of both worlds, you can sell a portion of the annuity payments for an immediate lump sum.

No matter what you plan to actually do with your payout lottery winnings, play it smart. Have a plan and stick to it so that, when you strike it rich, you’ll be able to do everything you want.

Common Myths About Selling an Annuity Settlement

selling an annuity settlementSome people are skeptical about selling an annuity settlement. The thought of getting a lump sum of cash now always sounds too good to be true.

They may have heard well-meaning advice from friends who tell them to stick to their monthly structured settlement payments. They may be concerned about the security of their financial future. Or they may simply not understand the process of getting a lump sum annuity payout and think it must be some sort of “get rich quick” scam.

We’re here to clear the air. Sometimes, selling an annuity settlement in exchange for a larger sum of money can be enormously beneficial. Here are some of the most commonly heard rumors surrounding the selling process, and the truth behind these myths.

Myth #1: I have to sell my entire annuity at once.

Not true. You can sell a portion of your annuity payments, large or small, to help get you the money you need upfront. In fact, you’ll be working with a financial expert to help you determine exactly how much you should sell to get the most out of your money depending on your needs and situation. Many people opt to sell settlements at some point in their lives; at the end of 2013, there were 34.8 million deferred annuity contracts in place with more than $2.58 trillion in combined value.

That’s a lot of cash waiting to be claimed.

Myth #2: I’ll get less money in the end if I sell my structured settlement annuity now.

Not necessarily true. While there are some fees involved in selling your annuity, there are ways you can invest that money to grow your financial assets in the long run. For example, you might buy a house requiring a 5, 10, or 20% down payment on the sales price. The more you pay upfront, the less you’ll be spending on interest and mortgage payments later.

Myth #3: I won’t be able to pay my monthly bills without my structured settlement check.

Again, your finances are what you make of them. Selling an annuity settlement might be the push you need to start a business or get an education, which can lead to a higher-paying job and a better future. According to the Kauffmann Foundation, it costs an average $30,000 to launch a new business today. With that money, you could be working for yourself instead of depending on a monthly check.

Money management can be stressful, but selling an annuity settlement shouldn’t have to be. You can speak with the professionals at 123LumpSum to learn more about the process and to discuss any concerns you have to ensure that your decision is the right one for your future.

When a Structured Settlement Annuity Hurts More Than It Helps

structured settlement annuityMany times, civil lawsuits never even make it to court. That’s because in the vast majority of civil cases both parties eventually accept a structured settlement agreement that pays the defendants enough money to recoup their losses. Whether your case was the result of an accident, medical malpractice, insurance dispute, or another type of liability claim, your compensation should be all about helping you get better and move forward with your life.

It’s very common for awards from cases like these to be distributed through a structured settlement annuity, in which case you will receive small, recurring sums of money over a long period of time — sometimes as long as 20 years or more. This is a great way to ensure a steady flow of income if you’re otherwise unable to work or provide for your household after an incident.

However, there are times when those small paychecks may feel more like a burden than a blessing. Under certain circumstances, it could be beneficial to get settlement money now, rather than having to wait for that next check to arrive.

Do these frustrating hypotheticals sound all too familiar? Then it’s time to consider whether or not to sell annuity settlements.

But how do you know if it’s the right decision?

You have medical bills to pay. If you received your structured settlement annuity from an accident or injury case, chances are you still have a long road of recovery ahead of you. Pending and overdue medical bills aren’t just stressful; they can actually hurt your credit score.

As many as 20% of credit reports are damaged by outstanding medical expenses, and in turn, the interest acquired on those bills can add up, too. The average American household pays $950 in interest alone every year, an expense that could easily be eradicated by simply having the cash for structured settlement payments upfront.

You’re swimming in debt. Most people carry some amount of debt throughout their lives, but there’s debt, and then there’s debt.

There were an average 3,422 bankruptcy filings per day in February 2015. This is a particularly cruel fate when you know you have a settlement amount waiting to be delivered to you in slow increments over time. If you’re looking for ways to reduce debt, you might want to think about selling your annuity to a financial institution for a lump sum payout.

You’re ready to start over. Moving on after a traumatic injury or stressful lawsuit is difficult, but the money you receive is supposed to serve as a way forward. Whether you’re looking to buy a home, start a business, or move to a new city for a fresh start, a safety net of cash from your settlement can be the security you need to take the next step.

If any of these situations sound familiar, it may be time to think about selling your structured settlement annuity. Talk with 123LumpSum toll free at 1-800-397-6721 today to learn about how you can turn in those small checks for a lump sum to get you on your feet again.

Manage Your Monthly Expenses With These Simple Tips

monthly expensesUnfortunately, learning how to manage your finances or monthly expenses isn’t a course usually taught to us in school. We have to learn as we go — often through trial and error (emphasis on the error). If you’re struggling to stick to a budget or find a positive balance in your bank account every month, here are some simple tips and tricks to help get you back on the right path.

  • Keep Track of Everything You Spend
    The first step to financial management is to become conscious of where your money goes every week. For a few months, keep careful track of every dollar you spend, whether it’s on rent, food, entertainment, or car payments. You may be surprised at your own results. Getting an idea of your current monthly expenses will help you find ways to cut down on unnecessary spending.But, be honest, if you don’t think you’ll actually keep track, there are a number of apps that will keep track of all your spending habits for you.
  • Find Ways to Make Cuts
    Once you have the data, take a good hard look at your spending habits to find small changes you might make that could lead to big savings. For example, bringing your lunch to work is a lot more cost-effective than eating out every day. And do you really need subscriptions to cable, Netflix, Hulu, and HBO GO all at once? Perhaps shop around for a discount gym membership. More than 40% of American families spend more than they earn; don’t be one of them.
  • Set a Goal
    While you might want to save up for a new house or car, your first goal should be getting out of debt. There are an average 3.5 credit cards for every person in the U.S., and Americans collectively owe over $11.9 trillion in debt payments. While paying off that credit card debt or student loan payment may seem like an impossible task, finding ways to reduce debt will help free up the rest of your money in the long run.

Managing your monthly expenses doesn’t have to be like pulling teeth. More often than not, simple awareness of your spending is enough to evoke change. While setting and sticking to a budget is a challenge, it’s one that will benefit you in the long run.

You can take control of your financial situation with a little bit of planning and willpower.

An Important Lesson On How Not to Use Your Lottery Winnings

lottery payments

A Georgia man who won $3 million on a lottery scratch-off ticket last year has given people everywhere an important lesson in how not to manage your finances after coming into a windfall of cash. Georgia man invested his winnings in running a crystal meth operation, and now he’s facing decades behind bars.

According to The New York Times, 45-year-old Ronnie Music Jr. has been indicted as part of a larger operation involving circulation of more than $1 million worth of methamphetamine and weapons. He pleaded guilty to a federal court last week and could face a maximum sentence of life in prison.

Music told state authorities when he won last year that he and his wife were going to save up their lottery payments. “I buy tickets every once in a while,” he said after winning big in February 2015. “I couldn’t believe it, and I still don’t believe it yet.”

Clearly, there were other plans in design.

After winning a large lottery, people typically get to choose between receiving an annuity settlement that doles out lottery payments over an extended period of time — usually either over 25 years or until death for very large jackpots — or they can get a lump sum that offers cash up-front. When people get tired of waiting for those annuity payments, they sometimes sell their lottery annuities midway through in order to get more cash at once. In any case, it’s clear that Music wasn’t saving up for anything besides drugs.

Of all the different ways to invest your money, a drug ring probably wasn’t the smartest choice. You could pay off your debt, for example. The average American household owes $15,355 on credit cards and $129,579 in overall debts. Even if you decided to splurge with your winnings, you could invest in a new car for a fraction of your winnings. The average price of a light vehicle in January 2015 being $33,933.

Literally anything would be better than investing in a meth operation. Even though the Times called Music’s drug ring business “thriving,” they also reported that he could have made more money by taking the lump sum of his lottery payment and investing it in the stock market.

Instead, says U.S. Attorney Edward J. Tarver, “As a result of his unsound investment strategy, Music now faces decades in a federal prison.”