Source: Thomas Corley, RichHabits.net (February 3, 2017) – When I travel the country speaking to high school and college students about exactly what they need to do to become financially successful in life I always begin my presentation by asking three questions: “How many want to be financially successful…
In making the decision on whether or not to sell all or part of your structured settlement or annuity, ask yourself these questions:
Do I Really Need This Money?
Get to the heart of the matter … do you really need a lump sum now to meet basic needs in your own life, or, is a lump sum now really necessary to take a positive step forward in your life? The key to unlocking the answer to this vital question is whether or not you have fully explored and exhausted your own personal alternatives before selling your structure or annuity. Have you asked yourself, “is it truly an emergency?” or “what else can I do?” Right now, by owning a structure, you own an asset. Just like selling a house or other investment, your plans for the money will be important in determining whether you really need it, and whether you are willing to trade the benefit of long-term stability for the power to use the money now, for a certain purpose, at this point in your life.
Do I Have A Really Good Plan For This Money?
How exactly you are planning to use the money is another vital question to thoroughly explore. To ensure you have a thorough and carefully considered plan, spend some time and do your homework in the form of a cost-benefit analysis. If in doing this, too many red flags are raised, perhaps it is better to back off the idea for a time. But if the plan is solid, and the need cannot be met in another way, then this may be the best alternative for you, resulting in the financial freedom you need right now. If you plan to invest the money, is it a better investment than what you currently have? The answer to this is “probably not”, given the stability of structured settlements or annuities. Do you need funding to start a business? If so, have you explored other sources of financing first? The bottom line – make an informed decision and ensure you have a good plan if you chose to take a lump sum now.
Can I Trust MySelf With My Own Money?
Structured settlements are very good for people who have a tendency to spend beyond their means. Structures and annuities come with rules and without exceptions. That rigidity creates stability over time for many people. However, as times change, the temptation exists to be able to gain more control over your money by selling. However, you must be aware of the trade-offs of doing so. If you are suddenly responsible for a lump sum of money, can you manage it conscientiously, and without common sense giving way to other temptations? If the answer is yes, then you may well be ready to take this step, but don’t forget to have a backup plan in place just in case.
Is This Best For Me?
Ask yourself, who will truly reap the benefit if I sell my structure? Making the decision to sell your structure may be the right call for you, but ask yourself questions to be sure. If the plan is to invest a lump sum of money into a business, are your business partners investing with you? Or, if you don’t have any partners, do you have other alternatives to infuse cash other then selling your structure or annuity? Are you selling to help a family member? While helping a loved one is noble, be sure that you are not jeopardizing your future to do so, as that would help no one in the end. Fast forward to your retirement years and ask yourself where your income will come from at that point in your life. Do you have a stream of income that will support you then? At the end of the day, you make the choice as to what is best for you, but, be conscious and aware of how decisions you make now can affect you later, and, always have a plan for the unexpected.
If you have asked yourself these questions and feel confident that selling your structure is right for you, then you should be commended for taking the steps to make a well-informed decision. If you have determined that your need is legitimate, that your plan is sound, and that you are prepared for the responsibility that comes with your choice, then Vantage Capital Consultants is the right partner for you.
Have You Considered Alternative To Selling?
While everyone’s circumstances are different, usually, the desire to sell a structured settlement or annuity is driven by a need or desire for money now. Before making the decision to your structure or annuity, however, you should consider other options that may make more financial sense for you in the long run.
Your alternatives to selling your structured settlement or annuity payments will generally fall into one of two broad groups of options. Either you can sell or liquidate another asset that you have or you can borrow money to meet your current needs.
We at Vantage Capital Consultants know that these alternatives may not be available to you, but, it is a worthwhile and valuable exercise to make sure that no other alternatives exist before you make the financial decision to sell all or part of your structured settlement or future annuity payments.
If you have no other viable alternatives and need to sell your structure or annuity for cash now, then, the next step for you will be to look at all of your options in selling so that you make the best choice for your situation.