[The following is a guest post]
When you win the lottery, you feel as though you are on top of the world. Your life is going to change. You can finally afford the house and the car that you want, and you can even stop working at your regular job. You can find work that you really love and you can start living the life you deserve. It’s seems like a great thing. However, all of those dreams will crash and burn once you realize the reality behind the lottery payments. Let’s look at what the reality is for some winners.
Winning a Million is Not Really Winning a Million
Few people are lucky enough to win a million in the lottery. This seems like a great deal of money, but when you spread it out over thirty years of annuities, you will find that you are not getting very much per year. At first glance, you might think that you are getting about $33,333 annually. However, you have to factor in taxes off the top of the winnings. This can amount to a substantial amount of money, which means you will be getting about half of that amount annually. Who knows how bad inflation might be in five or ten years. This could diminish the value of your winnings even further.
If you are getting between fifteen and twenty thousand annually, it might seem nice. However, it is the equivalent of a part time job. What does this mean? It means you will probably not be able to quit your current job. You can’t buy the dream car or the dream house. You might not even be able to pay down all of your debt with a single payment, which means it will keep gaining interest. The wonderful feeling of winning suddenly vanishes when you realize that even though your life is a little bit better, it is not the dream you hoped it would be. What can you do about that?
Selling Your Payments
Fortunately, you do have some recourse, thanks to third parties willing to buy your annuities. They can offer you a lump sum payment for your annual payments. Having the lump sum in your possession really can help you make true changes in your life. For starters, it is possible to pay down any debt that you have so you can get your life on track and be debt free. The lump sum also lets you get a better car and a better home. While you might not want to quit working, you can finally work on the things that make you happy. Turn your dreams into an actual business to keep making money, but do it on your own terms. With the lump sum payment, your goals and your dreams are within easier reach.
Keep the Spending Sane and Learn to Invest
Of course, you do not want to go crazy with the money. Just because you have the lump sum, it does not mean you should start spending on everything you want. Use it wisely. Get out of debt, start some smart investments to help you earn even more money, and work in the field that you like. You could even take some time to go back to school if you like. You can do what you want to do.
Those who tend to spend more than they should or even more than they have might want to continue receiving their annual payments. It could be a better way for them to manage their money. For everyone else, the lump sum payment from a third party is the best option.