Did you know that 9-10 lottery winners are broke within 5 years? It’s not surprising since most people are ill-equipped to handle the windfall of instant money. While structured settlement annuitants and lottery winners who opt for the annuity have better protection against unwise spending, bad investments, con-men and trustee mismanagement there are some safe guards that should be taken if you ever come into money.
Former dot-com millionaires, financial gurus and lottery experts have a great amount of advice on how to preserve your money including:
- Shhh, don’t say a word: Don’t update your Facebook status and call everyone you know telling them the good news. There was one case of a gentleman who bragged about receiving a legal settlement only to have his house robbed. You will have enough strangers, long lost family members and charities coming out of the woodwork soon enough so try to keep it a secret.
- Don’t change your lifestyle: One expert suggest that you do not change anything about your lifestyle for 1 year. I know that seems really tough to do especially if you’re living on your buddy’s couch but let the money sink in and don’t make foolish purchases.
- Get help: Hire a lawyer, accountant/tax expert and financial planner to help you make decisions regarding the money. Make sure you get a least 3 names and they are a member of the following organizations--National Association of Personal Financial Advisors, the Financial Planning Association, and the Certified Financial Planner Board of Standards. The American Institute of Certified Public Accountants has a list of CPAs who've earned the Personal Financial Specialist designation. The Securities and Exchange Commission (SEC) also has an area on their site to check financial firms and planners.
- Tax time: Depending on where you live, where you got the money from (lottery versus lawsuit) and how you’re receiving the payments there will be host of tax issues to consider. Get with a tax expert to discuss all of the implications before you do anything with the money. Don’t be like those few “celebrities” that didn’t pay their taxes and ended up in jail.
- No friends: Don’t lend money to old friends and don’t make new friends. Stay away from people in general because they will want to borrow from you or have an investment for you. Many times these new friends are scammers.
- No investing: Sit on your money and do not make any investments like buying artwork, businesses or stocks. Again see rule number 2.
- The 2% rule: If you can’t resist a major deal do not put more than 2% of your money into it. This way if this great deal doesn’t pan out you’re preserving your wealth.
- Watch your spending: If and when you make a few purchases keep it reasonable. Don’t buy a million dollar mansion or brand new cars for the entire family. Know where all your money goes, any fees associated with your purchases and other costs.
- Protect your identity: If it is possible protect your identity. Change your phone number, avoid appearing in articles and don’t make public donations. If you can, form a trust instead of using your name and always keep a watchful eye on your credit report.
- Stay healthy: Stress can kill you and no matter how much money you have it means nothing if you don’t have your health.
Dear Rescue Capital,
My insurance company is denying the claim in my pending motor vehicle accident suit. Can I still receive a cash advance?
Tammy in Elkton, MD
Many times it is common to see an initial claim denied by an insurance company. Just as your insurance company has a team of lawyers to represent their interests, it is important for you to have a lawyer who will fight for your rights and get your claim approved. With that being said, yes, in most cases you can get an advance on your settlement. Every situation is unique so it is important to talk with one of our knowledgeable team members to evaluate your case.
I was reading a blog post this morning from a divorce lawyer about the different ways to pay for a divorce when you don't have the money. One way was to get your spouse to pay, which is quite difficult. Another way was to borrow from family and friends. The third way was a divorce funding service that allows you to borrow money for lawyer’s fees in exchange for a "reasonable" percentage of your divorce settlement. But what about the people who won't be receiving a hefty divorce settlement? What are their options?
If you have an illiquid asset such as an annuity, structured settlement, life insurance policy, royalties, inheritance, pensions, cell tower leases, mortgage notes, lottery payouts or other period payments; you have options. You can sell all or part of your future payments in exchange for a cash lump sum. You can use the money any way you want ??make car payments, pay medical bills, attorney's fees. It's your money, your way.
Depending upon your payment structure you can defer selling your payments for a few years. This allows you get your cash immediately but your periodic payments won't be reduced until later.
If you have any questions about selling your future payments for cash, call Rescue Capital for your free no-obligation quote at 866.688.3532.