Ok. I have a delima. Im putting my business out there so you all can help me. I have a structured settlement from a dog bite, anyway.. the payoffs are 5k 10k 10k 15k 15k 21k 27k every three years. I already got the first three and i am due the 15k next aug. Now i want to go to one of those places so i can get my money now and the said that they can cut me a check for 39k right now. I want to take the money and run so i can pay off some bills and buy a house, but i dont know what i should do. Should i take the money pay off some bills buy a house, or wait for the payments to come over the years. I know i would loose like 19 grand but i would have the money now. Im stuck
oops…. I added one to many payments. Take back one of the 15k payments
I need financial advise ASAP?
05
Mar
tonevault
March 5, 2010 at 6:33 pm
Don’t be foolish! Keep the payoffs as they are, 19 grand is a LOT of money! You can’t win by taking the 39k….that would be STOOOO-PID!
sarge927
March 5, 2010 at 6:47 pm
Do the math again. If you have already received the first three payments totaling $25,000.00, you stand to make $78,000.00 over the course of the next ten years. Having them cut you a check for $39,000.00 means you’ll lose half of it. Do yourself a favor — stick with the structured settlement and take the money when you get it. Better yet, don’t rely on that money and invest it when you get it. Being impatient now is going to cost you dearly, especially if something happens later on where you could really use that extra money. Don’t go for the instant gratification. You’ll regret it if you do.
work_thenplay
March 5, 2010 at 7:27 pm
don’t take it, they’re ripping you off. At worst, go to a bank and get a loan that you can use to pay off high interest credit bills and use the settlement as collateral. Put that money away, and continue to work and save… I’m sorry, but this dog bite did not retire you. BTW you would lose 29 grand, not 19.
JW
March 5, 2010 at 7:51 pm
You need to calculate the net present value of the cash inflows & outflows in both scenarios & choose one with the highest positive value.
As a quick & dirty, the implied discount rate in the offer that was made to you is 13.2%. If the interest that you are paying on your bills is less than that, then you should keep the settlement.
PS to everyone who answered before me: Please take a finance class & learn about the time value of money. Then you wouldn’t say anything so ignorant.
rainfingers
March 5, 2010 at 8:00 pm
Definitely wait for the payments. If you’re hurting for money, call the people billing you and ask to work out a payment plan. Explain that you want to pay the bills and will have more money coming in soon. As for the house, save up until you have a down payment.
bostonianinmo
March 5, 2010 at 8:08 pm
Actually, you’re losing 39k, not 19k.
I was going to non recommend it until I crunched some numbers. I’ve changed my mind, now.
Comparing the buyout of your structured settlement to a 78k loan for 10 years, you’re paying about a 8.7% interest rate on the buyout. It’s not a sterling deal, but not a bad deal, either. And you no longer need to worry about collecting on the settlement either.
Just ensure that you’re not actually signing a loan for the funds, but are assigning the rights to the settlement in exchange for the immediate 39k payout. Have a lawyer and financial advisor review the deal of course, but it may well be worth considering.