How Do I Decide Whether or Not to Sell an Annuity?

Manage your finances

The task of watching the credit card balances is exhausting. Just as you think that you are reaching a point where you are going to significantly reduce your debt, an unexpected expense comes up and you are again scrambling to find a card that has room for another significant charge.
The fact that over 40% of American families spend more than they earn is an indicator that many of those families may be playing the credit card juggling game. The game that includes months of making progress on overwhelming debt, and then suddenly switching to a single day significant charge for a major home repair or car maintenance fee that can not be avoided.
For families who are trying to break this crippling cycle of debt, selling an annuity is a simple decision. Even for families who are not in financial crisis, the decision to sell an annuity can still be a simple one. Whether you find yourself in the fortunate situation of deciding to sell an annuity because of a company buyout option, an unexpected lottery winning, or as a result of a court settlement case, the decision to take the money up front is often the correct choice.
Selling an Annuity as a Way to Reduce or Eliminate Debt Is a Wise Decision
Ways to reduce debt are often difficult to find. While families can spend months cutting costs and eliminating unnecessary expenses, these same families can be blindsided by an unexpected home repair bill or emergency medical expense. Taking cash for an annuity settlement can be the perfect way to eliminate high interest credit card charges. Once the high interest fees are eliminated, families can move on to a more responsible and accountable budget plan. When you are in the middle of paying costly interest fees, however, the debt recovery process can seem impossible. Consider the overwhelming financial situations of many American families:

  • 20% Americans between the ages of 18 and 24 describe themselves as being in ?debt hardship.?
  • The average U.S. home has 13 credit card payments.
  • The average U.S. home is paying a total of $6,658 in interest every single year.
  • Only 37.4% of credit card holders pay their full balance every month.
  • As many as 15.9% of credit card holders pay only the minimum balance every month.
  • American consumers owe a combined $11.91 trillion in debt.

The Decision to Sell an Annuity with Lottery Winnings Is a Step In the Right Direction
Lottery winners do not have a great track record when it comes to the wise use of their winnings. Deciding to take fancy trips and make extravagant automobile purchases, and ignoring large credit card debt, can lead to the complete waste of what should have been a great financial opportunity.
Consider this devastating finding about American consumers who find themselves in debt. The most current research indicates that consumers grossly underreport and underestimate how much debt they have. As of 2013, for example, actual credit card debt that was reported by lenders was 155% greater than borrower-reported balances. Denying debt is dangerous. What starts as simple white lies to a spouse can become significant problems as interest rates continue to increase and multiply.
Lottery winners should face all of the debt that they have and begin by paying off the largest interest loans and charges. If you still have winnings left after you pay down the first debt, move to the next highest interest loan or credit card. Showing restraint and paying down your debt will make a larger impact on your life than buying a new house or taking a dream vacation.
Taking Cash for a Company Buy Out May Provide the Best Results
Even the most financially sound families and individuals may decide to sell an annuity instead of taking monthly payments over an extended period of time. Neither life nor a company’s financial solvency is definite. A person who is healthy today may not be around to receive and enjoy the lengthy payments from a long term scheduled agreement. A company that is offering to buy out its top employers today may find itself in financial crisis in five years.
The decision to take advantage of a cash opportunity is what makes the difference between financial success and financial ruin.

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