How Can I Pay Off My Student Loan Debt?

Selling fixed annuities

Are you interested in cash for your structured settlement? If you’re not sure what a lump sum payment is or how it works, you may want to continue reading below. More and more Americans are struggling with debt nowadays — from medical bills to student loans, the various factors that can sink you into thousands of lost dollars seem never-ending. With a structured settlement annuity you can see your debt gradually paid off over a fixed period of time with minimal interest and fuss, allowing you to get back to your life sooner than you thought possible. Let’s take a look at how this process works and whether or not it’d be right for you.

What Are The Most Common Forms Of Debt?

While debt can occur from many different situations, there are a few that are becoming increasingly common for the average American. Nearly one in five Americans under the age of 24 describe themselves as being in ‘debt hardship’, after all, so it stands to reason this is becoming a foundation everyone can relate to. Over 70% of Americans believe the greatest debt stigma concerns underpaid credit and debit cards. Medical bills, student loans and home payments are also common sources of debt hardship for many.

How Do People Generally Pay Off Their Debt?

Some choose to save up their money gradually, while others attempt to use whatever resources are at their disposal to shave away at stubborn debt. The average American household with debt carries over $15,000 in credit card debt and a whopping $129,000 in total debt — although household income has grown by 25% in the past 12 years, the cost of living has nearly doubled. Even now one of the most effective and popular methods of getting rid of excess bills and fees is getting cash for your structured settlement.

What Is A Cash For Settlement Payment?

Also known as a structured settlement annuity, selling a structured settlement is an incredibly effective way of tackling debt in a gradual manner. The average structured settlement payout in the United States is around $324,000, with over $6 million paid each year to fund new structured settlements. In fact, it’s been found that consumers vastly underestimate or overestimate how much debt they have — as of 2013 lender-reported credit card debt was a stunning 155% greater than overall borrower-reported balances.

What Is A Lump Sum?

Similar to a structured settlement annuity, a lump sum is a fixed payment you can receive to help pay off your bills. More than 37,000 Americans use structured settlement money on a yearly basis and over 90% of claimants who sell their structured settlement are ‘very satisfied’ with their decision. When the average American household pays a total of $6,000 in interest every year, it helps to have something you can rely on to reduce your day-to-day stress.

What Is An Annuity?

Compared to the one-time payment of a lump sum, an annuity is paid over a period of time. Selling off an annuity can surrender charges of around 10%, but the trade-off is a more feasible way of tackling your debt. Structured settlement payouts can reach over a $100,000, which is perfect for when medical bills and student loans are getting too high. If you want to get started on the right track to getting cash for settlements, look below for some simple tips.

How Can I Get Started?

Consumers have a wide variety of options for reducing pain and eliminating credit card debt, according to financial experts. Since a low credit score can impact your ability to apply for loans or buy a home, one of the first things you want to do is go to the source — a survey conducted by found that people were able to successfully waive fees 80% of the time when meeting with credit card companies, allowing them to eventually balance out their score. Personal loan rates can be as low as 5% if you have a good credit score, giving you convenient monthly payments with accessible interest. Debt isn’t forever — with a structured settlement annuity, your goals can be realized in good time.

Who, What, Why and How of Settlement Payments

Sell my structured settlement annuity

If you have recently won a settlement or inherited a large sum of money, you know the annuity and lump sum differences. You have several payout options when getting a lot of money and you shouldn’t feel limited to simply abiding by what you’ve been told you should do. Here are a few considerations to think about.

  1. Why Selling a Structured Settlement Helps
    This will be the first choice you have to make. Annuity and lump sum differences basically come down to this: Annuity gives you the payments over time, be it monthly or annually. Lump sum gives you the money all it once. How you decide to get the money really depends on what you want to do with it. If you don’t think that you can handle having all that money and are afraid you wouldn’t use it wisely, then you don’t have to sell your annuity payments. However, if you want to purchase a house or travel or go to college or pay off debt, then getting the money as a lump sum might benefit you a little more. If you got the amounts annually or even monthly, you would likely have to save up to do any of the above mentioned things just like you would if you were making a regular income.

  2. What the Annuity and Lump Sum Differences Are
    Now, keep in mind that just because you have decided to sell your payments does not mean that it will not come without it’s own set of disadvantages. There is a good side and a bad side to both options. The problem with getting a lump sum is that overall, it might actually give you less money than if you got the amounts incrementally. However, you probably wouldn’t even notice because you’d never have all your money at one time getting it through annuity anyway.

    Another difference is that by getting annuity, you deal only with your lawyer and their lawyer and the courts. If you decide to sell then you will be adding in a third party to the decision making process. Keep in mind, however, that they are only around until you receive your funds and then you don’t have to deal with them again.

  3. How to Make the Right Decision
    The best thing that you can do for yourself is get a financial adviser. You could even take it one step further at hire someone to completely manage your finances for you. This way, you could sell your payments, get the lump sum and not be afraid that you are going to use it unwisely. The only catch here is that you need to listen to your money manager or adviser. Realize that you hired them for a reason and if they advise you against making a certain decision then you need to abide by what they say. They are not going to force you to make the right decisions. The money still does belong to you and you have the final say but the reason they are there is because they know how to deal with money and they even know how to make it, make you more money.

  4. Who Not to Listen to
    It’s common for people coming into a lot of money to hire a money adviser but then spend all their time getting advise from family and friends. Unless your family and friends have as much money as you now do, they will not be able to give sound advise. Loved ones are well meaning and want to help but unless they have the experience, they might be leading you in the wrong direction.

  5. When You Should Make the Decision
    You are probably on a time limit with the courts. Speak with your lawyer about when you need to decide how you’ll receive your payments. Keep in mind that if you do decide to sell your payments, then it might take somewhat longer to receive it because the buying company has to have a little back and forth with you and a judge in order to make sure everything is done properly and in your favor.

The bottom line here is, listen to your lawyer and your financial adviser regarding annuity and lump sum differences and you can’t go wrong.

What to Do With Your Structured Settlement Annuity

Cash for settlement

If you are currently receiving a structured settlement annuity either because you won the lottery, a lawsuit or through a life insurance payout, you need to decide if you want to keep collecting the money monthly or if you would rather get cash for your settlement. There are a number of factors that go into making this decision regardless of whether you received $150,000 from an employer, are getting part of the over $3.5 billion paid out in medical malpractice suits in 2013, or you won $1 million in the lottery.

When you choose an immediate annuity, you can usually get your money is about a month. However, you have to choose the right one in order to offset the amount you will be charged in fees and taxes. For example, if you are under the age of 59 1/2, then your annuity will be charged 10% for early withdrawal. However, if you choose to wait to withdraw the funds, you must begin receiving payments by the time you are 70 1/2.

In addition, annual fees can be anywhere from 2% to 7% on top of the taxes that need to be paid. Taxes are usually between 25% and 35% depending upon your tax bracket, but cannot exceed 35% of the annual income, regardless of the amount of money made. This may be why almost 50% of lottery winners are still working and why nearly 70% of all lottery winners lose their money in five years or less, regardless if the amount of money they won was $500 million or $1 million. One of the best ways to determine what is right for you and your money is to use a special sell structured settlement calculator.

Once you sell your structured settlements, you are free to do whatever you want with the money. You can use it to get out of debt, buy a car or pay off your mortgage. However, if you do not want to spend the money from your structured settlement annuity all at once, there is another option. Another way to keep your structured settlement annuity safe is by turning into a deferred annuity rather than getting the money right away. While these are low risk, you do have to wait for 15 to 20- years in order to withdraw funds. However, the rate of return greatly exceeds other low-risk options. For example, if a 60-year-old man has a $100,000 deferred annuity and waits until he is 85 years old to collect, then he is guaranteed $4,000 a month in income.