Every year, thriving in the fast-changing U.S. economy becomes more and more cutthroat and difficult to keep afloat in. Much of it can be chalked up to the rise in American consumerism, and simultaneous decline in knowledgeable financial management. According to a recent survey, more than 40% of American families spend significantly more money than they earn, and that the average American home has to pay off about 13 credit cards.
Unfortunately, not many Americans are made aware of ways to reduce debt, making them fall victim to an endless cycle of acquiring more debt in order to pay for other debts, such as credit card statements, medical bills, college tuition, etcetera. All of these bills come in the mail every month, without fail, and it can be overwhelming. In fact, in February 2015, a survey revealed 3,422 Americans file for bankcruptcy everyday – all because the money that had on hand could not keep up with their monthly expenses.
The reality is, life can cut you slack from time to time, and you may come across several instances in your life, whether by lottery or personal injury, that you are entitled to a large lump sum payment or settlement. This is all well and good, but a huge payout in the hands of people who don’t know how to make sound financial decisions can be counter productive. You might ask, “How can I effectively manage this big chunk of money on a monthly basis?” The answer is simple: Hire a professional and get him to set boundaries and payments for you. This is also known as going for a structured settlement payment.
Now the next question would be, “But, what is a ‘structured settlement payment’?” Basically, when you’re entitled to a lump sum payment, you can get an insurance company to ensure you steadily receive preset payments out of that lump sum across a specified amount of time — similar to how your monthly salary or social security benefits come in.
There are a number of benefits to availing of a structured settlement payment scheme. A few are listed below:
- Tax-free source of income The entire structured settlement annuity is not subject to tax, including divided payments and any interest.
- Fully customizable payment schemes You can determine how much money you receive from that lump sum according to your current and predicted cash flow needs.
- A lifetime source of income You can even set the payments to be stretched out for the rest of your life.
- Optional Cost of Living Adjustments (COLA) The company in charge of your structured settlement payments can automatically adjust the amount you receive based on computed COLA that changes every year.
- Forget about management fees You don’t have to worry about paying fees or commission just so your money is effectively handled and transparently given to you.