Playing the lottery is the most popular form of gambling in the United States, according to surveys. One of the biggest decisions you’ll immediately be faced with after winning a lottery is whether you want to receive your lottery payments in a lump sum versus annuity style. Many people select the lottery annuity as a means of secure, consistent income in their future. Some people do it to protect themselves from themselves. Some people just don’t trust themselves with a couple million dollars in their pockets. Even if you do elect to take the lottery annuity that doesn’t mean you are stuck waiting for your money indefinitely. In fact, there are many companies that you can sell annuity payments to if you decide you need the money now. Here are three unpleasant situations that no one can plan for, which might make you want to take your lottery winnings in a lump sum, or sell your annuity if you went that route.
1.) Healthcare Expenses: Everyone hopes to avoid medical emergencies, but they can happen to anyone at any given time. In fact, 64 million people (35% of the population) reported having trouble paying bills or stuck paying off medical debt in the U.S. in 2014. Whether it be you or a family member, medical emergencies can rack up large bills quickly. Rather than let the debt pile up and wind up paying even more in interest with some type of payment plan, sell your lottery winnings and take a portion of the money to pay off these bills before they can do more damage. You’ve already been hurt physically, there’s no reason to compound that by damaging your financial standing as well.
2.) Vehicle Repair/Replacement: One of the biggest annual expenses is in vehicle purchase, maintenance, and repair. Everything else in your life might be going great and then the wheels fall off. Literally. Again your other option is taking out a loan and setting up a payment plan, which is fine, but you’re going to end up spending more money in the long run. The average transaction price (ATP) was just under $34,000 for light vehicles in the U.S. in 2015. On top of not having to pay the interest, buying a car in cash can be a great way to get an even better deal than you thought possible.
3.) Getting Sued: Hopefully you’ll never find yourself on the wrong end of a lawsuit, but if you do it might be time to sell that lottery winnings. Depending on the circumstances you might be better of agreeing to a settlement and offering to pay a smaller amount than a judge would order you. There is the risk the plaintiff will lose in court so many times they will take a settlement offer.