Monthly or lump sum payment?

[@M]

If you received a large cash award/settlement (damages for growing a second dick after receiving Dr. Docking's Covid vaccine for example), would you just accept monthly payments for the full amount, over time, or use JT Wentworth, or a similar service ("It's your money, use it when you want to", ya greedy fooks!) to get a lump sum payment (with a loss for doing so)?

Unless I was REALLY hurting for money (like, I need new LEGOs now or I'm a gonna die) I'd stick with the monthly payments.

 

[Burning Fight!!]

Monthly lump sum

 

[evil wasabi]

You take the lump. At 7% interest, it will double in 10 years. And that’s being modest.

 

[100proof]

You take the lump. At 7% interest, it will double in 10 years. And that’s being modest.

/thread

You're leaving money on the table long-term if you take a monthly payment, even with "penalties".

 

[Claudia Schiffer]

/thread

You're leaving money on the table long-term if you take a monthly payment, even with "penalties".

i'd say for the average person (aka idiot) monthly payment adds some level "safety". of course, that doesn't mean they won't rack up CC debts ahead of future payments...so maybe it doesn't matter for those people.

 

[@M]

You take the lump. At 7% interest, it will double in 10 years. And that’s being modest.

I hadn't considered that and that's an excellent point. I think the majority of people would spend rather than save the lump payment though (start a business, buy a house/vehicle, etc.)

 

[racecar]

i'd say for the average person (aka idiot) monthly payment adds some level "safety". of course, that doesn't mean they won't rack up CC debts ahead of future payments...so maybe it doesn't matter for those people.

exactly , i just talk to person that took a 150K inheritance payout ( taxman/layer took 47k), had 100k and lost it all in online gambling with in a year....


back on topic, definitly take the lump sum !!

 

[norton9478]

If it is a settlement payment, just keep in mind that the only number that matters is the present value of the annuity when the paperwork is signed. Any other number is purely abstract.

 

[BIG BEAR]

It's not really a matter of hurting for money.Our paper money is loosing it's buying power everyday so you take as much as you can get all at once and you do whatever you want with it.Most would invest it in other areas....
BB

 

[BIG BEAR]

exactly , i just talk to person that took a 150K inheritance payout ( taxman/layer took 47k), had 100k and lost it all in online gambling with in a year....


back on topic, definitly take the lump sum !!

Online gambling...That's another topic though...the whole concept of online gambling is foolish imo... I witnessed the casino cheating in real world,I KNOW they do it online!!
BB

 

[LoneSage]

exactly , i just talk to person that took a 150K inheritance payout ( taxman/layer took 47k), had 100k and lost it all in online gambling with in a year....

Wow. Dude got a once-in-a-lifetime chance to really change their family's life for the better and absolutely wasted it. Just wow.

 

[Lastblade]

It all depends on the internal interest/discount rate used to calculate the lump sum amount.

 

[evil wasabi]

I hadn't considered that and that's an excellent point. I think the majority of people would spend rather than save the lump payment though (start a business, buy a house/vehicle, etc.)

Vehicles and houses don’t really appreciate. but if you buy property to generate rental income, or a vehicle as part of your business such that you can write off expenses, then go for it. Buying a new car is probably the worst financial decision that 90% of us make.

 

[NeoSneth]

the correct answer is lump sum.
even if you take a 50% hit, it is the correct answer.

You can't make money on installments, meanwhile the payor is sitting there compounding off the money they owe you.

 

[LoneSage]

houses don’t really appreciate.

 

[norton9478]

In the days of higher marginal tax rates, it was sometimes better for lottery winners to take the annuity than to take the lump sum.

Until the Reagan, federal taxes on income over $100,000 were taxed at 70%.

So on a million dollar win, you would be looking at like $160,000 lump sum (less with state taxes).

 

[evil wasabi]

they increase in value with inflation, but generally they aren’t appreciating. If your house isn’t increasing in value enough to cover property taxes, maintenance and other overhead, how are you going to make it generate wealth for you? Especially if you live in it.

If you buy property, make it make money for you while you sleep. Don’t be working to make it make you money. Donkeys work.

 

[norton9478]

Houses tend to appreciate, but are a loser as an investment (because of the upkeep costs).

 

[LoneSage]

I was talking with a Chinese some time ago and we talked about the 70 year land lease. They asked me what happens if Americans don't pay their house property tax and I said I dunno.

 

[norton9478]

In the days of higher marginal tax rates, it was sometimes better for lottery winners to take the annuity than to take the lump sum.

Until the Reagan, federal taxes on income over $100,000 were taxed at 70%.

So on a million dollar win, you would be looking at like $160,000 lump sum (less with state taxes).

Lump Sum ($50,000 a year): take home about $32,000 a year (for 20 years).

 

[norton9478]

They asked me what happens if Americans don't pay their house property tax and I said I dunno.

They file a lien against the house.

 

[evil wasabi]

They file a lien against the house.

and eventually a tax sale where you get a nice check for the value of the home minus what you owed, along with a notice that your home was sold at auction and gtfo.

 

[Arcademan]

and eventually a tax sale where you get a nice check for the value of the home minus what you owed, along with a notice that your home was sold at auction and gtfo.

That's what almost happened with my grandparents' home (where I now live with my dad and nephew). My cousin was living in it and apparently for years got a property tax reminder in the mail and simply ignored it and threw them away. Literally on the day the state was going to auction the house and property off my parents and a couple of my aunts found out what had happened and ended up paying off all the back taxes and took over the house. We kicked her out, made a ton of home improvements since she really didn't care for the house and have been living in it ever since. She, along with her dad and a couple other relatives have threatened legal action against taking the home from her but it was ruled that as long as we pay the property taxes and upkeep on the house, she has no case.

 

[LoneSage]

Damn that escalated quickly

 

[racecar]

I was talking with a Chinese some time ago and we talked about the 70 year land lease. They asked me what happens if Americans don't pay their house property tax and I said I dunno.

The 70 year lease thing it’s just a renewal date , it get reset way before it’s up the land change hands with the developer usually once a building get to certain age they would demo it and rebuild in China, Especially in the top tier city’s . The good thing about China property it’s no property tax and you own it out right . Some of the smaller village in these city actually start a village land co-op and lease the land the developer / business and collect a huge dividend every year .

As for owning a house, given the low interest rate and payment are with in a persons income, it the best and saving nest egg a average person can make . as it builds equity and the bank will lend you money if you needed , most house value grows with inflation ( well minus the prime mortgage hiccup in 2008 ) .