3 ms·

What struck me wasn't that this was a bad deal (it isn't) but that it's a bad deal for them. If I personally, being of sound mind and making a good wage, were o

What struck me wasn't that this was a bad deal (it isn't) but that it's a bad deal for them. If I personally, being of sound mind and making a good wage, were offered a similar buyout of a structured settlement I'd take it. The future value of 63k with 7% compounding earnings over 35 years easily outpaces the value of the monthly payments. And over that long a time horizon 7% would be easy to get - it's well under the market growth for any given 35 year period. But that's me - I don't need the money to live off of every month, i don't have a disability that makes me unemployable, and I don't need those checks every month. If those were my circumstances though? I'd be pissed!!!

deleted 11y ago
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harryh 11y ago
Congratulations djrogers! By sucking at math you just cost yourself nearly 1.5 million dollars in retirement savings! https://docs.google.com/spreadsheets/d/1y3PFiRhnixOcqeVrxZ2jc0f9Hf6ZAoJeGsjZ_NNSWd4/edit#gid=0 https://docs.google.com/spreadsheets/d/1y3PFiRhnixOcqeVrxZ2j... I think one of the kind men from Access Funding would like to buy you a steak dinner.
- IkmoIkmo 11y ago
  Your monthly interest rate isn't quite right, it's 7% / 12, rather than 1.07^(1/12). i.e., if the annual interest rate is 100% (doubles every year), then it'd be incorrect to say the 6-month interest is half that (50%). As two terms of 50% would be a 125% increase, not 100%. To get to 100% you'd need two terms of 41%. If you apply this to the monthly rate it drops by a little. Compounded over all those years, the total amount drops to by about 6%. As the one value drops by a larger amount in absolute terms, the earnings difference actually drops by about $50k. Either way, it's still a ridiculous difference and your point fully stands.
  - harryh 11y ago
    Ya, good point. I was being a lil' quick and dirty when I put my spreadsheet together. Fixed.
- astrange 11y ago
  Is that $63k taxed as ordinary income? There could be a significant immediate loss there.
spoiledtechie 11y ago
But they are poor, with very little sense of stock value and market returns. While you might think more educates about it, they sadly dont. So they blow the money quickly for something they need at the time. So no, it really wasn't a good deal.
- djrogers 11y ago
  Yeah - that's what I said, it's not a good deal for them.
  - IkmoIkmo 11y ago
    No, it's not a good deal for anyone. If you run the calculations at a 0% interest rate, you lose money if you take the deal. If you do it at a 5% rate you lose money, at a 10% rate you lose money, at a 20% annual interest rate you lose money. You only win if you get 23% or higher annual returns averaged over 35 years (i.e. impossible even for Warren Buffet, let alone you or me, let alone someone with a GPA of 1.x) It's NOT a good deal, not for anyone.
craigmcnamara 11y ago
What struck me was they target a lead poisoned cohort of a marginalized group. That's fucked.

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harryh 11y ago

Congratulations djrogers! By sucking at math you just cost yourself nearly 1.5 million dollars in retirement savings! https://docs.google.com/spreadsheets/d/1y3PFiRhnixOcqeVrxZ2jc0f9Hf6ZAoJeGsjZ_NNSWd4/edit#gid=0 https://docs.google.com/spreadsheets/d/1y3PFiRhnixOcqeVrxZ2j... I think one of the kind men from Access Funding would like to buy you a steak dinner.

IkmoIkmo 11y ago
Your monthly interest rate isn't quite right, it's 7% / 12, rather than 1.07^(1/12). i.e., if the annual interest rate is 100% (doubles every year), then it'd be incorrect to say the 6-month interest is half that (50%). As two terms of 50% would be a 125% increase, not 100%. To get to 100% you'd need two terms of 41%. If you apply this to the monthly rate it drops by a little. Compounded over all those years, the total amount drops to by about 6%. As the one value drops by a larger amount in absolute terms, the earnings difference actually drops by about $50k. Either way, it's still a ridiculous difference and your point fully stands.
- harryh 11y ago
  Ya, good point. I was being a lil' quick and dirty when I put my spreadsheet together. Fixed.
astrange 11y ago
Is that $63k taxed as ordinary income? There could be a significant immediate loss there.

spoiledtechie 11y ago

But they are poor, with very little sense of stock value and market returns. While you might think more educates about it, they sadly dont. So they blow the money quickly for something they need at the time. So no, it really wasn't a good deal.

djrogers 11y ago
Yeah - that's what I said, it's not a good deal for them.
- IkmoIkmo 11y ago
  No, it's not a good deal for anyone. If you run the calculations at a 0% interest rate, you lose money if you take the deal. If you do it at a 5% rate you lose money, at a 10% rate you lose money, at a 20% annual interest rate you lose money. You only win if you get 23% or higher annual returns averaged over 35 years (i.e. impossible even for Warren Buffet, let alone you or me, let alone someone with a GPA of 1.x) It's NOT a good deal, not for anyone.

craigmcnamara 11y ago

What struck me was they target a lead poisoned cohort of a marginalized group. That's fucked.