“It’s my money and I want it now”
— Commercial for J.G. Wentworth, a company that buys structured settlement payments from injury victims
I have an obvious bias. I am in the business of setting up structured settlements for injured people. Wentworth is in the business of ripping them apart. Fourteen years ago, I spent a lot of my time and my own money convincing some legislatures to regulate Wentworth and companies like it. We made it tougher on Wentworth, but they are still around.
Wentworth has an easy task. All they have to do is get people to focus on the immediate and forget about the future. I try to get them to focus on the long-term.
If you look at the actions of Wall Street, Main Street and Washington during the past 20 years, you can see that the Wentworth philosophy is winning.
If you look at Washington’s trillion dollar deficits, Main Street home foreclosures and Wall Street chaos, you can’t really say “I want it now” has worked out.
Both Wentworth and I have a different view of “financial freedom.”
Wentworth’s idea of financial freedom is that you can get your hands on a wad of money and spend it immediately.
I have a different view of what financial freedom is really about. To me, real freedom means stability, security and independence. It means never running out of money. It means never having to work at a job you hate because you can’t afford to quit. It means never becoming a slave to your creditors.
In short, it means having control and stability in your life.
That is what real financial freedom is about.
Not many people have true financial freedom. And many who have the opportunity to gain it, screw it up.
It’s been said that 90 percent of people who win the lottery run through the money in five years or less. Sports Illustrated said that 78 percent of NFL players run out of money within two years after their football careers end. Similar ratios holds true in other sports.
In her book, “Living Richly,” Myra Salter said that 70 percent of all wealth transitions fail. That means that if you leave money to a loved one, it will be gone within two generations, no matter how much or how little you leave.
I’ve spent 28 years working with injured people and their money. My primary goal is to keep them from blowing it.
It’s harder than you think.
The three hurdles to overcome are complications, choices and lack of controls.
The world is an increasingly complicated place, but one rule has held true for centuries: People who have financial security control the destiny of the people who don’t.