Tag Archives: budget

How to Help My Mother NOT go Broke

They paid for college and a relatively lavish wedding and a lifestyle we apparently never could afford. They made a lot of bad money moves along the way–constantly adding on to and updating a house that was already the most expensive on the block, buying worthless art and “collectables” to clutter the house, taking money out of the markets around 2008 and missing out on the potential returns. Oh, and the kicker is that in 2015 and 2016 my father took a ton of money out of his IRA to buy a condo in florida and pay for my wedding without paying nearly enough in taxes to support those withdrawals, not to mention apparently not filing at all those two years, leaving my mother with $60k in tax debt and fines. For a man who made a career out of planning financial risk, he sure did a horrible job of planning for his and my mother’s retirement.

Dealing with his pretty traumatic death (a week after my NICU son was born last year) was hard enough–but not having to help my mother somehow NOT GO BROKE is going to, well, break me.

Now, I realize they paid for my college AND my wedding and I do feel a responsibility to 1. help her not go broke and 2. pay her back a reasonable amount for some of these expenditures. On one hand, had I known how bad the financial situation was, I might have made a different decision on where to go to college (public vs private school, which was an option) and I would have been less reckless with my spending at the time (when I didn’t understand budgeting or the value of money, sad to say.) But I did save on interest on student loans and I feel like I owe it to my mother to pay her back for at least some of my college education.

…The wedding was a beast of an event–but for my father dying of cancer it was as much his party as it was mine and for what it’s worth I saw him enjoy it perhaps more (much more) than I did with his family and friends. I had offered to pay for it up front so he wouldn’t have to withdraw from his IRA and he flat out refused, but I didn’t have a clue that ALL the money was in the IRA and the wedding plus their condo purchase just killed them tax wise those years. I can’t really blame myself for that as he told me “$50k for the wedding” and I went with that budget. He was too proud to admit that really he didn’t have the $50k for my wedding (and supposed $50k for my sister’s wedding that hasn’t happened yet) — maybe he thought he did. Maybe he was in denial. I don’t know. We shouldn’t have spent that money in 2016. I should have eloped.

I guess until tonight I hadn’t come to terms with just how bad the situation is. It doesn’t HAVE to be as there is a decent pension and social security, but my mother refuses to adjust her spending beyond perhaps not buying 4 matching pants to go with the 8 shirts on sale she just has to have. She’ll buy 2.

After interviewing a ton of CFPs (mostly fee only) I just felt like they weren’t going to add enough value to be worth their 1% annual management fees. It’s not that they wouldn’t tell her the right things she needed to hear, it’s that she would hear it and it would go in one ear and out the other. She’s just so far off from OK, I’m not sure WHERE to start. Scratch that, I know we should be selling her tri-state home IMMEDIATELY to start saving along the lines of $30,000+ a year — BUT, even that just scratches the surface of the issue. Even if I paid her back for the wedding and my entire college education, I’m not sure that gets her where she needs to be.

After all the CFP interviews I set up an appointment for her with Vanguard personal advisory services which is “just” .03% of her portfolio (really not that bad since her portfolio is just $400k in IRA at the moment, but also I get the sense that its’ about .03% of a real CFP service. What I like about it is that it’s .03% split out per month and you can get out at any time, so we can get some advice for cheap from a real CFP (or team of people who work with CFPs) and get some sense for what to do before investing in a private CFP. For free, they ran a basic plan for her… which was just depressing… and had me revisiting her spending and income and, well, the picture isn’t pretty. The picture has oozing wounds and horse shit that’s been festering for centuries covered in maggots.

And she’s doing BETTER than most people in America right now. She has $70k in fixed income (taxable, but still), $400k in the IRA and a home probably worth about $250k cash after it’s sold. But that’s nothing. She’s 65 and she’ll be broke by 70 at this rate.

I don’t know what to do. I don’t know how to get her to take this seriously. She is in LALA land. I don’t want to give her $25k or $50k or more UNLESS she can actually learn to budget properly and makes plans to help smooth this all out, somehow. Instead of saying that she CAN’T sell the house next year, she realizes that she HAS to sell it next year (sadly) and really she should sell it THIS YEAR. She CAN’T get a storage unit to keep all her random things and she HAS to sell what she can and move to her condo full time as soon as possible – even if that means not going to her condo this winter and staying in the cold weather to pack (but, as she says, she would have to buy a whole new winter wardrobe, which would cost a lot, so she should not stay there to pack up the house this winter.)

My thought on helping her out financially is that I need to get my ducks in order first (i.e. buy a house, pay off said house, have a stable career for next 10 years, invest my money) and if in 10 years she has been spending smartly then I can help pay for things like buy her a vacation package or even pay the basic bills if needed, up to a certain point, especially to ensure she’s comfortable in old age when she needs to have help.

It just all feels so unsurmountable I’m erring on the side of just being delusional like my mother and letting her run out of money at 70, go into credit card debt, and then… then what? She has an HOA to pay (her condo was “cheap” but it’s not cheap on a fixed income, and who the hell knows what special assessments will come up over time?)

Any advice on what I should do, other than send my mother a check for $50k and run the hell away from this?

 

Update on the Whole My Mom’s Finances are Fucked Situation

Sorry for the foul language, but hey, when things are fucked, there isn’t a better way to describe the situation than the appropriate terminology.

The saddest of all is that THEY SHOULDN’T BE FUCKED. At first, I felt super guilty for letting my dad convince me that he had $50,000 set aside for my wedding to spend without, I don’t know, asking to see all of his bank statements before signing the contract for my venue and vendors. Ok, I still feel super ridiculously guilty about this.  I feel guilty for never saying thank you in the right way for this generous gift.

BUT – it turns out, the $50,000 wedding was just one financial mistake in a list of what may be hundreds. Even if I were to repay my mother back every penny, she’d still be in quite the pickle. And I’m willing to repay every penny (my father would never let me do that, but he’s not here anymore, so there’s that.)

I’ve run the numbers. I put them in front of her face. I try to share how each year, not counting the tax debts and family loan she’s overspending her income $40,000-$50,000. Despite her $50/$60k or so after tax income with her SS and Pension, she’s still draining her IRA. She keeps saying she’ll take money out of the IRA. I keep telling her the IRA won’t last forever or anywhere near it.

The house has to go. I really, really, really don’t want it to go. I know it’s just a house. It’s just a stupid piece of property with a dumb room that I lived in for my first 17 years of life. It’s just a dumb piece of wood that has so many memories good and bad all jumbled up in it that I see maybe twice a year if I manage to make it out to the east coast that often and with it I can escape back to childhood and feel like there’s some sense of stability in the crazy fucked up world, but that’s not enough reason to keep a house that’s costing my mother $40,000+ a year to maintain and that isn’t even counting big fixes like… needing a new oven (it hasn’t worked in years now) or a roof or carpeting or anything else.

But I tell her over and over again that the house needs to go, and now that I’ve run the numbers, sooner than later. I tell her I’d love if there was a way to keep it, but there isn’t, and the best thing to do financially is to sell it ASAP. That means starting work on getting it ready for sale NOW. But she’s down in Florida in her winter condo, swimming for a few months. I’ll give her this winter — her abusive husband just died and left her with a bunch of unexpected debts and she needs to just get away and have some time to relax and not think about it. But then she’ll say in summer it’s too nice out and she has to go to the pool and she doesn’t have time to clean. My sister, who lives in the house for free, btw, works a minimum wage job and always says she is too tired to help with anything (her job does require her to be on her feet all day) but she lives there for free and really is no help… physically or financially….

I wish there was some way to have reasoned with my father about his spending… but he’d just blame my mother for HER spending. Well, they both spent too much. I understood and empathized with him wanting to spend his retirement income before he passed away. But he didn’t need to buy a zillion worthless paintings and sculptures at local art fairs (that now represent a rather large collection which has to be sold or donated or trashed) or all the worthless “collectables” and my mom didn’t have to spend so much on shopping and they both probably should have moved to a smaller property a long time ago (vs buying a second home which was cheap to buy but expensive to own in Florida) and…

I just feel absolutely sick because no matter how many different ways I spin the numbers they don’t work unless she sells the home. The whole tax situation is a trainwreck as well, as we’re now awaiting to find out what penalties will be assessed on some very late taxes that he refused to let my mother file on time and lied to her about having the correct amounts paid off (maybe he thought he did, I think he lost his mind in these last few years.)

You know, even at the end, my mom had to rush around to find a cemetery plot and paid top dollar because my father couldn’t handle thinking about these things and kept putting it off, despite being diagnosed with a terminal illness 13 years ago and told he had 2 years to live. Even after all that. So my mother ended up spending god knows what on the cemetery plots for both of them and funeral home expenses and all that, plus a brunch at a decent restaurant afterwards and poof there goes the money that my father said was saved for my sister’s wedding! Oh, and there was no liquid assets to speak of so my mother had to put it all on her credit card. My uncle did offer a $30k loan after we asked him for help to pay off the bills but that’s coming due next year as well and I’m sure he wants his money back and I unofficially said I’d be on the hook for it if she couldn’t pay or some reason. They have a legal agreement signed so he gets proceeds from the house when it’s sold. All that, just to pay for a funeral my father couldn’t properly plan for because he wanted to be immortal. I wanted him to be immortal to, but clearly we cannot have what we want.

And I feel guilty about moving away but I also know if I was there every second of every day these last 10 years it would be no different as my father only complained about my mother’s overspending but never ever would look at the bigger picture. I understand that being terminally ill was horrific and he couldn’t admit it to anyone so instead he just bought things as they made him feel like he would live forever, I guess, but those things are just things and I wish there was a way to bring him back and somehow give him happiness without having to just spend all this money on so much stuff that now has to be sold just to sell the house…

Even with the house sold, my mother will still be overspending, but I think she’ll be ok… if she were to sell the house immediately, which she won’t do. She says she needs years to clean it out. The reality is that she needs help to clean it out. A lot of help. Emotional and physical help. It will be very hard and stressful. It will be very hard for me as well. I certainly will struggle to part with my childhood furniture, which I thought one day might be used for my own children (especially if I had a girl), but it probably doesn’t make sense to ship it across the country, esp given right now I live in a one bedroom apartment with no room for it.

I wish I had a zillion dollars and could just throw money at this problem and be done with it. So. I have some liquid assets right now and I’m tempted to do just that. I mean, my parents paid for my college education AND my wedding so it wouldn’t be the strangest thing to pay my mom back now and help her out financially. But I also have a child and need to support my own family as I’m the breadwinner and I have serious mental illnesses and I can’t maintain my jobs for long enough and I still can’t afford a house.

I’m really struggling and I’m not sure what to do. I can just let her run out of money in a few years and go into debt, but then what? Do I just say “I told you so?” A few years ago I set her up with a Mint account and tried to teach her how to budget and it went nowhere. I think she’s starting to get why she needs to budget but she refuses to, so what do I do? She can’t spend $700 a month on food (I get how she can, I’ve done it before, but she can’t) and she especially can’t if she’s keeping the family home with its $700/mo variable home equity payments that will pop up to $1700/mo in 2020 and also whatever this tax payment plan of ~$1000/mo will be for 72 months…

Then these tax lawyers and enrolled agents want $3k-$4k to help her reduce her penalties for taxes and I’m sitting here thinking maybe we should just try to do this ourselves because she doesn’t have $3k-$4k to pay for help (if we can do it ourselves) and I’m just sick of feeling like I have to protect her from vultures who prey on the weak but also don’t want to be stubborn like my father and refuse help when it’s needed.

I could give her $100,000 but it wouldn’t solve anything, it would just delay the inevitable. I’d rather save the $100,000 for when she’s older if she really needs the support, vs now when she’d just spend it on things she doesn’t “need” though she’d say she does.

So that’s the state of that.

First Quarter 2018: Spend Report

Ok, so the year has gotten off to a bit of a rough start on the spending front.

The good news is that my income for the first 3 months of the year (including post-tax paychecks and pre-tax 401k contributions) has been $34,495. So, my $13,675 of spending for 1/4 of the year doesn’t seem that bad when I’ve saved $20.8k thus far.

*Also, theoretically, if I receive my stock at the end of the year, I could have an extra ~ $4000 of savings per month which is significant (and makes my bad spending choices look slightly less bad?)

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December Budget: “Half Month” Check In

Since we (I) managed to spend way too much this year, I’m starting a better way of holding myself accountable to sane fiscal living by posting a budget update twice a month. I know I need to get a handle on my spending, especially with baby on the way — and the hope to own a home one day. Here’s how December is looking thus far:

This only includes my spending for the month Continue reading

2018 Budget Planning

It’s time to plan for a baby. And 2018. I’m aiming to put together a realistic budget, and determine how – with baby I can accomplish my goal of $650k networth by the end of the year (*personal networth) en route to my major next goal of $1M by 40, or sooner. I’m bumping that up to 38 because after that I’d like to save for the down payment of a house. This gives me 4 years to hit this goal. Continue reading

November Networth and Budget Recap ($541,989)

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November was a reasonably successful month for networth growth. According to NetworthIQ, my networth is now $541,989. This is a 2.98% (or $15.6k) monthly increase from the end of October.

End of Month Spend Report

Income: $7826
Spend: $3907
Remainder: $3919

Spend Breakdown

  • Rent: $1350
  • Auto: $284
  • Bills: $170
  • Entertainment: $48
  • Food & Dining: $707
  • Health: $114
  • Infertility: $563
  • Shopping: $1821*
  • Travel: $190
  • Other: $10

Went a little (ok a lot) crazy with shopping this month… mostly due to the Sephora Rouge sale. Don’t judge. I’m planning to return a chunk of items I bought that I don’t need, so that will hit December’s spend. Had I not gone psycho on shopping, this month would have actually not been that bad.

Despite spending way too much at Sephora (*this includes all of my hair products for the year, which I acquire for 20% off. And, other things I don’t need.)

My budget goal was $4400 in spend and I actually only spent $3907 so while that’s close, I’m $500 under my target spend. Not bad. I can do better, but not bad.

And all this spend was BEFORE I knew I was pregnant… so I’m definitely going to focus on cutting down the shopping habit going forward. The good thing about living in a 1 bedroom apartment is that it’s hard to go too crazy buying things for the soon-to-be newborn. And, I now have a very real “why to save” goal ahead of me… coming in 8 months! OH MY GOD. My objective is to save as much as possible before baby comes. That, and kick ass at my job so my boss allows me to work remotely and keep earning income when I return from a very brief maternity leave. (AH.)

December Spend Target: $2950 spent / $4876 saved

  • Rent/Home: $1350
  • Auto: $300
  • Bills: $200
  • Entertainment: $100
  • Food & Dining: $700
  • Health: $100
  • Infertility: $0
  • Shopping: $100
  • Travel: $0
  • Other: $100

 

October Networth & Spend Report: $519k

Despite not having a job for four solid months this year (and spending $20k on travel during that time), with the stock market’s latest performance my net worth is still up significantly. I realize what goes up must come down, but for now I’m enjoying seeing a higher net worth than I expected given how the job situation has gone down this year, and my not-so-frugal global travels.

It’s a little upsetting that if I hadn’t taken the trips and if I was able to obtain a job sooner, my net worth would be much higher — but my goal was always to close 2017 with $500k in net worth, and I’m really happy that I likely will accomplish that, barring any crazy stock market crash.

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I do owe my husband a lot of money (we keep our accounts separate) but he’s a good lender with really great rates (no interest, just hugs.) 🙂

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October spending definitely was high, given all the traveling. But I’m hoping for Nov and December expenses will be significantly reduced. I am taking one weekend trip but otherwise it should be a relatively cheap month. Here’s how October played out:

*note – believe it or not, this is my portion of monthly spend only. My husband has a separate budget, including his portion of the rent.

  • TOTAL SPEND: $7640
  • Home – $1400 (rent)
  • Auto & Transport – $621 (car detailing, new battery, gas)
  • Bills & Utilities – $331 (accidentally had international call for $75)
  • Entertainment – $154 (concert, netflix, etc)
  • Food & Dining – $583 (only half of month when not traveling)
  • Health & Fitness – $930 (infertility treatment, glasses)
  • Shopping – $1280 (new clothes for job, prob returning some)
  • Travel – $2234 (last part of honeymoon)
  • Other – $107

Obviously, I can’t spend $7640 each month!

Spend Goals for November:

  • TOTAL SPEND: $4400
  • Home – $1400 (rent)
  • Auto & Transport – $300 (gas)
  • Bills & Utilities – $200
  • Entertainment – $200
  • Food & Dining – $800
  • Health & Fitness – $1000 (infertility treatment costs)
  • Shopping – $200
  • Travel – $200
  • Other – $100
  • (Not included – investments ~$3000)

 

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2016 Spending

Although I saved a substantial sum in 2016, I definitely overspent in many areas. It was the year of my wedding so even though my parents contributed a sizable sum to the event, I splurged and spent too much on it outside of their contribution. We did a small “mini moon” which also cost something, but in 2017 we will splurge on a bigger international honeymoon. Here is a quick overview of how my spending went into 2016…

Income (after tax and 401k): $112.4k
Spending: $81.2k
(remaining / savings: $31.2k + $18k  (401k) = $49.2k saved)

Auto & Transport: $5.1k
Bills & Utilities: $1.5k
Education: $2.2k
Entertainment: $1.37k
Fees: $443
Food: $11.7k (yikes)
Gifts: $1.67k
Health: $5.4k (not counting insurance)
Home (rent and home things): $17.3k
Personal Care: $4k
Shopping: $14.8k
Wedding: $9.6k
Travel: $6.2k Continue reading

Budgeting with 50/20/30 Guideline

As I work to be better at budgeting, I searched the Internet for strategies for how much I should be spending on various items each month. I like the 50/20/30 strategy which seems reasonable and maybe even do-able.

Basically, you split your after-tax, after-401k take-home income into 3 buckets:

50% – fixed expenses
20% – financial goals
30% – variable expenses

So my after-tax income (now that I’ve maxed out my 401k for the year) is $9500. That breaks down to:

$4750 fixed
$1900 financial goals
$2850 variable expenses
Continue reading