View Full Version : OK, now you got me thinking--what would YOU do if you were me?
The ideas in the retirement thread we've been discussing are not new, and I have adjusted my own simple living philosophy to allow me to live with some peace of mind, but it still leaves me curious.
For you more financially-savvy simple livers, what would you do in my situation? And I'm really looking for some creative, strategic direction here, just for the fun of it:
Here's my situation:
61 years old/DH 60
Make a good income--not to get too personal but in the 6 figures / DH is not earning much at this point
Assets: $6,000 in IRA (yes you read that right--oh the shame of earning six figures and having nothing to show for it); Home in which about 75% of its $360k value is mortgaged in a brand new 15-year 3.25% interest rate mortgage.
Liabilities: Gosh darn empty albatross of a home which I expect to close in about 4 weeks. We would have already closed if dear BIL had done his duty as executor of MIL's estate, but left the nasty probate filing until we had a closing date. (enough said)
Additional earning potential: I'm just starting my local food delivery service and what I am hoping for is for it to grow enough for someone to be interested in either taking it over or buying it in 5 years. Or it could bomb.
Other debts: IRS, I'm ashamed to say, but I paid the $3000 mortgage payment on my MIL's former (empty) house instead of the IRS, so I have a delinquent tax burden. Also have about $7000 left in student loan debt for my kids.
Other asset: DH owns 50% of the house BIL lives in, but BIL is currently living there rent-free. Value of the paid-off house is about $340,000.
What would you do?? I'm talking big picture--like, should I move? Should we all move into BIL's paid off house and rent or sell my primary residence? But if I prefer to stay and pay off the mortgage in 7-9 years, would that put me in an OK situation if I sell the house at that point? Should we kick out BIL and rent the house? Sell it?
Really, what would you guys do if you were me? Just curious.
ApatheticNoMore
6-10-13, 2:27pm
Well I can't see not saving money on a 6 figure income (only in a weird case one year have I ever seen such a thing) so, you know :) I really would try to build up some kind of nest egg now as you never know when you won't be physically able to work (not being pessimistic, just planning). I wouldn't want to go into retirement without anything but SS - scary that is. Saving is not creative :)
Assets: $6,000 in IRA (yes you read that right--oh the shame of earning six figures and having nothing to show for it
well if most of ones life they earned almost nothing they aren't going to have much to show for it, even if eventually they finally get an astoundingly good salary. Having a lot is mostly years of accumulation, and no major blows that wipe it out.
Other debts: IRS, I'm ashamed to say, but I paid the $3000 mortgage payment on my MIL's former (empty) house instead of the IRS, so I have a delinquent tax burden.
Yes unless you want to break the law, you do have to pay taxes :) But they're forgiving (sometimes even work out a deal if payment is impossible) and the interest rate is low. It wouldn't be my top concern.
Also have about $7000 left in student loan debt for my kids.
Any chance they could pay some or all of that themselves?
Other asset: DH owns 50% of the house BIL lives in, but BIL is currently living there rent-free. Value of the paid-off house is about $340,000.
So here's where I'm seeing a potential. Maybe your brother in law could rent out say one room in the house and you could get most of the proceeds? You don't necessarily need to kick the guy to the curb to realize some financial value from the house is what I'm saying.
Should we all move into BIL's paid off house and rent or sell my primary residence?
Well do you really WANT to live with your BIL or is the idea just kick him out?
But if I prefer to stay and pay off the mortgage in 7-9 years, would that put me in an OK situation if I sell the house at that point?
As far as housing goes yes, you'll be fine in terms of housing. But I don't know if the net from what you sell the house for (including all loses from transaction costs) and what you can buy a cheaper house somewhere else (do you really want to live somewhere else?) is really by itself a retirement plan without other savings! What kind of net would you anticipate?
Thanks, ANM:
I'm not intentionally not saving money--I lost probably $200,000 in the recession due to the whole MIL thing and I also lost $150,000 because DH's business tanked and I've picked his commercial loans up to save my home.
And yes, I only started making decent money a few years ago and before that, things weren't that great. But still, I think I had a bit of lottery mentality when I started seeing money come in. I bought a new Prius and funded a family trip to Scotland (although I did use frequent flier miles for the airfare). I also agreed to fund my DD's expensive private school college tuition, and while DH used to pay for our family annual vacation month in VT, when his business tanked, I picked up the slack.
Yes, I'm dealing with the IRS, but it's a bummer because my debt snowball was almost gone.
Student loans, I did tell them that I'd pay as long as I am able, but to me not being able is being completely out of money. However, it's something to think about.
I like the rental idea! He probably wouldn't but might take to it better than moving. I sure like that idea better than giving up my house. If DH weren't around, I would seriously consider downsizing, but we really like our home, it is going to appreciate over time, I'm sure, and so we just reinforce each other in terms of really wanting to stay. We've considered asking BIL to move in with us and rent his house, but that would not be easy for any of us--DH and his brother are definitely The Odd Couple, and I can't say I'd enjoy losing my privacy either.
I'm really of the mind to just broadcast loud and clear to my fun-loving family that the money train is off the track for a while and be "gazelle" about taking care of business and my savings.
Catherine, I think it's good you're asking people who aren't emotionally entangled in your specific situation. Your situation feels familiar to me--too many decisions to be made and not enough a sense of priorities about them. Given that my personality is different from anyone else's, here's what I would do if in your place. First, I would pick an amount I would save every month, way above what you have been saving. Since I wouldn't really know what's the right amount, I would just pick one--I'd start with half my income (I tend to be extreme with myself this way, but it's the only thing that's worked for me). Then I would look at the choices that are left and try to prioritize ,knowing that I don't know the future but have to cut some things out. I would not to continue to contribute to BIL's support by letting him live there rent-free once the estate is closed. I would sell that house and put DH's half in savings (assuming you're in a position in re DH to make that decision). BIL will not be a pauper if he has half the income of the sold house. I would try to understand why I'm paying off other people's debts above my own, and even if I couldn't, I would stop doing it once your kids' tuition is paid off--unless they're financially able to do it themselves right now and your doing it is just making life cushier for them. I would think of it as a boundary issue--I am not going to support anyone but DH and me, and that's not selfish, it's self-respecting and survival. For me the solution wouldn't be to earn more money but to start spending a lot less. That's what I think I would do.
Great thoughts, larknm.. I would love to be able to save half my salary, and I'm looking forward to unloading the house and also paying off the IRS before I'll feel comfortable really saving, except for the IRA maximums. I have my budget set up on YNAB with broad categories of Wants, Needs, Taxes, Gifts, and Savings. I need $5,623 to just meet my "Needs." It just feels like it shouldn't have to be so much! The Needs consist of mortgage, PSEG, AT&T, Cable, Water&Sewer, and basic necessities like food, clothing, prescriptions for DH, and basic housing things and gas/auto registration etc.
And yes, I would love to sell BIL's house. DH is adamant about not doing that, because he things that can be a steady stream of income for us. Problem is, BIL would also love to sell it and just take the money, but we can't afford to buy him out at this point. I am NOT willing to take on another mortgage. Perhaps I just need to talk to DH about that.
rodeosweetheart
6-10-13, 3:59pm
This is such a great question, Catherine, and the answers have been equally great! I will need to think about it some more to see what I would do, but a couple of things jump out at me-
2 times in your post you mentioned the word shame, and I think if I were you, I would try to attend to those things that involved shame--these are really bothersome to you, and if you could do something about them, then you might feel more optimistic and in control of life.
The two things were owing the IRS and not having saved more in retirement.
Another thing that jumps out at me is the part about not wanting to fund the fun-loving family at this point, to your own detriment. I so relate to that, and did it for YEARS and still have a lot of trouble not doing it. If the kids can pay their college loans, then it is time for them to do so, I think. And if they can fund the family vacation to Vermont for a month, that would be awesome. If not, then maybe it needs to go down to a week long vacation, and you don't pay all the freight?
How can your DH contribute to paying off the IRS bill? It sounds as though he may see your money as "our money" but your debts as "your debts". You did bail the mom out, the DH out for the business loans--when does he return the favor? When will he step up to pay back the IRS--to think of how that could happen? Does he see you as funder and him as the free spender? Why do you have to be the one to figure out how to save his business, the mom's house, to the detriment of your own legal safety vis a vis the IRS--I guess that is what I am wondering.
Money is so terrific as a boundary clouder, isn't it, lol. I have had so many issues over the last 15 years that have involved family and money, to the extent that at times I feel that I am only of value to my family for a source of money so they can have what they want. I think this is distorted, but it really is an issue for me, and it has hurt me over the years, and I am working really hard to tryto take care of myself first, and then let the other adults take care of themselves. NOt easy.
Not to sound nasty but it seems to me that your DH is not living in your world.
You are carrying the load of the family with no support. Why? When will it be enough?
If one brother is living rent-free, there is no income being generated. Period!!!
If you picked up the liabilities/debts from DH's business failure, all of his assets should go to cover those debts including the house jointly owned with his brother who wants out. It would with any other lender, why not you? You are not a bank, you are a person who will need savings and sooner than you think.
Harsh truth - if you don't take care of yourself, bet on it that no one else will especially not your DH who has no money coming in to pay his outstanding liabilities, is getting past the age of high income employment, and will have increasing healthcare costs.
Do what is right for you and do it yesterday. Be as clear with family members that riding on your coattails is a thing of the past. You simply have to have some assets saved. Tell the kids the truth, they need to hear it from you about your finances or rather the lack of savings due to life's circumstances and your responses to those circumstances.
Thanks, rodeo/razz: Yes, things have just gotten a little out of hand in that department and I need to hear the tough talk about being more assertive.. It's such a tangled web, actually, but I just need to get myself out of it all--my kids are understanding of the situation--very supportive actually already. My MIL was the most financially responsible, hard-working, generous woman ever--somehow those genes died with her.
fidgiegirl
6-10-13, 8:31pm
I was reflecting on the situation on the my doggie walk. BIL living rent free, that's no good, but it's also confusing, because it is paid off, so it IS half his house, and it isn't draining money from you and DH, but there is an opportunity cost there. :( Like razz said, no rent being paid = it not being an income stream. If you can convince DH, cut that house loose. This seems to be the easiest way to also clear you of this obligation that seems to (rightly or not) be there to house BIL. Also then you can use the $$ for some of your other liabilities and once you can clear all the debt, then you can look at other options for super-accelerating your savings.
And . . . ummmm, is BIL set to get half of DMiL's house sale proceeds? Maybe that should be reconsidered. You have paid thousands in interest to hang on to it all these years. Has he contributed?
Money and family, it gives me the heebie jeebies, I suppose I will have my turn someday, too. Wishing you the best as always. You are a kind, kind soul . . . just don't let it be your financial undoing, as razz laid out . . .
Big hugs for you catherine . . .
I think that you live in expensive real estate land. Certainly you live in expensive real estate tax land, NJ is crazed in their taxation.
What you do for a living, you can do anywhere, I think.
I would get the h*ll out of $$$ Dodge. I'd rent a 1 br apt in an inexpensive part of the country and make the next 5 years all about building net worth. I think (again, assuming) that you fly often to meet clients and you'd need to live near an airport with decent direct flights. If my assumption is correct about your business, you have a HUGE advantage that you can take your cash producing business to a place where expenses are low. DH either gets on board or he can stay in NJ and can fund that lifestyle himself. But clearly, you would need to sell your joint home so that none of that mortgage falls back on you. I don't mean break up with DH, I mean you now, both of you, need Financial Boot Camp and if he is reluctant, you go without him.
I would from this very moment NEVER NEVER NEVER give more than ten dollar gifts to your children, your inlaws, your husband. They see you as the cash cow. Nip that chit in the bud. Why you are paying school loans is beyond me.
The new bizness? How can you possibly spend one cent on this thing if ANY of it goes in the red? You idea of selling it in the future--what exactly are the assets that you'd be selling? Do not overvalue a "business."
That's the big picture.
iris lily
6-10-13, 11:26pm
--Wait--how much are you getting from the sale that closes in 4 weeks? Will that pay off your debts?
You husband's "job" should be to get his $170,000 from the house BIL lives in. However that happens, he needs to make it happen. Of course he'll have to force a sale.
Here are my thoughts on things:
1. MIL's house/BIL's house
Sell both, take the money, and pay off the commercial debts, the IRS, and the student loans. Put the rest into savings (assuming there is a 'rest').
2. Your House
This is a tough one. If you believe you can work and earn at this level until you are 70 and pay off the house and save up for retirement -- and you believe the house will sever you long-term -- then it's a definite possibility.
On the other hand, I do agree with iris lily. And here you have options.
A. sell your house and buy a smaller one in a less expensive tax/COL area;
B. sell your house and put the money into retirement/savings, and then rent until you feel confident and can buy an inexpensive place in a good COL/tax area.
C. sell your house and move into the rental market -- saving everything for retirement.
3. student loans
if your kids are established and can afford the payments, it would be a good idea to transfer it to them.
4. BIL's house
If your DH refuses to sell, then he can ask his brother for rent in terms of his share at the rental value of the house. Essentially, say you could rent the house out for $1800/mo. If DH and BIL were in business partnership, then they would get $900 each (say). So, BIL can pay DH $900 per month for his value in the house.
5. moving in with BIL
Hey, if you can do this, then good on you. It might be a great way to go for everyone, if everyone is friendly and comfortable with it. Make sure financial duties toward the house are clear (how taxes get paid and by whom, utilities, food, etc).
6. Business
I agree that you should not over-value this. I have had more people try to sell me their businesses for so much more than what they are worth. One gal wanted to sell her website to me for $100k because of all of the "unique content" -- except that she wasn't a professional writer and her revenue per year -- which barely made her costs -- is only $4k. Which means the value of the business is likely $4k, at most. Another gal wanted to sell her yoga studio to me. She decorated a rented space in a good catchment, but had no client base and no brand awareness, etc. She wanted $200k for having decorated a space!
People often over-value what they have. My business isn't worth enough to sell it yet -- because the sale price (likely market rate at twice/three times profit) would not be enough to cover the amount of money/time that we have put into it to date. It needs to be MUCH bigger for that to be part of the equation, really.
I do have an exit strategy, though, and that's always a great thing to have when you have a business. :)
catherine
6-11-13, 12:41am
Kelli/iris/zoebird: thank you for putting in your good thoughts on this. I'm going to make this the last reply at this point--I've gotten the message!
I remember reading the short story The Necklace (http://www.eastoftheweb.com/short-stories/UBooks/Neck.shtml) by deMaupessant when I was younger and I thought it was so tragic--to waste 10 years of your life for nothing, and sometimes I feel like I've stepped into that book.
But you can't change the past. I know what my job is now with regards to my relationships. But essentially, I still feel I'm going to be OK. I am going to try not to sell the house right now--I'm going to give it a year and see where I am then. I am going to give the business a go. Maybe I won't get much value for it in five years, but DH is working on it with me and it may give us some additional income. My start-up costs have been very low so far.
I think I may drag BIL/DH to a financial planner so that they can hear the grim facts from someone objective rather than getting embroiled in the emotional stuff (and there will be plenty of that--DH/BIL have a strange relationship). I'm hoping I can talk DH into selling BIL's house--that's what BIL wants, so that seems to be the best option there.
In terms of proceeds from MIL's house--that's only going to be around $13k, so it will help, but it's not going to solve the whole problem.
Meanwhile I'm going to really batten down the hatches in terms of spending and get this debt taken care of.
That's the plan anyway. Thanks again for your input...
try2bfrugal
6-11-13, 12:44am
I'm trying to get a handle on your assets, liabilities and net worth.
Assets: 6K IRA, 90K equity in your house and 170K in BIL house. Total Assets = $266.
Liabilities: Taxes: ??, Student loans, 7k, Current mortgage 270K. Total liabilities = $277
Net worth: Negative 11K.
Annual expenses: 67.5K
Do you or DH have any pensions? What will both of your Social Security benefits be per month? What are your retirement expenses going to be?
At 61 years old, if it were me I would plan for worst case and assume that either I might develop health issues or I might lose my job and not be able to find a new one for the same pay range within the next few years. So I would start a serious retirement plan ASAP with what I had on hand and could maybe save over the next three years or so.
Right now your assets are not diversified. They are almost all in real estate. You don't appear to have an emergency fund.
To put things into perspective a bit, if you sold both houses you'd have to pay selling fees so you would have 246K net worth left over (less the taxes owed and any other assets / liabilities I did not list). At a 4% return, that could provide about 10K in income a year, plus any pensions and Social Security income. Under that scenario of selling both houses, you would have to include rent as an expense in retirement.
Alternatively you could sell both houses now, pay cash for a 246K house, and not have a mortgage payment, but that would leave you with zero savings and you'd have to live off Social Security and any pension income in retirement.
I think you either need to sell the BIL house, rent it out, move in with him or get him to pay a fair rent for your half. If you move in with him and sold your home that would leave you with a small savings cushion of 84.5K. Invested at 4% that could bring in $3.38K a year plus your SS / pension income in retirement.
If your business takes off, great, but I wouldn't count on any income until it is a sure thing. Is that different than the six figure job income?
If you know your SS / pension income in retirement and retirement expenses you can enter your numbers into Firecalc.com and maybe some other retirement planners and that will give you a ballpark idea if your retirement plan will work out okay. You can also model different options of buying, selling and renting houses in firecalc to see which one works best for you.
Finding out your Social Security benefits is really key. You are not far from the age most people retire, often due to forces outside their control. Your expenses are 67.4K a year and the average Social Security check is $1,230 a month or not quite 15K a year. Two SS payments would be 30K. If something happened to one of you you'd be back down to ~15K or whatever your particular benefits would be. If you sell the houses you could bring in maybe 40K total with investment income. Unless you have pension income, I don't see you being able to afford the house you have currently. I would second the drastic steps like Iris Lily suggested. You have to have a feasible plan for retirement and be able to get your retirement expenses under your retirement income. If you can work until 70 or so and can save more money that is great, but I wouldn't count on being able to do that. Can your DH work? You really could use the extra income right now.
I'm trying to get a handle on your assets, liabilities and net worth.
Assets: 6K IRA, 90K equity in your house and 170K in BIL house.
Liabilities: Taxes: ??, Student loans, 7K.
Net worth: 259K
Maybe you covered it below but I didn't follow what you said. She's got mortgage liability of $273,000 for the house she lives in and pays a mortgage on. She's got negative net worth.
try2bfrugal
6-11-13, 1:34am
Maybe you covered it below but I didn't follow what you said. She's got mortgage liability of $273,000 for the house she lives in and pays a mortgage on. She's got negative net worth.
You are right. I got ahead of myself on selling the current house. I did not put the current mortgage in liabilities. I will correct that. Thanks.
Catherine,
Given the issues that you have had as a result of your finances being entwined with your husband/your husband's family, I would strongly recommend that you do not do anything that would further link your financial future to them. Ok, maybe your husband, if he really is getting in step with the business. But even there I would be cautious.
I would NOT in any circumstance move in with your BIL or have him move in with you. There is enough dysfunction in that relationship already. Don't make it part of your daily life.
I agree with the suggestions to try to extract some of the value you have tied up in the house where the BIL lives. Either by him offsetting what you are losing by "sharing" it with him (on paper only), or by forcing a sale. If your DH and BIL are intent on waiting for values to come back up, then there should be an agreement about that, too -- when the house hits X valuation on Zillow, it goes on the market, or else BIL starts paying Y (or Z extra, depending on whether you are able to get him to start paying you something now.
The kids should take over the student loan payments. Period. They may be in low-earning jobs now, but they don't have retirement staring them down the face.
PAY YOUR TAXES!!!!! That will come back and bite you hard if you don't get it under control, due to penalties and interest. Get settled up with the IRS. No more trips or luxuries until that is taken care of.
Good luck to you. I am impressed by how well you have stood up under all this pressure. If it were me, I probably would have caved long ago. Would have had a really hard time holding down a job, not to mention thriving in one.
Good luck with the business. Really hope that takes off for you as well and you are able to turn the corner financially soon.
lhamo,try2bfrugal,
Thank you.. Well, I do have a game plan and a lot of resolve. And it's not the lack of money I'm upset about--it's the waste of it.
The reason I am not catatonic with fear and despair is that as I mentioned, I'm going to be fine. Even if I have nothing, I will be fine. Thankfully, some of the people I have admired and read with great interest are Peace Pilgrim, Daniel Suelo, Jim Merkel, and "Dr. Jackie Benton" of the book 12 x 12, all of whom earn either nothing or less than the income required to have to pay taxes. In my own life, my mother's estate was $60. On her deathbed, she pulled out from under her butt three 20 dollar bills (which I had given her the previous month) and gave it to me. That was the extent of her "portfolio." And she was the happiest, most "enlightened" human being I've known, a status that she earned after living through hell with three alcoholic marriages, a devastating stroke, and the loss of all her personal belongings in a fire.
I thank God daily for all that I have. Today, I have everything I need, and that's all I need to worry about for today. I love the famous quote by Julian of Norwich: "All shall be well, and all shall be well, and all manner of things shall be well." I truly believe that. To me that's the heart of simple living.
iris lily
6-11-13, 10:56am
catherine, I'm sure that you will do fine. I didn't really expect you to sell your house and move to a one bedroom apartment.
My approach to money is from a place of fear of being broke. Don't ask me why, I've never been broke. I mean, I've lived a simple, student-type life, but I always knew there would be a roof and food. Not always gas, though, haha. I didn't hate it, I was fine with it. But also, I was not in debt. Debt scares the beejesus out of me. I remember signing on the dotted line for my first (and only) mortgage. That $45,000 house was going to cost something like $189,000 in total payments. I panicked and got sweaty and felt sick when I read that disclosure statement. (I'm not one to feel sick.) I vowed to myself "never again" and I've not been in debt again.
Some of my money reality is that I just like to see it pile up. The pile gives me pleasure and amassing it is a fun hobby. Now that the market is up, it's extra fun, but that will change, it always does.
rodeosweetheart
6-11-13, 1:09pm
Well, I've thought it over, and here is what I would do, I think--
I would use the proceeds of the 13000 house to pay off IRS debt. Anything left over I would use as emergency fund start.
I would sell the BIL house (sorry, I thought MIL and BIL house were same house, confused here!) and split proceeds- half to BIL and half to business debt from husband's business. He would give me his half of 170000 to make right the business debt from the marital estate, or from my accounts--not sure how this is set up.
If he did not want to do that, I separate so as to make each of us responsible for our own financial futures.
I would sell current home. If it is marital property, I would split the proceeds and each of us would get half. If not,I would figure out what seems fair. I would not feel I could continue to put out the 67k year needed to live there, and the taxes would scare me for the future--I would feel that I could not afford to live there once I stopped earning.
I would sell my current house so as to not be in debt there.
I would move forward to try to find something in a country rental near my new organic grocery producers 'hood, so as to be near my new clients while still able to service the old clients. This would lower my cost of living considerably.
I would save half my income and put it away for retirement.
I would ask DH to bring in half of our new lifestyle in the rental. If he is unwilling, I would ask for a separation.
I would move forward into retirement planning and start now. Just because I have seen with my own parents how you start in one lifestyle and time and inflation and prices going up erodes that lifestyle. Would be thinking about trying to get the lifestyle affordable now, to save, and pick an age and try to keep working that long--say 10 more years.
That would be my plan, I think.
I agree with what the other posters said, but I would reconsider trying to agressively pay off the student loans. Research your loans. Generally, they 1) are forgiven when you die, 2) are forgiven when you become disabled, 3) offer means-tested repayment plans/deferments. To put it bluntly, given your age, any of those have a high chance of becoming available to you in the next 10 years, either because SS becomes your only income or you are unable to work anymore. So put away for retirement as much as you can and try to get away with the min payment on those possible. I would do the same on the morgage as the interest rate is low and it's probably covered by mortgae ins in the case of your or your hubby's death. Run the calculations yourself, but my advice would be to put away as much as possible.
Check out this post by Mr. Money Mustache about The Shockingly Simple Math Behind Early Retirement http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
His calcualtions don't include SS, but the bottom line is you'll be OK
flowerseverywhere
6-11-13, 1:54pm
Here is what you should do; whatever is right for you. Where do you want to be in one year, two years or five years? What kind of example do you want to set for your kids and grandkids? Really think about that. Maybe in one year you want to be rid of the real estate you want to be rid of, pay back the IRS and have told your kids as of june1 2014 you need to take over your loan payments? Maybe you want to say in one year I want to save x$ in a retirement account. Maybe you want to have a sit down with DH and set a timeline for selling the house he has with bil. There is no sense looking back. So you made mistakes. Join the club. But you can look forward and craft a plan so that you can live in decent housing, have adequate food and keep the heat on in the winter.
Good luck and keep us updated. I thought you kinda took a beating in the responses but when you ask that is sometimes what happens.
rodeosweetheart
6-11-13, 2:23pm
"But you can look forward and craft a plan so that you can live in decent housing, have adequate food and keep the heat on in the winter."
Yes, that is absolutely well stated, and exactly right, I think!
"Good luck and keep us updated. I thought you kinda took a beating in the responses but when you ask that is sometimes what happens."
Gosh, Catherine, I hope you have not felt anything I said was offensive or harsh. You asked for what we would do, and some of us feel strongly about it--in my case because I have faced similar threatening situations. But I hope you were not hurt or offended by anything I said, that was not my intent.
Catherine, I love your entry about how you'll be okay--particularly the list of Peace Pilgrim and the other low/no earners, and especially the tale of your mother. This whole thread makes me feel like I know you a lot better, and that entry really cinches it--I'm going to use you for an example for getting my financial problem out there for these people to give me the kind of reality feedback you're getting. Thanks.
merince: Thanks for the link. I love Mr. Money Mustache, so that was very helpful.
flowerseverywhere: You're right--I asked for it, and I kind of was looking for the tough love. I'm actually going to print this out in case my lilly-livered, doormat tendencies rear their ugly heads.
rodeasweetheart: Thanks for the checklist--it's a great one!
iris lily: I totally understand where you're coming from.. hey, you're a grower and a farmer and you love to watch all things grow--flowers, money, it's all the same, right? And I so agree with you on the debt--it is definitely slavery, but in my case I think I held out my own wrists and said, "Lock me up."
I'm just waiting for this much awaited for closing to take place, hoping the buyers don't get impatient now that the ball is in OUR court (thanks to BIL's not following up on his duty as executor--my new law grad son says I could sue him for falling down on his duties as executor.. sometimes it's a tempting thought). I have stopped paying the mortgage and will be 30-60 days late depending on the closing date. I simply can't do the IRS and Chase both, and I agree with you all who said the IRS has the bigger teeth. I tried as hard as I could to preserve my credit, but I'm just tapped out.
ETA: larknm, yes, I do feel a bit exposed now, but I've been hanging around this forum for a long time, so I guess I'm among friends.
try2bfrugal
6-11-13, 3:09pm
Elizabeth Warren and her daughter wrote a book called All Your Worth that shows people how to balance their income with their outgo. I think you would find it helpful.
Elizabeth Warren and her daughter wrote a book called All Your Worth that shows people how to balance their income with their outgo. I think you would find it helpful.
I actually have it. I can see it on my office bookshelf right now. I use the "Needs"/"Wants"/"Save/Debt reduction" approach to set up my categories in YNAB. It really helps, although I'm trying to keep the "Wants" proportion a lot lower than their recommendation. I'm actually not a big spender--just a light touch, so maybe I should have a category "Money to Friends and Family: 0%"
flowerseverywhere
6-11-13, 3:39pm
"
"Good luck and keep us updated. I thought you kinda took a beating in the responses but when you ask that is sometimes what happens."
Gosh, Catherine, I hope you have not felt anything I said was offensive or harsh. You asked for what we would do, and some of us feel strongly about it--in my case because I have faced similar threatening situations. But I hope you were not hurt or offended by anything I said, that was not my intent.
I also did not mean anyone said anything that was unwarranted or particularly mean, sometimes the truth is hard to read. I don't think there is one of here who is perfect, and we could all use some refinements. I just felt kinda bad because Catherine seems like a sweet soul who has only tried to be a good wife and mom. Sometimes those exact things are what gets us in the most trouble!
"
"Good luck and keep us updated. I thought you kinda took a beating in the responses but when you ask that is sometimes what happens."
Gosh, Catherine, I hope you have not felt anything I said was offensive or harsh. You asked for what we would do, and some of us feel strongly about it--in my case because I have faced similar threatening situations. But I hope you were not hurt or offended by anything I said, that was not my intent.
Of course not!!! I know you guys are looking out for my best interest, and I appreciate it!
BarbieGirl
6-12-13, 9:04pm
Catherine,
Loved your Julian of Norwich quote. I don't have anything of value to add except that my MIL lives right next to the Julian shrine in Norwich and is very involved in Volunteer work there. She even wrote a children's book that is sold at the gift shop there. She occasionally gives talks in the US about Julian of Norwich.
Best wishes!
Barbie
fidgiegirl
6-12-13, 10:16pm
I also want to thank you for putting your situation out there. A lot of us have enjoyed the money threads in the past but there haven't been as many, and it can be hard to put it out there especially when there are spots for people to criticize. I felt like I was taking an emotional risk to put up my attic thread, and it didn't get nearly as many responses as yours. So sending more hugs!!! And hoping you'll keep us updated.
Not to bring back this subject, but I want to thank you all. I just copied and pasted all of your responses and bolded all of the suggestions and saved the document on my desktop. I was overwhelmed with the sane, rational thought that went into each of the posts.
This morning I also ran a few options by DH. He feels TOTALLY overwhelmed and trapped. I actually outlined 7 options to make him realize there are choices, but that didn't help. I didn't say what I wanted to say, which is basically, "Hey, you made your bed, now go lie in it" He can't accept that. He asked about my getting a mortgage (he has no/bad credit) on his brother's house and buying him out, and I basically said "no way." So that takes one option off the table.
On a positive note, we ARE CLOSING THIS WEEK on MIL's old house!!!!! I don't think there will be much money. Now, because we should have closed May 15, but we had to THEN go to probate with BIL's paperwork because he was so ineffective as an executor, apparently the buyers' interest rate went up a notch and they're asking us to share the $4,000 impact.
Also, did NOT pay the mortgage payment on the MIL house. I'm sick of it, and I don't have the money. If it messes up my credit, oh, well. Instead, I paid the $5000 to the IRS.
I'll keep you posted, but, honestly, I ran the figures last night at 3am, and OUT OF MY POCKET this whole fiasco has cost me $194,000. DH's business bombing has cost me $150,000.
So I'm keeping my eyes on my new mantra, NO MORE WASTE. That's it.
Thanks again.
Over and out.
Haven't read all the other posts yet so may be repeating.
First - pay off the IRS asap. Use emergency funds or income but pay it or penenties will increase.
Second - Tell BIL he either needs to buy out your dh's share of the house, or move so it can be sold or rented. If he doesn't want to do that and wants to continue living there rent free, then figure out what the total monthly house expenses would be and also what it could rent for. Deduct expenses from rental amount to determine income you'd get if rented out and tell him he has to pay your dh half that amount each month for his income share.
Thirdly - Get the kids to pay some or all of their student loans if they can.
And lastly - Do a Dave Ramsey "rice and beans, and beans and rice" style budget and throw much of that 6 figure income at debt and mortgage. Or throw it at me :-) . Then save, save, save until you are where you want to be. A paid off house, no debt, and money in the bank. Then you can decide to work or retire or whatever. I know you live in a high tax state - income and property - so unless you are really attached to that area you may want to move once you are able . That would reduce those high property taxes you pay on the current house. But really it all depends on your end goal - what is that?
Here are my thoughts on things:
1. MIL's house/BIL's house
Sell both, take the money, and pay off the commercial debts, the IRS, and the student loans. Put the rest into savings (assuming there is a 'rest').
2. Your House
This is a tough one. If you believe you can work and earn at this level until you are 70 and pay off the house and save up for retirement -- and you believe the house will sever you long-term -- then it's a definite possibility.
On the other hand, I do agree with iris lily. And here you have options.
A. sell your house and buy a smaller one in a less expensive tax/COL area;
B. sell your house and put the money into retirement/savings, and then rent until you feel confident and can buy an inexpensive place in a good COL/tax area.
C. sell your house and move into the rental market -- saving everything for retirement.
3. student loans
if your kids are established and can afford the payments, it would be a good idea to transfer it to them.
4. BIL's house
If your DH refuses to sell, then he can ask his brother for rent in terms of his share at the rental value of the house. Essentially, say you could rent the house out for $1800/mo. If DH and BIL were in business partnership, then they would get $900 each (say). So, BIL can pay DH $900 per month for his value in the house.
5. moving in with BIL
Hey, if you can do this, then good on you. It might be a great way to go for everyone, if everyone is friendly and comfortable with it. Make sure financial duties toward the house are clear (how taxes get paid and by whom, utilities, food, etc).
6. Business
I agree that you should not over-value this. I have had more people try to sell me their businesses for so much more than what they are worth. One gal wanted to sell her website to me for $100k because of all of the "unique content" -- except that she wasn't a professional writer and her revenue per year -- which barely made her costs -- is only $4k. Which means the value of the business is likely $4k, at most. Another gal wanted to sell her yoga studio to me. She decorated a rented space in a good catchment, but had no client base and no brand awareness, etc. She wanted $200k for having decorated a space!
People often over-value what they have. My business isn't worth enough to sell it yet -- because the sale price (likely market rate at twice/three times profit) would not be enough to cover the amount of money/time that we have put into it to date. It needs to be MUCH bigger for that to be part of the equation, really.
I do have an exit strategy, though, and that's always a great thing to have when you have a business. :)
OK I should have read this first as it sums up my thoughts nicely. I also thought some more about the option of moving in with bil into the paid off house. It might actually work out if dh is reluctant to force a sale or charge him rent. If it's close by you can make the move easy and sell your place - becoming both mortgage and debt free instantly and maybe some extra left over for savings. Then if bil doesn't like the living arrangement, you will be in a position to buy him out without having to incur too big of a mortgage - one that could be paid off fast with your income.
lhamo,try2bfrugal,
Thank you.. Well, I do have a game plan and a lot of resolve. And it's not the lack of money I'm upset about--it's the waste of it.
The reason I am not catatonic with fear and despair is that as I mentioned, I'm going to be fine. Even if I have nothing, I will be fine. Thankfully, some of the people I have admired and read with great interest are Peace Pilgrim, Daniel Suelo, Jim Merkel, and "Dr. Jackie Benton" of the book 12 x 12, all of whom earn either nothing or less than the income required to have to pay taxes. In my own life, my mother's estate was $60. On her deathbed, she pulled out from under her butt three 20 dollar bills (which I had given her the previous month) and gave it to me. That was the extent of her "portfolio." And she was the happiest, most "enlightened" human being I've known, a status that she earned after living through hell with three alcoholic marriages, a devastating stroke, and the loss of all her personal belongings in a fire.
I thank God daily for all that I have. Today, I have everything I need, and that's all I need to worry about for today. I love the famous quote by Julian of Norwich: "All shall be well, and all shall be well, and all manner of things shall be well." I truly believe that. To me that's the heart of simple living. What a great additude Catherine! Things in life don't always turn out the way we planned but rarely is anything wasted. I look at my choices in life as neither good or bad, maybe my career didn't pan out the way I wanted, or my marriage, or where or how I live, but neither were those things wasted time. I feel the same about money. It was money earned and spent where band when needed. Maybe not the way I planned to spend it, but spent none the less and not wasted. Maybe even enjoyed too.
OK I should have read this first as it sums up my thoughts nicely. I also thought some more about the option of moving in with bil into the paid off house. It might actually work out if dh is reluctant to force a sale or charge him rent. If it's close by you can make the move easy and sell your place - becoming both mortgage and debt free instantly and maybe some extra left over for savings. Then if bil doesn't like the living arrangement, you will be in a position to buy him out without having to incur too big of a mortgage - one that could be paid off fast with your income.
This is also a viable option, because buying out BIL would be only half the mortgage which you may be able to pay off more quickly on your income. If you can make this work, then I say go for it.
And, if your husband refuses to make a decision, then you're just going to have to make some. "this is what we need to do in order to be financially secure. you're going to have to buck up and deal with it."
I grant you, loosing a business is a hard hit to the ego/emotions and he's probably dealing with that still. But, there is a point when you need to focus and make some decisions for your future.
The ideas in the retirement thread we've been discussing are not new, and I have adjusted my own simple living philosophy to allow me to live with some peace of mind, but it still leaves me curious.
For you more financially-savvy simple livers, what would you do in my situation? And I'm really looking for some creative, strategic direction here, just for the fun of it:
Here's my situation:
61 years old/DH 60
Make a good income--not to get too personal but in the 6 figures / DH is not earning much at this point
Assets: $6,000 in IRA (yes you read that right--oh the shame of earning six figures and having nothing to show for it); Home in which about 75% of its $360k value is mortgaged in a brand new 15-year 3.25% interest rate mortgage.
Liabilities: Gosh darn empty albatross of a home which I expect to close in about 4 weeks. We would have already closed if dear BIL had done his duty as executor of MIL's estate, but left the nasty probate filing until we had a closing date. (enough said)
Additional earning potential: I'm just starting my local food delivery service and what I am hoping for is for it to grow enough for someone to be interested in either taking it over or buying it in 5 years. Or it could bomb.
Other debts: IRS, I'm ashamed to say, but I paid the $3000 mortgage payment on my MIL's former (empty) house instead of the IRS, so I have a delinquent tax burden. Also have about $7000 left in student loan debt for my kids.
Other asset: DH owns 50% of the house BIL lives in, but BIL is currently living there rent-free. Value of the paid-off house is about $340,000.
What would you do?? I'm talking big picture--like, should I move? Should we all move into BIL's paid off house and rent or sell my primary residence? But if I prefer to stay and pay off the mortgage in 7-9 years, would that put me in an OK situation if I sell the house at that point? Should we kick out BIL and rent the house? Sell it?
Really, what would you guys do if you were me? Just curious.
With a 6 figure income, none of what you mention seems too overwhelming.
It think if it were me I'd put the BIL house up on airbnb.com. BIL can still live there but you'd have some revenue too. I'm renting the bedrooms of my condo on airbnb and it has been great. They're very helpful. Most of my guests have been from other countries and are no trouble at all. For that matter depending on the configuration of your own home you could get some airbnb revenue from it too. My listing specifies they get the room and bath and USE OF the kitchen and laundry. They don't make themselves at home in the main living area. A lot of the time it's as if they aren't even here. The great thing about it is they stay a month or two or three and then leave, so if you don't like it you can always stop doing it - not like having to kick out a long term roommate. You can block out part of your calendar when you don't want guests, too. This could help you keep your debt paying down without a lot of extra work and thought. (I set my minimum stay at one month. One night people are too much work)
My late DH was constantly on a payment plan with the IRS. Make a deal and then pay as agreed and you're fine.
Knowing that you (y'all) own half of BILs house gives you some security behind your own mortgage - if something goes wrong you have two houses to sell or live in or sell one to pay for the other or sell both and buy something else - it's a great backup. If it were me I'd hold onto it at least for a while. That assumes some revenue from it, either airbnb or BIL paying something, at least the taxes and utilities so it doesn't cost you anything.
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