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Old 05-29-2009, 02:03 AM   #21
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Does she have a spare bedroom and bathroom? If so than she needs to get a roommate the extra $400-$500 a month will make a big difference. It beats the heck out of working especially at her age in this economy. Plus it may get you of the hook for helping out all the time.

If she has an extra bedroom but it is being used than have her sell some stuff on ebay to make room.

Second thought what about going after the Ex. I didn't think that quitting your job got you out of paying alimony. Perhaps they can negotiate a lump sum instead of 10 years worth of alimony.

I'd show her W2R budget and tell her that is pretty much she HAS to live on unless she figures which unpleasant way she wants to generate more income, job, roommate,or Ex.
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Old 05-29-2009, 06:14 AM   #22
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Do you have a college / university or language school in your town? She could start getting used to another person in the house by renting out a room to students for a limited time.

She could look for a job as babysitter / mothers helper or the like. These jobs often also provide for some meals and kill the time to spend money.
Could she apply for reduction of property tax because of recent reduction of the house's value?

Is ExH already getting some income from his retirement accounts? Then part of that income might be hers.
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Old 05-29-2009, 06:27 AM   #23
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Does she have a spare bedroom and bathroom? If so than she needs to get a roommate the extra $400-$500 a month will make a big difference. It beats the heck out of working especially at her age in this economy. Plus it may get you of the hook for helping out all the time.

If she has an extra bedroom but it is being used than have her sell some stuff on ebay to make room.

Second thought what about going after the Ex. I didn't think that quitting your job got you out of paying alimony. Perhaps they can negotiate a lump sum instead of 10 years worth of alimony.

I'd show her W2R budget and tell her that is pretty much she HAS to live on unless she figures which unpleasant way she wants to generate more income, job, roommate,or Ex.
I totally agree. W2R budget is livable and MIL needs to live within her means. If not, she will end up spending down her investments and potentially lose her house. Tell her this is an emergency and she needs to act NOW. This is her base budget. If additional income comes later then she can adjust her budget to include the add'l income, but not until then. She must get tough minded about this and make it happen.
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Old 05-29-2009, 07:57 AM   #24
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I would take an extended vacation from MIL's problems otherwise she will never figure them out as long as she has you to solve them . She's 66 not disabled .If she wants to live on $32,000 maybe she does have to get a job or figure out where to make cut backs instead of putting it in your lap.
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Old 05-29-2009, 08:09 AM   #25
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LTC Insurance: $1600
This another expense I think should be cut. It is unrealistic for someone with her very small nest egg be paying 8% of her annual $20k income for this type of insurance.
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Old 05-29-2009, 08:16 AM   #26
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This another expense I think should be cut. It is unrealistic for someone with her very small nest egg be paying 8% of her annual $20k income for this type of insurance.
I agree, and in fact I do not carry LTC insurance myself. But I waffled because some people feel it is essential. If she eliminates it, she could budget a much more liveable $3100 for miscellaneous spending money, instead of $1500.

Also, if she takes in 1-2 of her friends as renters/roommates, she might be able to keep her pets (which I would imagine might be a huge issue for her).

The budget needs to firmly cover food, shelter, medical, and utilities. I think she could live on a lot less for food, but wanted to generously fund it. A small steak (or whatever) once a week can go far in making someone on a tight budget feel less deprived.

I would imagine that her first reaction is going to be, "You just want to keep me from spending my money so that you will inherit it!" so the OP will probably have to somehow get her to accept the standard 4% SWR as reasonable in her own mind.
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Old 05-29-2009, 08:30 AM   #27
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This another expense I think should be cut. It is unrealistic for someone with her very small nest egg be paying 8% of her annual $20k income for this type of insurance.
It's usually said that LTCI is really only something needed by the middle and upper middle class -- the wealthy can bankroll the LTC out of pocket and those of little means can have a considerable portion of it picked up by the government (albeit perhaps not at the facility of one's choosing). And I don't know that there are enough assets here to justify the cost.

The only problem with dropping it is that if circumstances change and she wanted to pick it up again, it would likely be much more costly. But in reality I'd have to think the chances of that are rather slim.
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Old 05-29-2009, 08:35 AM   #28
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Although we have LRC insurance I do not believe it is appropriate in this situation.

Note that the budget proposed does not set aside any savings for home maintenance. She is relatively young and eventually the roof, water heater, furnace etc. will need replacement.

She need a reality check about her finances but also hope that if she manages her spending closely it is do able.
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Old 05-29-2009, 08:39 AM   #29
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Note that the budget proposed does not set aside any savings for home maintenance. She is relatively young and eventually the roof, water heater, furnace etc. will need replacement.
I see $1200 budgeted for home repair annually. Don't know if that's enough in her case, but it may have to be and for only the most urgent repairs; the conventional wisdom is that one should budget about 1% of a home's value for annual repair and maintenance.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 05-29-2009, 08:43 AM   #30
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...because some people feel it is essential...
Let me guess... LTC insurance salespeople?
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Old 05-29-2009, 08:49 AM   #31
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Let me guess... LTC insurance salespeople?
Unlike some kinds of high-commission insurance (koffkoffwholelifekoffkoff), for the right circumstances I think LTC might be prudent. I'd agree that it's probably oversold, though -- a lot like annuities.

The bottom line is that if you have very few assets to protect, you probably don't need LTC -- eventually gummint assistance would come into play, the main downside being that you couldn't pick the facility. And if you're wealthy, you can pay cash for the care.

In short, the prime target demographic for whom LTC might make sense is solidly middle to upper middle class, probably with at least a few hundred thousand dollars in assets to protect, and who want to see to it that those assets pass to their heirs and not to the nursing home.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 05-29-2009, 08:51 AM   #32
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Of course it is up to her where she will cut, but for example, how about:

Medicare: $1200
Medigap: $2200
LTC Insurance: $1600
Property taxes: $900
Home insurance: $900
Gas: $1500 $800 - drive less
Drug and Medical Co-pays: $1200
Food: $5000 $3600 (this is definitely enough for a single person living alone on a budget)
Pets: $6000 $600 (she has quite a few of them) Poor people can't afford more than $50/mo on pets - eliminate expenses or find homes for them
Maid: $800 $0 (unnecessary luxury)
Vacation: $1200 $0 (unnecessary luxury)
Newspaper: $200 $0 (unnecessary luxury)
Car repairs: $1000
Car Insurance: $900
Home repairs: $1200
Charity: $1500 $0 (she can't afford it)
Gifts: $1500 $200 (simple, handmade gifts)
TV: $700 $400 (bare bones basic cable)
Phone: $800 $300 (cheapest landline, no long distance)
Alarm system: $400 $0 (poor people can't afford alarm systems)
Termites and Pest Service: $600 $100 (yearly termite inspection only - - she will have to use a can of bug spray to deal with pests herself)
Utilities:$1400
Miscellaneous (classes at local college, eating out, movies, clothes, etc...): $3600 $1500 (cut out classes, eating out, movies, cut back on clothes or get second hand)

Total $36,300 $20,000

The reason I keep emphasizing "poor people" is not that I personally think that she is poor at all - - but she needs to get in that mindset if she is going to cut back sufficiently.
Thanks W2R,

Your budget looks a lot like the one I envision for her. But she always finds some weak justifications to avoid cutting costs. Like she wants to keep the newspaper... to line up the cat boxes with. Literally $200 p!ssed away! Basic cable? Not enough channels to keep her entertained (mind you every time I go there she is watching Oprah on one of the local channels and I have never seen her watch one of the premiums channels). I already had her cut the landline to the most basic service (local+911, no more long distance, caller ID, voice mail, etc....) but she needs to keep the landline because of the alarm system and DSL internet.
But I will show her your proposed reduced budget so that she can see that I am not the only one who thinks there is a lot of non-essentials in her current budget.
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Old 05-29-2009, 09:01 AM   #33
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Does she have a spare bedroom and bathroom? If so than she needs to get a roommate the extra $400-$500 a month will make a big difference. It beats the heck out of working especially at her age in this economy. Plus it may get you of the hook for helping out all the time.

If she has an extra bedroom but it is being used than have her sell some stuff on ebay to make room.

Second thought what about going after the Ex. I didn't think that quitting your job got you out of paying alimony. Perhaps they can negotiate a lump sum instead of 10 years worth of alimony.

I'd show her W2R budget and tell her that is pretty much she HAS to live on unless she figures which unpleasant way she wants to generate more income, job, roommate,or Ex.
Thanks Clifp. She has actually 2 spare bedrooms and her house is quite large (about $2,500 sq.ft. IIRC). And there is plenty of stuff she could sell on Ebay (good idea!)... Also the local economy is not that bad and I think she would have a reasonable chance to find a part time job even now. As for the Ex, I want her to go after him more aggressively but so far her attitude has been "let's wait and see". I don't think she can afford to wait much longer.
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Old 05-29-2009, 09:08 AM   #34
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I personally think that she can't afford the LTC insurance and that her medicare supplemental insurance could probably be downgraded (right now she has plan J, but I think that she could go with plan C). Because of the way she lived all these years, she can't fathom "scrimping" on insurance, especially health insurance.
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Old 05-29-2009, 09:11 AM   #35
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I personally think that she can't afford the LTC insurance and that her medicare supplemental insurance could probably be downgraded (right now she has plan J, but I think that she could go with plan C). Because of the way she lived all these years, she can't fathom "scrimping" on insurance, especially health insurance.
Health insurance itself needs to be one of her core expenses and probably not one she can cut too much. The only possible exception is on Medigap if she's over-insuring herself with extremely low deductibles and copays.

LTC, on the other hand, can probably be cut. It's not like she won't get any if she runs out of money. I'm assuming in her situation there's no expectation of passing much of an estate to her heirs? If not, that would seem to make the decision to cut LTC easier.
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Old 05-29-2009, 09:12 AM   #36
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I see $1200 budgeted for home repair annually. Don't know if that's enough in her case, but it may have to be and for only the most urgent repairs; the conventional wisdom is that one should budget about 1% of a home's value for annual repair and maintenance.
I do a lot of repairs myself so her budget needs to cover just the cost of materials. She had a new roof and A/C installed 2 years ago, so her home repair costs should be below average for the next 10-15 years.
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Old 05-29-2009, 09:24 AM   #37
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Health insurance itself needs to be one of her core expenses and probably not one she can cut too much. The only possible exception is on Medigap if she's over-insuring herself with extremely low deductibles and copays.

LTC, on the other hand, can probably be cut. It's not like she won't get any if she runs out of money. I'm assuming in her situation there's no expectation of passing much of an estate to her heirs? If not, that would seem to make the decision to cut LTC easier.
She would like to pass as much of her estate as possible to my wife. That's why she has been reluctant to consider a reverse-mortgage. We have made it clear that she is not in a position to worry about such things. DW doesn't expect a dime of inheritance from her anyways. That's why I think she should get over that mental hurdle and try to stretch all of her resources to remain financially independent. For us, it's far more important than any inheritance.
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Old 05-29-2009, 09:40 AM   #38
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She would like to pass on her as much of her estate as possible to my wife. That's why she has been reluctant to consider a reverse-mortgage. We have made it clear that she is not in a position to worry about such things. DW doesn't expect a dime of inheritance from her anyways. That's why I think she should get over that mental hurdle and try to stretch all of her resources to remain financially independent. For us, it's far more important than any inheritance.
Isn't it ironic that folks in this situation think they are doing their children a great favor when in reality they are making their kids miserable through their actions?

Not me. I'm spending it all before I go. (I'm doing a great job of rationalizing, right? )
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Old 05-29-2009, 09:45 AM   #39
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I would take an extended vacation from MIL's problems otherwise she will never figure them out as long as she has you to solve them . She's 66 not disabled .If she wants to live on $32,000 maybe she does have to get a job or figure out where to make cut backs instead of putting it in your lap.
Well she might not physically disabled, but I think that she might be "financially disabled", she just doesn't understand money (or math) and she is very naive about her finances. She married very young and she never had to work for money or take care of the family finances. FIL used to take care of every aspect of their finances (and be quite secretive about it from what I understand) and it seems like, for 30 years, she never felt the need to get involved. When she divorced she was shocked to discover they had so much debt and so little saved up for retirement. She had simply no idea... So it's no wonder that something as basic as balancing a checkbook seems to be an impossible challenge for her. I have tried to teach her the basics so that she could handle on her own things like keeping a checkbook register, printing a budget, calculating how much to transfer from savings, etc... It's like it's coming in one ear and coming out the other.
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Old 05-29-2009, 09:49 AM   #40
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Isn't it ironic that folks in this situation think they are doing their children a great favor when in reality they are making their kids miserable through their actions?

Not me. I'm spending it all before I go. (I'm doing a great job of rationalizing, right? )
Yes do your kids a favor and spend it all!!!
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