"Retired" nurse struggling to stay retired.

[CK2015]

Hello all.

I'm Christine and found myself "retired" after an illness that left me unable to return to the bedside and do nursing after almost 30 years at our county hospital. I'm 50 soon to be 51 and got thrown off the hamster wheel at age 48.

Needless to say I wasn't quite ready.
I do own some rental property and had a small ebay hobby selling business on the side that has now become my full time gig. It's grossing around 48K.

Because of my rapid health decline I found myself having to pay $1100 a month in health insurance which just sucked a gaping hole in my finances. I recently switched to a $500 a month HMO plan. And this was retiree benefit insurance.

I'm getting long term disability insurance but they will stop paying me this month because my policy had an "any occupation" clause in it which gives this company an out to stop paying me. In preparation though I have been buying enough inventory that I believe I can sell thru my ebay business and replace the loss I am having with the disability insurance.

Sadly I still have a first and second mortgage on my primary home. I own another house free and clear except of course for taxes and insurance but my Mom lives there for now. Doubt she will move into something more age appropriate so I can rent out that house so I'm kinda stuck with that situation.

I've been blowing thru some of my personal savings along with around $50K in 457 and 403B money. Still have around $50K left in those accounts along with around $200K in my state investment retirement account. I have around 50K in credit card debt right now along with a car note of around 20K.

I also have a self directed IRA where I own a condo that I rent out. It has a PMM for 50% LTV so there isn't much cash flow on that. It's got a 15 year mortgage on it with 14 years left so was counting on that money for when I turn 65, sort of like my own little annuity.

I also own another rental condo that I clear around $750 a month on after expenses which helps me pay for my health insurance premiums now.

I know these numbers don't look like a retirement scenario but I'm not employable anymore with my health issues so I need to find a way to make this work.

What should I do with that 200K that I have in the investment plan with the FRS? It's just parked in a self balancing fund. There was 229K in there earlier this year and now it's down to $210K.

Also what should I do with the 10K left in the 403B and the 40K in the 457?
I've got about 10K cash on hand that is dwindling fast too.

Thanks for any help.
Glad to be here, hello from the Sunshine state.

 

[Sunset]

You are going to fail with the credit card debit of 50K, the interest on that must be $13 K -> $20K per year or more.
You need to honestly figure out how did you rack up 50K of CC debt ?
You desperately need to go to a non-profit credit counselling service, and be super careful not to use one of the scam ones.
They can at least have the CC company stop charging interest and accept a payment plan (and you have to stop using the CC).

Did you just buy the car?

You need to charge your mom rent or move in with her and sell the double mortgaged home to stop the drain on money.

You cannot discharge your debts via bankruptcy due to you will lose so much real estate.

If you burn through your retirement money, you will have nothing left.

Perhaps you should fight the disability insurance company decision using a lawyer, even if it is one that works on consignment/commission vs per hr.

Best of luck, maybe others have better ideas

 

[daylatedollarshort]

It doesn't sound like you have enough income to support separate residences for you and your mom. I think the good news is that many people are able to support themselves with online businesses, and it is good you are healthy enough to do that. But it seems like your overhead is too high right now for your income.

What is your total net income and what are your annual expenses - your personal expenses and costs for all the houses? What is your total net worth with all the houses and mortgages included?

 

[CK2015]

You are going to fail with the credit card debit of 50K, the interest on that must be $13 K -> $20K per year or more.
You need to honestly figure out how did you rack up 50K of CC debt ?

I had to pay for remodeling my bathroom to make it handicap accessible, paid my health insurance copays which at the time were more than $600 a month between therapy and medications plus all the specialists I had to go see along with floating a $1100 a month medical premium. So much money wasted.


You desperately need to go to a non-profit credit counselling service, and be super careful not to use one of the scam ones.
They can at least have the CC company stop charging interest and accept a payment plan (and you have to stop using the CC).

So far I just pay mostly the minimum payments except for my daily credit card which I try to pay at least 1K a month on to keep up with it.


Did you just buy the car?

No I bought the car two years ago because I needed to change my large SUV because I could not drive it nor get into it due to it's height.
I have mobility issues now so needed a car at easy height to get into and out of.
I traded in my car which they gave me 5K for and I put another 5K down. The car is a business expense so my business pays most of it.


You need to charge your mom rent or move in with her and sell the double mortgaged home to stop the drain on money.

Mom lives with Auntie and there is no way we can live together. She's just one difficult lady to get along with. She treats me as if I am 16 and I'm 50.
My Auntie is 89 years old and just fell and broke her hip so if she passes then I guess I will revisit Mom moving into a more suitable senior facility as the house is just too expensive for her $800 a month SS check and I've been subsidizing her for years. It's a dysfunctional relationship, I know. My subsidizing her rent is kind of a divorce settlement. LOL


You cannot discharge your debts via bankruptcy due to you will lose so much real estate.

Oh I'm not planning to go bankrupt. Yes I do have too much to lose. I don't think it would be worth it unless the judge would let me negotiate a reasonable repayment plan. I went from a nursing salary of 100K to 36K almost overnight. Unfortunately my bills are at the 100K salary level.


If you burn through your retirement money, you will have nothing left.

Yes that is what concerns me. That's why I've thought to purchase a few other cash flowing properties in my IRA with the 200K that I have left and just not touch that money for 10 years until I can pull some out without paying the penalty. At least in the meantime it should be accumulating a little nest egg plus some property appreciation although that plan isn't guaranteed.


Perhaps you should fight the disability insurance company decision using a lawyer, even if it is one that works on consignment/commission vs per hr.

ERISA is on their side from what I have read and seen on Youtube. I'd have to pay the lawyers up front since I've already had an open claim. Because my employer only had policies that had the "any occupation" clause in them, I can pretty much be a clerk making $10 an hour and fulfill that requirement. And given my education that is the conclusion they come to. And to be honest I am not sure I am up for a long legal battle with Goliath. I'd rather focus my energies on my ebay business and possibly making my own website.


Best of luck, maybe others have better ideas

Thanks so much.

Answered you in blue.

 

[CK2015]

It doesn't sound like you have enough income to support separate residences for you and your mom. I think the good news is that many people are able to support themselves with online businesses, and it is good you are healthy enough to do that. But it seems like your overhead is too high right now for your income.

What is your total net income and what are your annual expenses - your personal expenses and costs for all the houses? What is your total net worth with all the houses and mortgages included?

I pay $3K taxes and $5K insurance on the house Mom lives in. House is worth around $375K with no mortgage.
I pay $2300 for my place. It's worth around $325K Both Mortgages is $240K.
Car payment is $430. Worth around $20K
Credit card payments are minimums but the rates are around 10% - 14% split between 5 cards. 50K in debt.
My rental properties make $1200 each but only clear $750 and around $300 but the $300 is for the IRA. One is worth around $140K with a 78K mortgage and the one in the IRA is worth around $135K with a 60K mortgage on it.

My ebay store grosses 48K and I only have about half of my inventory listed so given that sales is a numbers game I guesstimate that I could double my ebay sales if I got them all listed. Right now it's not very profitable on paper since I am building up my inventory and that is taking most of my profits. Good news is that if I sell a dozen of one item I have usually made back my whole investment on the dozen after the second sale since I sell in a high markup category.

Sadly I only have so much energy as I take a lot of meds that have sedating side effects and makes it hard to focus for long periods of time without several breaks. The good part is that I can go at my pace, the bad thing is that I am working at a turtles pace.

 

[Totoro]

Have you made a summary cashflow projection? Preferably with your home business listed separately.

As in:

Non-ebay cash in per month in: xx$
Non-ebay Cash per month out: yy$
Deficit: zz$
Time to bankruptcy: xx months - you are not planning for it, but calculate it. In months, not years. Be honest and provide for extra health issues.

Net cash provided (used) by EBay business per month: $

In addition, you'll need an increase in inventory per month line to see what will change once you stop building inventory. Mind you, you could also get stuck with inventory and your health may preclude you from doing more.

From a first glance you are exactly where you say you are: at a 100k expense level with a 34k (uncertain) income.

If so, you need drastic interventions and you'll have to come to terms with that first. To be specific: money as a solution for any problem is no longer an option.

Trying to grow out of the problem (by going EBay-at-home) is really admirable and it may work (I hope it does!), but counting on that is dangerous. Sorry if this all sounds harsh.

 

[Golden sunsets]

In addition to the comments others have made the big elephant in the room is REAL ESTATE. Sell it all. First to go on the market is the paid off home. Tell your Mom and Aunt that you are putting the home on the market today and they should both make other living arrangements immediately. This asset alone is valuable to you and can go a long way to solving your problems but instead it is a money pit to you. Sell the other properties as well including your own. Once all properties are sold and the mortgages are paid off pay off the CC debt. Then sell the $20,000 car and buy a used car that costs less. Get a small apartment for reasonable rent. Invest the remaining cash in low cost index funds. You must then learn to live on the limited resources that you have which would include a conservative wd rate on your investments of no more than 3-3.5%/yr. You have to bring your expenses down. I do think you need some outside advice on your debt and investments. You've been dealt a tough blow with your health issues and your request for advice demonstrates that you are aware of the seriousness of your situation, but I'm sorry to say that the steps you've taken thus far or are contemplating, are unlikely to work and further jeopardize your financial situation. Best of luck.

 

[Senator]

The best investment you can make is to payoff the credit card debt. Take $50K of that $200K and do that.

 

[target2019]

As for the car, since it is primarily business use, it makes sense to keep it. If it gets a decent MPG in driving, all the more reason to continue to use it.

 

[rodi]

I agree that it's time to do a thorough accounting of your assets, debts, and cashflow. I think you are throwing around numbers that don't do a full accounting. You mention $48k income from the ebay business in the first post - but then later you say that's GROSS sales.... What is your NET income: sales minus costs and taxes. Costs should include your car payments since you are claiming that as a business expense. Are you making much money?

You need to get a serious handle on your debt. Multiple mortgages, car payments, and credit card debt. It sounds like you may need to sell some non-performing assets.

You need to charge your mom rent or have her move in with you. You cannot afford to have her live rent free while you are lacking income and servicing debt. If you sell that property you could pay off the car and credit cards and give yourself some breathing room. Alternatively, she could pay rent, and you could apply that money to debt reduction. You cannot afford to be as generous as you are being.

 

[infoseeker]

Are you interested in a (possibly lucrative) part time, at home job? If you keep your RN license active......consider consultant work where a registered nurse is needed to review various applications, forms, etc.

Good luck to you.

 

[CK2015]

Have you made a summary cashflow projection? Preferably with your home business listed separately.

As in:

Non-ebay cash in per month in: xx$
Non-ebay Cash per month out: yy$
Deficit: zz$
Time to bankruptcy: xx months - you are not planning for it, but calculate it. In months, not years. Be honest and provide for extra health issues.

I doubt I'd be able to bankrupt given the assets I have available to me and to be honest it's not something I want to do unless I absolutely have no choice.


Net cash provided (used) by EBay business per month: $

In addition, you'll need an increase in inventory per month line to see what will change once you stop building inventory. Mind you, you could also get stuck with inventory and your health may preclude you from doing more.

I make a lot of my inventory since it's custom jewelry in a niche. The combinations are endless as far as inventory building with just buying the basic materials to make them which is very reasonable. It's my time that is not being considered here. Also Mom helps me make it since she's the creative one.
I've been paying her living expenses in return for helping me with that but maybe I should be paying her a 1099 income since she can earn money but she doesn't want the hassle of filing taxes. Maybe I should put her on the payroll and help her with paying the taxes. Might be cheaper for me than just covering her expenses and using her as a dependent since I don't think I need the dependent anymore.


From a first glance you are exactly where you say you are: at a 100k expense level with a 34k (uncertain) income.

If so, you need drastic interventions and you'll have to come to terms with that first. To be specific: money as a solution for any problem is no longer an option.

Trying to grow out of the problem (by going EBay-at-home) is really admirable and it may work (I hope it does!), but counting on that is dangerous. Sorry if this all sounds harsh.

Well ebay has certainly been a challenge in this economy but it is still trucking along for me so I haven't lost all hope that it will continue. Costume jewelry is an extremely competitive category to sell in given the Chinese sellers have over run the category but I still manage to somehow have some sales. I guess some people must search by USA sellers.

 

[Sunset]

OP - Please do NOT buy any more real estate. I know as I own a number of properties and its a lousy way to make $$$ given that you cannot do any repairs yourself so you are at the mercy of repairmen. Plus the effort involved in renting, and it ties up too much cash.
Like earlier poster said, index funds are better especially as you get worse healthwise.

Any other siblings who can help your mom ?

 

[CK2015]

In addition to the comments others have made the big elephant in the room is REAL ESTATE. Sell it all. First to go on the market is the paid off home. Tell your Mom and Aunt that you are putting the home on the market today and they should both make other living arrangements immediately. This asset alone is valuable to you and can go a long way to solving your problems but instead it is a money pit to you. Sell the other properties as well including your own. Once all properties are sold and the mortgages are paid off pay off the CC debt. Then sell the $20,000 car and buy a used car that costs less. Get a small apartment for reasonable rent. Invest the remaining cash in low cost index funds. You must then learn to live on the limited resources that you have which would include a conservative wd rate on your investments of no more than 3-3.5%/yr. You have to bring your expenses down. I do think you need some outside advice on your debt and investments. You've been dealt a tough blow with your health issues and your request for advice demonstrates that you are aware of the seriousness of your situation, but I'm sorry to say that the steps you've taken thus far or are contemplating, are unlikely to work and further jeopardize your financial situation. Best of luck.

Well the other issue is that Mom and I are both on all deeds to the properties and she refuses to let me sell anything, especially her primary home. We had a big falling out about 10 years ago and she actually wanted me to sign off the title on that home but I refused since all my equity is tied up in that home. Basically she wanted a free house and leave me with all the debted properties. I told her I'd wait her out. I know that sounds cruel but she just pissed me off and then she let the insurance go on the house so I ended up having to protect my "investment" because she was careless with the insurance.
It is what it is and sadly I think unless she loses her mental faculties I am stuck with this situation until Auntie either dies and Mom finds herself living alone. But knowing Mom she will bring in a room mate for cash flow. She's done it before and Auntie was giving her $500, she just wasn't paying the heavy expenses only their home repairs, food and utilities.

 

[CK2015]

The best investment you can make is to payoff the credit card debt. Take $50K of that $200K and do that.

I was thinking of doing this with the 457 money instead of the retirement fund since it would be the least penalized from Uncle Sam.

 

[CK2015]

As for the car, since it is primarily business use, it makes sense to keep it. If it gets a decent MPG in driving, all the more reason to continue to use it.

Yeah I do need a car and I purchased an extended warranty on it since it's probably going to be expensive to repair if it needs any so that money is already sunk into it.
I usually keep my cars for 7-10 years so probably around the time it is paid off I'll get a few years extra ownership on it.
I am only driving around 5K miles a year now. I used to do 10K before but since I work out of my home now I only go out every other day if that. So gas and wear and tear should be much lower now.
And it's a small SUV, still 6 cylinder but I only gas up once a month now.

 

[CK2015]

I agree that it's time to do a thorough accounting of your assets, debts, and cashflow. I think you are throwing around numbers that don't do a full accounting. You mention $48k income from the ebay business in the first post - but then later you say that's GROSS sales.... What is your NET income: sales minus costs and taxes. Costs should include your car payments since you are claiming that as a business expense. Are you making much money?

My business has not been profitable on paper but that's because I have reinvested the money to buy more inventory and equipment that I would need going forward. I've attended a lot of trade shows this past year to make contacts. I think I have enough inventory to double my gross and with not spending on inventory should be able to make more of a profit. My biggest expense is actually postage.


You need to get a serious handle on your debt. Multiple mortgages, car payments, and credit card debt. It sounds like you may need to sell some non-performing assets.

I do have some vacant land that I want to sell but that will only bring in maybe 15K which honestly won't put much of a dent in that debt. Maybe only kick that can down the road paying minimums or wipe out one card with it. I hate to throw the cash I have on hand at just one debt. I feel like I need to keep it instead. I hate to rob from Peter to pay Paul and I know that is what I am doing but I was doing it in hopes that the business would be able to make it up in the future. Living in fantasyland I know but am the eternal optimist.


You need to charge your mom rent or have her move in with you. You cannot afford to have her live rent free while you are lacking income and servicing debt. If you sell that property you could pay off the car and credit cards and give yourself some breathing room. Alternatively, she could pay rent, and you could apply that money to debt reduction. You cannot afford to be as generous as you are being.

The mom situation is like a divorce settlement.
I say that I am paying her lifetime alimony and child support. LOL

 

[Sunset]

I pay $3K taxes and $5K insurance on the house Mom lives in. House is worth around $375K with no mortgage.
I pay $2300 for my place. It's worth around $325K Both Mortgages is $240K.
Car payment is $430. Worth around $20K
Credit card payments are minimums but the rates are around 10% - 14% split between 5 cards. 50K in debt.

BINGO - Sell the house your mom lives in.
Use the money to: pay off all CC, pay off auto, pay off your house mortgage.

You will reduce your annual expenses by: $47,760
$8K house with mom, 430*12 car, your house 2300 * 12, CC debt approx 7K this is: 8,000 + 5,160 + 27,600 + 7,000 = $47,760

Actually it will save even more, as you have not included any repair costs on the home you mom lives in.

Notice how your annual expenses are much more than your income, this will lead to bankruptcy unless you change course now.

 

[CK2015]

Are you interested in a (possibly lucrative) part time, at home job? If you keep your RN license active......consider consultant work where a registered nurse is needed to review various applications, forms, etc.

Good luck to you.

Not any longer. I let my RN license go as I have no desire to return to medicine with all the changes in the industry. It's just not what it used to be and if I have to be in a business I'd prefer it to be my own not the business of cheating patients of the care they need in the name of profits. I worked at a charity hospital and they were trying to force us to be like a private business which was just as unsustainable a plan as mine is here. If I'm going to be on a sinking ship I want to be the captain this time.

 

[CK2015]

BINGO - Sell the house your mom lives in.
Use the money to: pay off all CC, pay off auto, pay off your house mortgage.

You will reduce your annual expenses by: $47,760
$8K house with mom, 430*12 car, your house 2300 * 12, CC debt approx 7K this is: 8,000 + 5,160 + 27,600 + 7,000 = $47,760

Actually it will save even more, as you have not included any repair costs on the home you mom lives in.

Notice how your annual expenses are much more than your income, this will lead to bankruptcy unless you change course now.

This does seem like the most logical solution.
I'd even be open to moving there myself and getting Mom a senior housing arrangement but she refuses to move.
The reason why I even have a second mortgage on my place was that the house needed a 30K roof put on it and I didn't have the cash at the time because she pitched a fit and we closed the equity line that I had been using on that home to borrow against to keep my expenses at a manageable amount. Since losing that equity line everything has gone south as far as monthly payments. Now with no income I doubt I'd get that line re-opened and she wouldn't agree to it anyway. I feel like I'm being held hostage until something happens to them both. I just hope the nursing home doesn't try to take the home as collateral for her care in the future. If that happened then I'd really be screwed. At that point I'd just move into it and be stuck with it for the rest of my life. I really should do some estate planning with her but she feels that if we talk about these issues then she will somehow magically die the next day. Living in denial is an art she has perfected to a T. Sadly thanks to me and my stupidity in trying to be a good and fair daughter.

 

[CK2015]

OP - Please do NOT buy any more real estate. I know as I own a number of properties and its a lousy way to make $$$ given that you cannot do any repairs yourself so you are at the mercy of repairmen. Plus the effort involved in renting, and it ties up too much cash.
Like earlier poster said, index funds are better especially as you get worse healthwise.

Any other siblings who can help your mom ?

I have a brother but he's not willing to give Mom cash.
He's smarter and stronger than I am. I don't blame him because Mom is a compulsive catalog shopper buying lots of crap she doesn't need. I've tried the making her feel guilty for spending while making me pay, but it just doesn't sink in.

And I know real estate doesn't have the best returns but I haven't done that great in mutual funds either. I live in Miami and the rents are thru the roof here lately. Not sure how long that will last but there are a ton of companies building lots of high end apartment complexes here. Seems that affordable housing is not worth the effort of these companies which makes bread and butter land lording a worthwhile effort.

I have a property manager and he's pretty reasonable at only 6%. I'm so much happier having him manage these properties for me now. I don't know my tenants, don't care to know them and he deposits the profits into my bank accounts every month. He's getting me more rent than I was getting myself which more than covers his fees and he hasn't really done many repairs yet and the ones he did I was expecting to do.

For the most part those two apartments were in pretty decent shape with new appliances, ACs and kitchen and bath cabinets. They are 35 year old condos but they are in desirable areas so they rent very quickly. We literally have one moving in and out in the same day. Will it continue? I have no idea but right now I feel it's probably the best place I could put my money. I'm just not that up to speed on mutual funds and stocks.

 

[Sunset]

This does seem like the most logical solution.
I'd even be open to moving there myself and getting Mom a senior housing arrangement but she refuses to move.
The reason why I even have a second mortgage on my place was that the house needed a 30K roof put on it and I didn't have the cash at the time because she pitched a fit and we closed the equity line that I had been using on that home to borrow against to keep my expenses at a manageable amount. Since losing that equity line everything has gone south as far as monthly payments. Now with no income I doubt I'd get that line re-opened and she wouldn't agree to it anyway. I feel like I'm being held hostage until something happens to them both. I just hope the nursing home doesn't try to take the home as collateral for her care in the future. If that happened then I'd really be screwed. At that point I'd just move into it and be stuck with it for the rest of my life. I really should do some estate planning with her but she feels that if we talk about these issues then she will somehow magically die the next day. Living in denial is an art she has perfected to a T. Sadly thanks to me and my stupidity in trying to be a good and fair daughter.

You are talking like the house your mom lives in, is not your property.
If it's your property, sell it, worst case is she moves in with you.

If it's your property it cannot be used as collateral for nursing home as your mom does not own it (and you should NOT co-sign for her for anything).

You should look into what assistance your mother qualifies for, since her SS is so low (or does she have other pension income?). This will take pressure off you to pay for stuff.

 

[nwsteve]

Given your back is a bit against the wall, you may want to consider getting a court directed division of the property with both of your mom and you on title. Not sure about your state's laws but legal aid attorney could advise.
Typically, when real estate is held by two or more parties and they can not agree on sale, court requires either one party to buy out the other or a sale, where funds are evenly divided.
While you would be giving up part of your equity, you would be freeing yourself on ongoing expenses for property taxes, insurance, and repairs plus getting the liquidity to pay off your credit card. Tough message to your Mom but it sounds like you have moved on.
Nwsteve

 

[Sunset]

I would not recommend you get into buying stocks in general, but as an alternative to real estate which requires lots of work and has high risk (imagine a tenant trashes your place, I've seen it happen to the tune of $30K).

I would only recommend Vanguard funds as the expenses are low, you never want to pay more than 0.30% management fee for a mutual fund.
They have funds and ETF's, either would be fine and I use both.
Some Vanguard ETF's are super low cost like VTI which is 0.05% annual fee.
They are at www.vanguard.com

 

[CK2015]

You are talking like the house your mom lives in, is not your property.
If it's your property, sell it, worst case is she moves in with you.

If it's your property it cannot be used as collateral for nursing home as your mom does not own it (and you should NOT co-sign for her for anything).

You should look into what assistance your mother qualifies for, since her SS is so low (or does she have other pension income?). This will take pressure off you to pay for stuff.

Well it's both of ours on paper.
I purchased it with my credit and paid it off with profits from an apartment building that I sold at the height of the market here.
I also used some of those profits to buy the place where I live now which is a downtown condo. The prices are already past the pre-market crash so I'd hate to sell right at this moment since I see lots of foreign activity going on here.

The only way I could sell it is with her cooperation or if she loses her mental faculties and I become her guardian. Luckily Mom is sharp as a tack mentally so at least I know I am probably not facing an Alzheimers situation but getting her to agree to fix this just is not happening. I guess her thinking is that she doesn't have much time left on this planet and the time that she does have will be spent as she well sees fit regardless of what burden she creates. I've been shocked at how selfish some old people become until I had to experience it for myself.

And since I live in a 1 bedroom downtown loft condo there is no suitable living arrangement for both of us here. I struggle with the stairs myself but can still manage it, if she moved here it would be an accident waiting to happen for sure.

Mom needs to divest entirely to get any form of aid. She's not willing to do that, trust me I have tried talking sense into her but she refuses. I've even offered to help her buy something that she could take a reverse mortgage on with say half the profits from the house which would give me enough cash to stabilize my situation and hers but that just makes too much sense. She said she'd consider moving when she turns 80 if her sister dies or goes into a nursing home which is one year away. Like I said before I think I am stuck until she is good and ready to move. Auntie fell and broke her hip and is in a rehab hospital right now so maybe she may never return and Mom might consider a move earlier but I'm not holding my breath.