Helping My Grandmother

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PocketChangePension
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Helping My Grandmother

Post by PocketChangePension »

Hi everyone,
I was talking with my Grandmother recently about what she planned to do with her money. My worthless uncle stole over $200k from her, which she'll never see again, so she has hardly anything and wants to do the best thing with it.

Emergency funds: All cash is in the bank
Debt: $60k mortgage @ 5.25%
Tax Filing Status: Single (Widow)
Tax Rate: 0% Federal, 0% State (Her income is $1,350/mo between SS and a pension. Nothing Else. She tells me she pays no taxes at all)
State of Residence: NJ
Age: 70
Desired Asset allocation: Undecided
Desired International allocation: Undecided

Now, she has $37k in a money market at Bank of America earning a pathetic amount. This is all she has. No retirement accounts, no other savings, nothing. She wants to invest it and after I explained Vanguard to her with the low fees, she's on board. It would all be in a Taxable account. She wants to keep $7k in the checking account and invest the other $30k

So I assume the best bet is VTSMX, VGTSX, and VBMFX? (I would go with Admiral shares, but since she would just meet the absolute minimums for all of the funds, I assume that's not the best bet in case it drops a bit. If I'm wrong, please explain why).

She hasn't decided on an asset allocation yet. I've explained that part to her in a way she understands, but she hasn't come up with an answer yet.

She said she would love to just be able to get another $3,000 a year to cover property taxes and water bill, which I explained is not going to happen. She'd be happy with another $1,500 or so per year in gains just to help offset the bills.

I'm open to any and all suggestions.

Thanks,
Kevin

EDIT: Sorry I forgot to include it before, but please don't suggest paying down the mortgage. I know it's 5.25% return, but she doesn't have the money to do it. After paying mortgages, taxes, electric bill, gas bill, car insurance, etc. She has about $100 left for the month to pay for food and gas for her car.

Also, don't suggest refinancing please. Getting this mortgage was hard enough. At her age and with only SS income they won't do it. We've tried.
Last edited by PocketChangePension on Sun Jul 20, 2014 4:32 pm, edited 1 time in total.
Ervin
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Re: Helping My Grandmother

Post by Ervin »

She should "invest" in paying her mortgage. It will generate a 5.25% yearly return, guaranteed. There is no better low-risk investment. She should also move her cash reserves to a high-yield online savings account or CD (e.g. Ally Bank). If she wants a higher yielding fund, I am sure there are some less risky fixed-income funds. But I would definitely not invest in a total stock or bond market index at this age.
Last edited by Ervin on Sun Jul 20, 2014 4:36 pm, edited 1 time in total.
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Ervin wrote:She should invest in paying her mortgage. It will generate a 5.25% yearly return, guaranteed. There is no better low-risk investment.

At her age, she should not speculate on the stock market. What if it crashes again?
See the edit in the first post.
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runner9
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Re: Helping My Grandmother

Post by runner9 »

PocketChangePension wrote:
EDIT: Sorry I forgot to include it before, but please don't suggest paying down the mortgage. I know it's 5.25% return, but she doesn't have the money to do it. After paying mortgages, taxes, electric bill, gas bill, car insurance, etc. She has about $100 left for the month to pay for food and gas for her car.
Why can't she use the $30K to pay down the mortgage? If she doesn't have it for the mortgage how does she have it to invest in taxable?
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

runner9 wrote:
PocketChangePension wrote:
EDIT: Sorry I forgot to include it before, but please don't suggest paying down the mortgage. I know it's 5.25% return, but she doesn't have the money to do it. After paying mortgages, taxes, electric bill, gas bill, car insurance, etc. She has about $100 left for the month to pay for food and gas for her car.
Why can't she use the $30K to pay down the mortgage? If she doesn't have it for the mortgage how does she have it to invest in taxable?
Please explain to me how if she only has $37k total cash left in her name and a $60k mortgage it's a good idea to pay down the mortgage. Then what? Still have a $30k mortgage and basically no cash left?
Ervin
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Re: Helping My Grandmother

Post by Ervin »

I am not saying to invest all in the mortgage. Just the part that she can dispense of. There is no other investment that will return 5.25% yearly guaranteed.

Any net return that money would generate in the stock market should subtract the 5.25% that is lost by not prepaying the mortgage (unless the mortgage has no incentives for pre-pay - as in the total amount of interest is fixed even if it is paid sooner).

If she doesn't want to do that, she can invest in a 2.3% online CD with 6 month-interest early withdrawal penalty, that would return her an extra $700 yearly. She shouldn't play roulette with her retirement money. Just my 2 cents.
Last edited by Ervin on Sun Jul 20, 2014 4:48 pm, edited 1 time in total.
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Ervin wrote:I am not saying to invest all in the mortgage. Just the part that she can dispense of. There is no other investment that will return 5.25% yearly guaranteed.

Any net return that money would generate in the stock market should subtract the 5.25% that is lost by not prepaying the mortgage (unless the mortgage has no incentives for pre-pay - as in the total amount of interest is fixed even if it is paid sooner).
While I agree from a purely mathematical standpoint, it just isn't the best thing for her. She's trying to make her savings last, and generate enough to help cover property taxes and water bills. Her monthly income really isn't enough to cover expenses, so she slowly draws money from the savings to cover it when she falls short. She's extremely frugal and will leave the heat/AC off until it's 100% necessary to save money. She leaves lights off unless necessary. She doesn't spend money on anything she doesn't 100% need to. Because of that, there's no possible way to cut the expenses down.
stan1
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Re: Helping My Grandmother

Post by stan1 »

Tough situation for her (and her family). She's fortunate to have family members who care about her.

You probably aren't going to like my answer but I don't think she should have anything invested in stocks or bonds. She has zero ability to take risk especially if she is in good health and might live another 20-30+ years. I would not invest in anything that could lose value so that means CDs even though she is not going to like the interest she gets paid. Speaking of health, how is she paying for her medical insurance/care?

I think she should get a trusted roommate or move in with a family member to save on living costs. A series of major house and car repairs would wipe out her savings. Hopefully you and some other family members are able to help her out with gifts -- grocery shopping, holidays, meals, or monthly deposits into her banking account. I would also look into charitable and government programs in her area (such as senior meals).

How much equity does she have in the house? I don't like reverse mortgages but this might be a rare case where one would make sense if there is a lot of equity in the house and she absolutely insists on staying there.
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Ged
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Re: Helping My Grandmother

Post by Ged »

It sounds to me like your grandmother's problem is that her house is taking more of her income than she can afford. One bout of illness and she would be wiped out.

At her income level she may qualify for subsidized housing. Waiting lists are long, however it can be a real boon to someone in your grandmother's situation.

Also I hope she is taking advantage of the various real estate tax breaks the elderly in NJ get. Individual towns often have programs, as does the state.
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Ok, I've always been of the impression bonds are as stable as can be. How are they able to lose value? Everyone always says holding bonds will keep your portfolio from losing tons of value in a huge downturn.

She has probably $70k equity or so in the house. She's not going to go for a reverse mortgage. She's also not the type to take stuff from us. I gave her a credit card to buy groceries and other things with, but she refuses. You have to get the stuff and just bring it to her house. I live a couple states away and visit every 2 months or so. My parents live in the same town, but there just isn't room for her to live with them. Her other kids really don't have any room either.
Ervin
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Re: Helping My Grandmother

Post by Ervin »

If bond interest rates go up, the value of the bonds will decrease. So she could actually lose money.

Why do interest rates tend to have an inverse relationship with bond prices?
Last edited by Ervin on Sun Jul 20, 2014 5:09 pm, edited 3 times in total.
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Christine_NM
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Re: Helping My Grandmother

Post by Christine_NM »

Have you considered Managed Payout fund?

This would be an additional $1200 if $30,000 were invested. The fund minimum is $25,000. I think I'd start with the minimum and see how it goes. That would be $1000/year.

I don't see how else you can get a consistent amount. The fund is doing the same thing she is doing, returning capital as cash if necessary.

You said $1500/year, but I can't see how to guaranteed that. Even corp bonds are not paying that now.

Something about her life has got to change. Does she really need the car?
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Christine_NM wrote:Have you considered Managed Payout fund?

This would be an additional $1200 if $30,000 were invested. The fund minimum is $25,000. I think I'd start with the minimum and see how it goes. That would be $1000/year.

I don't see how else you can get a consistent amount. The fund is doing the same thing she is doing, returning capital as cash if necessary.

You said $1500/year, but I can't see how to guaranteed that. Even corp bonds are not paying that now.

Something about her life has got to change. Does she really need the car?
Yes, she does need the car. The car really doesn't cost her much at all. She spends probably about $40/month in gas at most and that's it really.

It doesn't NEED to be $1,500 or NEED to be a consistent amount. Anything she earns will help. $1,500 would just make a huge difference. $1,000 or $1,200 would make a big enough difference too.
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BL
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Re: Helping My Grandmother

Post by BL »

I agree that she can't afford to invest. If she insists, the Life Strategy Income (20% equities) is the absolute most I would go with.

I don't see what advantage there would be in paying down mortgage. She needs the money to be available for emergencies, or at least in CDs (unless that scoundrel uncle will get at still more of her money!). The money should be FDIC insured or it's equivalent in credit unions, as she has no ability to risk her money. Maybe check Bankrate for rates. I-Bonds (10K/year maximum) would only be available after one year (varies with inflation, currently about 1.95% for 6 months.)

She really should consider selling if she could move into subsidized housing or live with family member. Investigate all the senior services available; perhaps a senior center would have a contact number if you can't find it elsewhere. Food stamps, food banks, driving services, etc., might be available. They often depend on income and savings. There could be county assistance for Medicare or other health insurance as well.
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Christine_NM
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Re: Helping My Grandmother

Post by Christine_NM »

Person -

I wasn't thinking of the car as a big expense, I was thinking of the money selling it would bring (and some savings in gas, registration, oil change). Even a few hundred dollars would help. Otherwise, someday it will break down and she will be stranded if she can't afford to maintain it.

Maybe she will reconsider your credit card offer if you say she'll be doing you a favor -- you won't have to worry about her finances anymore.

I am the same age as your Grandmother, so this affects me somehow. There but for the grace of God, etc.
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stan1
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Re: Helping My Grandmother

Post by stan1 »

If she won't use a credit card for groceries you could deposit $200/month into her checking account (or whatever number you want to use). I do that with my mom to help her make ends meet. She is 81 and has a little more than your mom because she sold her house this year (but also now has to pay rent in senior housing). I was able to put most of the proceeds from her house in 3% Pen Fed CDs while they were offered back in January.
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ulrichw
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Re: Helping My Grandmother

Post by ulrichw »

PocketChangePension wrote: [...]Also, don't suggest refinancing please. Getting this mortgage was hard enough. At her age and with only SS income they won't do it. We've tried.
I'm sorry to keep up the trend on harping on this aspect of your grandmother's situation.

In my opinion, your grandmother has a cash flow issue and possibly one of her biggest expenses is this mortgage. I'm not sure how much time is left on the mortgage, and whether the 60K comprises the original balance or the current balance, but the minimum payment she's making on this is $330 per month.

Have you tried seeing if she can get a smaller loan? If she takes 30K of her $37K and refinances her loan to $30K at 4.125% (seems to be approximate current rate), her payment will go down to $145 per month. That's a net cash flow difference of $185 per month, or $2220 per year - guaranteed and risk free.

Alternately, is there any possibility of her selling the house? I believe you'll probably rule this out, but if things are as tight as you describe, she may sadly be living in more house than she can afford.
Novine
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Re: Helping My Grandmother

Post by Novine »

How much could she realistically get if she sold the house? What are rental rates in her area? Depending on your answers, the best return may be selling the house and moving into an apartment.
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Re: Helping My Grandmother

Post by PocketChangePension »

Renting would cost 3-4x what her mortgage costs are. HCOL area The original balance was like $65k or something. It's a 30 year mortgage that she got a few years ago because it's all she was able to afford. It's a small house in a 55+ community. The payment is like $350 ish last I remember, and that's without property tax and homeowner's insurance.

Selling the car might bring some money, but without a way to get around she would be miserable. She is not the type of person who stays home all day with the heat at 90 degrees and does nothing. She volunteers with EMS, does her gardening work, helps her neighbors out, etc. She enjoys staying active and would probably be bored to death if she couldn't do that stuff.

Paying down $30k on the mortgage to refinance would free up cash flow, but she'd only have $7k left in her name and that's it. If any sort of emergency were to happen she'd be in a bad situation.

There really aren't any houses close to the area that are cheaper than where she lives right now. She could probably sell the house for $130k, minus real estate commissions, but that wouldn't help with nowhere to live.

The uncle will not be able to touch any more of her money. Neither will anyone else unless she wants them to. He didn't take any of it until the market crashed in 2008/2009 and then he ran off with whatever he could.
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Re: Helping My Grandmother

Post by Lafder »

There are costs to selling and moving even if downsizing. Not to mention the huge stress. And if she needs a car, why would selling her current car help, when we don't know it's cost or value? Again, there are expenses and taxes with buying and selling houses and cars.

At least she has 100$ left after paying her usual bills. Selling the big items might make more sense if she was not meeting her current expenses.

Has she looked at downsizing options? Maybe there is a nice smaller place, an apartment even , that she would actually like. Freeing up the equity in the house could make a big difference as long as the move did not make her miserable and not be worth it.

Having access to the whole 37k amount seems better than tying it up in simply lowering the mortgage, in my opinion. This is her only available cash assets!

Have you helped look at her expenses in case anything can be cutout or changed?

It is terrible her son somehow got 200k from her. That would have made a huge difference in her $ security. Is there any chance he will find a way to take any of what is left? Or a chance he will payback what he took? Were there any legal charges?

It sounds like she has some family that can help a bit if she is short month to month.

I know my own parents in that age range have their $ in Wellesley. They are in a situation where retirement income usually meets or exceeds expenses, except when it doesn't. Some of it is a retirement account so they do have to take the RMD. But they are very concerned with loss of principal, yet want some growth.

37,000 is more than many have at retirement. It could be worse!
lafder
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Lafder wrote:Has she looked at downsizing options? Maybe there is a nice smaller place, an apartment even , that she would actually like. Freeing up the equity in the house could make a big difference as long as the move did not make her miserable and not be worth it.

NJ is a HCOL area to begin with. There really are no downsizing options unless she moves to another state, and it still wouldn't be worth it

Have you helped look at her expenses in case anything can be cutout or changed?

I haven't, but I trust my Grandmother is doing everything she can. She even leaves the heat off in cold months to keep the bill down.

It is terrible her son somehow got 200k from her. That would have made a huge difference in her $ security. Is there any chance he will find a way to take any of what is left? Or a chance he will payback what he took? Were there any legal charges?

What happened was she sold her house in upstate NY that was paid for and moved to NJ to be closer to family. Well, the house she wanted to get was $260k, but since she wasn't working, he said to give him the proceeds to put the mortgage in his name because he was the only one who can qualify. It was great for the first 2 years, but when the market crashed, he bailed out, kicked her out, and disappeared. He only put a small amount down on the house to begin with and put the rest in the market, unknown to her. He also had her other retirement money in there. She got a check back for $50k from him, but that was it. She had that $50k plus what she has now and had to find a house in a hurry. So no, there is no possible way for him to take what's left. Nobody imagined her own son would steal from her like that. The chances of him paying anything back will be like winning the lottery. The whole family stopped talking to him and hasn't seen him in years. There were no legal charges filed. They said it would be argued that it was a gift and too hard to prove he stole it all.
Buckeye
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Re: Helping My Grandmother

Post by Buckeye »

Can she work?

My Mom went back to work at 66 for 11 more years working part-time in a restaurant kitchen. She made an additional 4-7k annually during those years....and really enjoyed it for the most part.
epictetus
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Re: Helping My Grandmother

Post by epictetus »

this is a very difficult situation.

i would suggest at least considering moving the money to an online savings account. she could get .85-.90% interest that way. and maybe consider some CDs.

is there any chance she could obtain a part-time job of some sort? it sounds like she is very active. anything she makes would help a lot.

is a sad situation.
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Lafder
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Re: Helping My Grandmother

Post by Lafder »

Pocketchangepension,
You are a wonderful grandchild to be stepping in to help your grandmother!

I understand it is best for her to stay in place and keep her car.

I also understand being frugal about heat and cooling.

It makes sense for grandma's security to keep the 7k in her accessible bank account.

There is a risk of a decrease in value, but Wellesley or Lifestrategy income might be options. Or 3 x 10k CDs. She is unlikely to need it all in any one year, so there can be some tolerance for dips in value.

Is there anyone in the family who can payoff the 60k loan and carry a mortgage with a better interest rate for her ? Or pay it off in return for inheriting a portion of the house? Just some extra thoughts.

37k is more in hand than an elderly relative of mine has. His house is paid for but the taxes alone eat up a good portion of his income. He won't do a reverse mortgage and he is not willing to sell, yet.

My grandmothers are both gone now. Both were also really proud and would not easily take $. It was possible to shift her cable bill to us so she did not have to see it or worry about it. (She was going to just cancel it to save $). The same could be done with utility bills. As you already noticed you can directly buy things. Perhaps a giftcard would be easier for to spend than a credit card since she won't worry you are going to get the bill after she uses it.

lafder
fposte
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Re: Helping My Grandmother

Post by fposte »

Is there any possibility she could rent a room in her house to a housemate? Keep the rent low in exchange for heavy-duty vetting and some household help, maybe?
farney
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Re: Helping My Grandmother

Post by farney »

Since her biggest asset and biggest expense is her home, my two thoughts are related to that.

1) Not sure how helpful this would be, but instead of a refinance, she might be able to do a recast. Take 15-20k of her savings and put towards principal. The remaining principal balance would get reamortized over the remaining life of the loan, thus lowering her payment. Not sure if this is an option - check with her mortgage company first. Also, not sure if the additional cash-flow she would gain would be worth lowering the savings, but it's likely more than she could get from any equivalently safe investment.

2) If that's not an option, is there any way you could buy the house from her and then rent it back to her at a lower monthly amount? Obviously this depends on your financial situation, but the benefits to her are obvious. She might alternatively find someone else to set up a sale and leaseback arrangement with.
Calm Man
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Re: Helping My Grandmother

Post by Calm Man »

I live in NJ so I know it is costly. I agree with you OP that she simply can't put her limited funds into the mortgage. I also don't think I like your idea about putting her in stocks at all. There's just not enough there. It sounds to me like your grandmother, who is a home owner and drives a car, is not mentally disabled. How can a person let themselves get into such a situation that they have literally nothing and have literally nothing coming in? Did she not work and save anything?
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joe8d
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Re: Helping My Grandmother

Post by joe8d »

epictetus wrote:this is a very difficult situation.

i would suggest at least considering moving the money to an online savings account. she could get .85-.90% interest that way. and maybe consider some CDs.

is there any chance she could obtain a part-time job of some sort? it sounds like she is very active. anything she makes would help a lot.

is a sad situation.
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black jack
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Re: Helping My Grandmother

Post by black jack »

Congratulations on trying to help your grandmother; you're doing the Lord's work.
farney wrote:Since her biggest asset and biggest expense is her home..
Try to make her home work for her. You say she's in a high cost-of-living area; as others have suggested, can she find someone trustworthy to move in with her/rent a room from her? Either a family member (you say she moved to where she is to be close to family), family friend, another elderly woman looking for cheap rent and company, graduate student, etc? The nearby family can drop by regularly and keep an eye on the situation. Just a few hundred dollars a month in rent would make a big difference in her situation.
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Calm Man wrote:I live in NJ so I know it is costly. I agree with you OP that she simply can't put her limited funds into the mortgage. I also don't think I like your idea about putting her in stocks at all. There's just not enough there. It sounds to me like your grandmother, who is a home owner and drives a car, is not mentally disabled. How can a person let themselves get into such a situation that they have literally nothing and have literally nothing coming in? Did she not work and save anything?
Read the part about my uncle stealing $200k from her.
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

farney wrote:2) If that's not an option, is there any way you could buy the house from her and then rent it back to her at a lower monthly amount? Obviously this depends on your financial situation, but the benefits to her are obvious. She might alternatively find someone else to set up a sale and leaseback arrangement with.
Unfortunately it's not doable. I don't make enough to support that mortgage.
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carorun
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Re: Helping My Grandmother

Post by carorun »

If her health is good, getting a part time job isn't a bad idea. Does she have work experience? Answering phones in an office for 10-20 hours a week and/or babysitting would help cover her property taxes and monthly shortfall without touching savings. If she doesn't have access to a computer, finding a job is certainly more difficult, but you could possibly go to her once a week with your laptop and a wifi hotspot to search for jobs with her.

I understand that you are not able to carry a mortgage for her, and that's totally understandable. Is one of her children in a position to help there? Even moving the rate from 5.25 to 3% would make a huge difference in her cash flow.
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

vachica wrote:If her health is good, getting a part time job isn't a bad idea. Does she have work experience? Answering phones in an office for 10-20 hours a week and/or babysitting would help cover her property taxes and monthly shortfall without touching savings. If she doesn't have access to a computer, finding a job is certainly more difficult, but you could possibly go to her once a week with your laptop and a wifi hotspot to search for jobs with her.

I understand that you are not able to carry a mortgage for her, and that's totally understandable. Is one of her children in a position to help there? Even moving the rate from 5.25 to 3% would make a huge difference in her cash flow.
She is looking at working part time at the hospital. She does have internet and a laptop. None of the family members are in any position to help with a mortgage/rent situation.
lawman3966
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Re: Helping My Grandmother

Post by lawman3966 »

PocketChangePension wrote:Renting would cost 3-4x what her mortgage costs are. HCOL area The original balance was like $65k or something. It's a 30 year mortgage that she got a few years ago because it's all she was able to afford. It's a small house in a 55+ community. The payment is like $350 ish last I remember, and that's without property tax and homeowner's insurance.
By way of overview, if she sold the house she'd have $1350/mo in income, and a nest egg of about $107K ($37K in current savings + $70K in proceeds from the home, assuming there are no cap gains taxes). At $1.35K/mo and a nest egg of about $100K, she is likely at the median of assets and income for a retiree of her age. Thus, there must be a solution since millions of people are in situations very similar to hers.

Turning to specifics, I must disagree that renting would cost 3-4 times her mortgage. First, the relevant basis for comparison is the total cost of ownership which would include not only the mortgage, taxes, insurance, and utilities, but also the interest being lost on the $70K in equity. It seems inefficient to pay a mortgage with "net" income. Most mortgages (to my knowledge) are paid with gross income, thereby reducing the income tax burden of the payer. From what you say, she is likely paying about $600-$700 in housing costs per month (added in an estimate of her property taxes and utilities). If she used the $70K from selling the home to buy an inflation indexed SPIA, she would likely get about $300 a month. She should therefore be ahead by $1000/mo ($700 + $300) by selling the house, before considering rental costs.

One can get roommate arrangements for much less than $1000/mo in NJ. I know because my roommate arrangement is about $800 in a very nice neighborhood in central Jersey. A quick search indicated that such arrangements can be had for considerably less in Pennsylvania and in less expensive parts of NJ. Even if she insists on staying in NJ, she should still be able to roomshare for well under the $1K (approx) that it is costing her to remain in a $130K home by herself. [I note that $130K is cheap for a home in NJ (The home I live in costs about $530K, though four bedrooms are being rented out). It stands to reason that the rental arrangements should be correspondingly cheaper as well].

Her home is her largest expense, and is thus the most logical place to cut costs. I would say, based on that, that it's a mistake to reject this potential cost savings out of hand.
stan1
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Re: Helping My Grandmother

Post by stan1 »

I'm going to summarize some of the options that have been ruled out:
- Selling house
- Geting a trusted roommate (female, around her age)
- Reverse mortage
- Moving her in with family
- Family helping pay off mortgage
- Family helping out with bills/groceries

I haven't heard moving to a lower cost of living area yet or remarriage to a widower with a pension (lots of competition for those)! A part time job would help but those can be tough to find for a 70 year old. I'm assuming there are no family members who could pay her to provide child care?

Over the next few years home, auto, and health expenses are likely to deplete much of her remaining assets. This is anonymous advice to you from the internet but I think there's a looming crisis here that the family is going to need to address. Good luck, there aren't any easy answers here it seems.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
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HomerJ
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Re: Helping My Grandmother

Post by HomerJ »

She should buy a SPIA (Single Premium Immediate Annuity) with the $30k...

At her age it will pay her around $180 a month or a 7% return... until the day she dies.

Note that the money is GONE. She pays a single premium ($30k), and the insurance company pays her $180 a month until she dies. If she dies next year, all the money is gone... If she lives 20 more years, it's a pretty good deal for her.

It's a very good and safe way to generate income for someone in her situation.

Edit: Do NOT let some slimy insurance salesman talk her into any other kind of annuity... SPIA is what she needs.
xf01
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Re: Helping My Grandmother

Post by xf01 »

Tough situation.

I think the money should stay in the bank or in a CD. She needs it on hand - a new furnace could deplete 10K immediately.

Your efforts may be better spent on making sure she is taking advantage of all available services. It's likely she can qualify for SNAP, utility bill partial credits, telephone bill assistance (NJ lifeline program), and property tax help.

http://www.state.nj.us/nj/community/senior/

Her county should also have a website for elderly services/ department on aging.
frebrowser
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Re: Helping My Grandmother

Post by frebrowser »

I don't have any additional suggestions on investments.

If she will accept groceries that are delivered to her house and you can afford it, you might want to look into whether something like Amazon (possibly using the subscribe and save discount) grocery delivery would work for you.

I've sent things like pet food, dry whole milk (Peak brand is surprisingly good), pasta, prepared food in pouches or cans, cookies, candy bars ... Most shelf stable stuff is available. Sometimes the pricing is competitive and sometimes not.

Fresh grocery delivery is also available from various sources but I haven't tried it myself. I just supplement where I can.

Something similar might work with any prescriptions that can be renewed by mail.
abyan
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Re: Helping My Grandmother

Post by abyan »

A friend of mine who works as a lawyer in the federal government on housing issues has been yelling at me for two years to call up my lender and ask if they can do better with my mortgage. I've been a bit mortified about doing it, but basically the Feds have been beating on the mortgage lenders for years to help people out with HARP and HAMP, and they're beating on them anew right now. He says it can be hit or miss when you call but you have nothing to lose telling them she can't afford the payments and you need their help. I know it sounds weird, trust me I'm still a bit unnerved about calling, but he insists we have nothing to lose and that they could decide to cut your rate, possibly forgive principal even. This isn't necessarily a refi. Again he does this for a living so I trust him, though of course there's no guarantee the lender will help, but he says sometimes they do, and they're feeling pressure from the Feds right now to help. I realize you've tried other things with regards to the mortgage, but perhaps it's worth a try. Obviously grandma will have to be on the call so you have permission to discuss her account.
Calm Man
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Re: Helping My Grandmother

Post by Calm Man »

PocketChangePension wrote:
Calm Man wrote:I live in NJ so I know it is costly. I agree with you OP that she simply can't put her limited funds into the mortgage. I also don't think I like your idea about putting her in stocks at all. There's just not enough there. It sounds to me like your grandmother, who is a home owner and drives a car, is not mentally disabled. How can a person let themselves get into such a situation that they have literally nothing and have literally nothing coming in? Did she not work and save anything?
Read the part about my uncle stealing $200k from her.
Yes, I see. OK, how did she let your uncle steal 200K from her? Since she is near destitute and likely will lose her house and car one day, is there a way you can attempt to recover the stolen money either by the non-criminal route (a contingency lawyer), asking him, or the criminal route if necessary? Does the uncle acknowledge he has stolen the money?
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PocketChangePension
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Re: Helping My Grandmother

Post by PocketChangePension »

Calm Man wrote:
PocketChangePension wrote:
Calm Man wrote:I live in NJ so I know it is costly. I agree with you OP that she simply can't put her limited funds into the mortgage. I also don't think I like your idea about putting her in stocks at all. There's just not enough there. It sounds to me like your grandmother, who is a home owner and drives a car, is not mentally disabled. How can a person let themselves get into such a situation that they have literally nothing and have literally nothing coming in? Did she not work and save anything?
Read the part about my uncle stealing $200k from her.
Yes, I see. OK, how did she let your uncle steal 200K from her? Since she is near destitute and likely will lose her house and car one day, is there a way you can attempt to recover the stolen money either by the non-criminal route (a contingency lawyer), asking him, or the criminal route if necessary? Does the uncle acknowledge he has stolen the money?
PocketChangePension wrote:What happened was she sold her house in upstate NY that was paid for and moved to NJ to be closer to family. Well, the house she wanted to get was $260k, but since she wasn't working, he said to give him the proceeds to put the mortgage in his name because he was the only one who can qualify. It was great for the first 2 years, but when the market crashed, he bailed out, kicked her out, and disappeared. He only put a small amount down on the house to begin with and put the rest in the market, unknown to her. He also had her other retirement money in there. She got a check back for $50k from him, but that was it. She had that $50k plus what she has now and had to find a house in a hurry. So no, there is no possible way for him to take what's left. Nobody imagined her own son would steal from her like that. The chances of him paying anything back will be like winning the lottery. The whole family stopped talking to him and hasn't seen him in years. There were no legal charges filed. They said it would be argued that it was a gift and too hard to prove he stole it all.
MN Finance
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Re: Helping My Grandmother

Post by MN Finance »

Invest the 30 in a SPIA as someone else mentioned. Keep the 7 in cash. If that's not enough then family needs to help. There are no other options.
xf01
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Re: Helping My Grandmother

Post by xf01 »

Does anyone know if SPIAs may affect qualifying for Medicaid? It looks as though OP's grandmother would have to go through Medicaid for nursing home care, if she ever became unable to live on her own. If you have an annuity would that stand in the way of qualifying for Medicaid?

OP, I would also check to see whether there is a Medicare PACE program where she lives. They are great but not many areas have them.

http://www.medicare.gov/your-medicare-c ... /pace.html
Herekittykitty
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Re: Helping My Grandmother

Post by Herekittykitty »

When you said no legal charges were filed against the son because "they said" it would be to hard to prove it wasn't a gift - who were "they"? Was the question strictly from a criminal and not civil perspective? I do not know if it would matter - not being a lawyer and not having experience in this kind of situation. However if I were in the situation, I would want to be sure I had all available information, which would include an opinion from an attorney regarding whether anything could be done from a civil perspective, or perhaps a debt collection perspective. I would likewise want to know if there was anything from the elder law perspective protecting granny from fraud and/or financial abuse. Criminal prosecution, which you say couldn't be done (I assume based on what a prosecutor told your family?), might be different from civil remedies. Again - I am not a lawyer and I don't know, but if I were in the situation, I would want a legal opinion because I would want to know.

Best wishes.
I don't know anything.
gd
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Re: Helping My Grandmother

Post by gd »

She can probably reduce her expenses somewhat with social programs. Check with her local social and senior services. I don't know how NJ works, but most MA towns have a Council on Aging, a volunteer committee running local senior services, usually with some paid professional staff. She may have access to things like senior work-off programs, where some part-time clerical work gives a reduction on local property taxes, heating bill assistance, local senior events like low-cost lunches, meals-on-wheels, perhaps even a local food pantry. There may be a social worker who can give advice about such programs, this is what they do. She'll be resistant to some of it, such as food pantries, but she's definitely in the target group for such things. It's probably not part of how she views herself and her life, but times have changed and it's a normal part of life nowadays for people living on SS.
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dodecahedron
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Re: Helping My Grandmother

Post by dodecahedron »

I definitely agree it is worth looking into social service options. In my area (and many others), there are very nice senior apartment complexes with subsidized rents (sliding scale rent based on income), which would allow your grandmother to live in dignity and comfort at reasonable cost. The nicest ones are operated by very reputable charitable nonprofit organizations (funded by government subsidy contracts). Your grandmother just doesn't have much margin in her life for disasters like the inevitable need for major repairs that can happen at any time when something unexpectedly goes wrong with her house. There are probably waiting lists, so I strongly encourage to investigate options sooner rather than later.
Jazz56
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Re: Helping My Grandmother

Post by Jazz56 »

Herekittykitty wrote:When you said no legal charges were filed against the son because "they said" it would be to hard to prove it wasn't a gift - who were "they"? Was the question strictly from a criminal and not civil perspective? I do not know if it would matter - not being a lawyer and not having experience in this kind of situation. However if I were in the situation, I would want to be sure I had all available information, which would include an opinion from an attorney regarding whether anything could be done from a civil perspective, or perhaps a debt collection perspective. I would likewise want to know if there was anything from the elder law perspective protecting granny from fraud and/or financial abuse. Criminal prosecution, which you say couldn't be done (I assume based on what a prosecutor told your family?), might be different from civil remedies. Again - I am not a lawyer and I don't know, but if I were in the situation, I would want a legal opinion because I would want to know.

Best wishes.
I think this route is worth some serious attention too. And personally, I would make sure that the son who took her money knew we were actively exploring it. Even if there is really no way to bring an action against him, the idea that it could happen might shake loose more of her money than the $50k he has paid back thus far. Apparently family shame isn't enough to alter the situation but the threat of legal action in some form might get some response from him. Even a letter to him from an aggressive attorney asking questions and making noise can have a positive effect.
Last edited by Jazz56 on Tue Jul 22, 2014 9:02 am, edited 1 time in total.
gloomydog
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Re: Helping My Grandmother

Post by gloomydog »

Sorry trying to get some facts straight about the theft of 200K, which if possible to recover, would still be the best way to go.

She wanted a 260K house, but she gave uncle money for mortgage since she didn't qualify on her own. She got 50K back. Was the amount she gave your uncle 250K for a 260K house? A transfer like that is likely to be significant. It should be possible to trace since this took place in 2006/2007. Maybe you can do some legwork now to help her.

And you or her other children could get together and pay for some little "luxuries" for her like cable/internet/insurance, or deposit a little bit of spending money into her account if you want to help.

We must be of a similar age as my grandparents are in their 70s and in need too, except they never had 200K to their name in the first place. The solution was to rent out their apartment while moving in with one of their children. It's a tight situation but it generated enough to cover their other needs with all of us chipping in for extras like hospitalization. Your grandma is hardly destitute, since she has some assets, but she's on the cusp if disaster should hit. GL.
gd
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Re: Helping My Grandmother

Post by gd »

Your grandmother is in an undesirable spot, but still better off than countless millions. She'll survive. The uncle sounds more like a hapless jackass than a thief. Make sure you think about the psychological fallout, and the tradeoffs in costs and likely benefits of possibly making the defining event of her old age be a vendetta against a son. You might even find that a conciliatory approach might get more results-- guilt can be as powerful as threats; if he sees a way to give back cents on the dollar over the years in return for not feeling like a jerk, perhaps he would. And yeah, I'm just making stuff up about people I don't know.
Jeanz
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Re: Helping My Grandmother

Post by Jeanz »

One thing you or your parents might do is make sure that she's aware of any programs that might help her. A place to start is with the county, which should have an "agency on aging" or a "division of senior services" or something of the sort. She might be eligible for a heating subsidy, for example. Turning off the heat is OK for an active 70-year-old, but that won't necessarily be true in the future.
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