What to do when a parent's money runs out?

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McCharley
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What to do when a parent's money runs out?

Post by McCharley » Sun Jun 02, 2013 12:40 pm

I wonder if any of you find yourselves in a similar situation...

My (single) mother has, counter to all advice and despite about $200k in inheritance, retired early and managed to spend down everything, including a mortgage on her house. :confused

(If I sound a little bitter it is because it could have worked out for her -- really I am just sad.)

She has not lived extravagantly but there has always been a "hole in the bucket".

She has a house now (w/$200/mo mortgage) and $1200/mo. in Social Security. She says she comes up $1k shy every month. Should I just send her money?

She's my mother and I owe her a lot (of course). I feel guilty for feeling stingy. Are any of you in the same boat?

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TomatoTomahto
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Re: What to do when a parent's money runs out?

Post by TomatoTomahto » Sun Jun 02, 2013 12:45 pm

My relationship with my mother was complicated; I did not grow up with her after the age of around 7. OTOH, she was my mother, and I could not stand the thought of her choosing between food and medicine in her final years. I sent her something every month. I did not send enough to allow her to continue to make bad financial choices.

Since I felt ambivalent about it, I set up an auto-pay with my bank so that I wouldn't always be reminded.
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The Wizard
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Re: What to do when a parent's money runs out?

Post by The Wizard » Sun Jun 02, 2013 12:58 pm

Time to get the Reverse Mortgage paperwork started?
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Re: What to do when a parent's money runs out?

Post by gerrym51 » Sun Jun 02, 2013 1:11 pm

family relationships are always an issue. I suppose you could buy the house-pay the morgage-not sure if that's a good or bad idea. the reverse mortgage is your best bet if you don;t want to get directly involve. then it's her and the bank

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Re: What to do when a parent's money runs out?

Post by Johm221122 » Sun Jun 02, 2013 1:13 pm

The Wizard wrote:Time to get the Reverse Mortgage paperwork started?
This seems like good idea
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enderland
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Re: What to do when a parent's money runs out?

Post by enderland » Sun Jun 02, 2013 1:15 pm

Why is she $1,000 short?

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Re: What to do when a parent's money runs out?

Post by letsgobobby » Sun Jun 02, 2013 1:19 pm

Where does the $1000 per month come from?

HornedToad
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Re: What to do when a parent's money runs out?

Post by HornedToad » Sun Jun 02, 2013 1:20 pm

I would first start seeing if she could cut expenses. It also isn't clear how old she is and if capable of still working or not.

Does she have other alternatives (downsizing, etc)

I'd be wary of getting in a situation that you have to pay 1k/month for next 15-20 years. Especially if that number starts increasing with inflation/lifestyle creep/etc

Do what you can to help her be self sufficient instead

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Re: What to do when a parent's money runs out?

Post by Erwin » Sun Jun 02, 2013 1:28 pm

McCharley wrote:I wonder if any of you find yourselves in a similar situation...

My (single) mother has, counter to all advice and despite about $200k in inheritance, retired early and managed to spend down everything, including a mortgage on her house. :confused

(If I sound a little bitter it is because it could have worked out for her -- really I am just sad.)

She has not lived extravagantly but there has always been a "hole in the bucket".

She has a house now (w/$200/mo mortgage) and $1200/mo. in Social Security. She says she comes up $1k shy every month. Should I just send her money?

She's my mother and I owe her a lot (of course). I feel guilty for feeling stingy. Are any of you in the same boat?
No doubt! family is family no matter what...what else is left?
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StormShadow
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Re: What to do when a parent's money runs out?

Post by StormShadow » Sun Jun 02, 2013 1:34 pm

HornedToad wrote:I would first start seeing if she could cut expenses. It also isn't clear how old she is and if capable of still working or not.

Does she have other alternatives (downsizing, etc)

I'd be wary of getting in a situation that you have to pay 1k/month for next 15-20 years. Especially if that number starts increasing with inflation/lifestyle creep/etc

Do what you can to help her be self sufficient instead
And how much per month do you think it cost the OP's mother for the first 18 years of his life?

This isn't a sibling we're talking about and the OP already stated she isn't wasteful. If you have the means, I don't think $1,000 per month is that steep a price to help her out. Certainly she should do what she can to cut costs and educate her in the meantime.

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Re: What to do when a parent's money runs out?

Post by The Wizard » Sun Jun 02, 2013 1:37 pm

What toad said.
Need to find a way for self sufficiency, not charity forever.
She doesn't handle lump sums well and we don't have enough insight here on her financial astuteness.
A tough problem...
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Re: What to do when a parent's money runs out?

Post by Leemiller » Sun Jun 02, 2013 1:37 pm

I may have to do something similar for one of my parents soon. Maybe eventually both of them. What I expect is for things to be on my terms. I'd want to see all bills and know where every penny was going. Might be a time for a reverse mortgage as others have suggested. Unfortunately in my experience people don't suddenly develop a work ethic in their 60s. My parent has also squandered a lot of money. So I really emphasize.

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Re: What to do when a parent's money runs out?

Post by livesoft » Sun Jun 02, 2013 1:41 pm

Perhaps she can find a similar destitute-on-SS-benefits women with whom she can share living arrangements. That is, she can live like a college student.
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Re: What to do when a parent's money runs out?

Post by stan1 » Sun Jun 02, 2013 1:46 pm

I help my mom out and do look at her expenses. When I looked at her bills I noticed she was spending about $300/year on scrapbooking supplies. She doesn't eat out or have any other hobbies, so I didn't say anything. She needs something to do with her time.

Agree it would help if she could find a relative or friend to live in one room of the house so she could split household living expenses.

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Re: What to do when a parent's money runs out?

Post by Grt2bOutdoors » Sun Jun 02, 2013 1:49 pm

Is it cheaper to rent than own? If all options have been considered and taken and you have the means without significantly putting you in financial distress - then you don't need to come on any internet forum to know what the right choice is. I'm sure you do know what is right, now go do it.

As for all the others who feel tough love is the answer - would you be the first to volunteer if the shoe were on the other foot? :confused
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McCharley
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Re: What to do when a parent's money runs out?

Post by McCharley » Sun Jun 02, 2013 2:13 pm

Thanks for all the replies.

Just to clarify, she gets $1200/month in SS and has already reverse mortgaged her house to the hilt. She now lives in a large farmouse in the boondocks of Maine. It is too much house for her but now if she moves the mortgage comes due and it is a difficult place to sell. It is also the place of her dreams.

Those of you recommending the tough love approach: I hear you, absolutely. But she has never listened to me in these matters and never will. If I draw the line then we have a train wreck of foreclosure, etc. Then we're looking at paying rent, too. :|

She's in her early seventies and could, absolutely, spend less. (I had no idea that cigarettes were so expensive, for example :shock: , or that it would be possible to accumulate over 2000 books...) But really I don't see how I could "impose" this on her.

For now I plan to send what I can -- probably $1000/mo. This is money that used to go straight into savings so it is a bit galling, but she's my mother. I do worry that lifestyle creep will happen. She has always spent more than what was coming in -- she inspired Bogleheadedness in me!

It is a comfort to hear that some of you have come up against the same issues and come to the same conclusion.

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Re: What to do when a parent's money runs out?

Post by linguini » Sun Jun 02, 2013 2:24 pm

$1200/month isn't a lot of money to live off of, but if she's spending $2200/month then there might be some room for cutting back a little or finding some assistance from other sources. Unless it's a huge burden on you, I think it makes sense to help out with some of the gap through direct financial assistance, but also to help her in two other ways:
1. Go through expenses and bills and help her identify where she can cut back without significantly harming her lifestyle. Spending $2200/month one one person while paying $200/month in mortgage is neither living in poverty nor living it up, so there's probably room to trim a little but not all the way down to her social security check of $1200/month without significantly impacting her life in a negative way like some of the other posters in this thread are suggesting, so it seems harsh to expect her to live around the poverty line if you are flush with cash. Make sure her money isn't going to high-interest credit card debt. Have her just walk you through your finances and have her make sure everything is on a budget going forward, even if it's not a $1200/month budget, so that your monthly assistance plugs the gap between income and spending instead of becoming a new source for spending. After all, you don't want to just create a bigger bucket for her to put a hole in. Try your best to come up with messaging so that she understands your checking up on her finances are an attempt to assist her with living well and not an attempt to control her, but basically you can't give out $1000/month unconditionally and expect the finances to just work out without your help at this point considering she's already proved that she isn't the greatest at handling money. This is the same issue as the thread with the daughter who failed a semester of college and moved back home: you want her to feel as if she is free and empowered and that you are being supportive in order to avoid creating resentment between the two of you, but you also need to make sure that there are conditions for your support so that the situation does not worsen.
2. Her income is low enough that she might qualify for federal, state, or local government assistance, as well as charitable assistance. Ensure that she is signed up for government programs like medicaid or meals on wheels, maybe help her find a nearby food pantry to help cut some of the cost of groceries, though I understand this might be difficult in rural Maine. Outside assistance could go a significant way toward decreasing the amount of support you will be responsible for.

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Re: What to do when a parent's money runs out?

Post by stan1 » Sun Jun 02, 2013 2:31 pm

Can she do anything with the land the farmhouse is on (sharecrop, harvest some timber, raise chickens/sell eggs)?

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Re: What to do when a parent's money runs out?

Post by StormShadow » Sun Jun 02, 2013 2:39 pm

McCharley wrote:She's in her early seventies and could, absolutely, spend less. (I had no idea that cigarettes were so expensive, for example :shock: , or that it would be possible to accumulate over 2000 books...)
Gah! Get her to stop smoking! Pronto! :oops:

In Maine, a pack a day would set her back $2,500/year. Not to mention putting her at increased risk for emphysema, lung cancer, heart disease and stroke.

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Re: What to do when a parent's money runs out?

Post by HornedToad » Sun Jun 02, 2013 2:40 pm

StormShadow wrote:
HornedToad wrote:I would first start seeing if she could cut expenses. It also isn't clear how old she is and if capable of still working or not.

Does she have other alternatives (downsizing, etc)

I'd be wary of getting in a situation that you have to pay 1k/month for next 15-20 years. Especially if that number starts increasing with inflation/lifestyle creep/etc

Do what you can to help her be self sufficient instead
And how much per month do you think it cost the OP's mother for the first 18 years of his life?

This isn't a sibling we're talking about and the OP already stated she isn't wasteful. If you have the means, I don't think $1,000 per month is that steep a price to help her out. Certainly she should do what she can to cut costs and educate her in the meantime.
I'm not saying don't help out. I'm saying move towards a path of self sufficiency instead of sending $1000/mo for next 5 years, $1500/mo for the 5 years after that and then $2000/mo for the 10 years after that, etc where now she feels like she doesn't have to worry about the money and doesn't have to make tough choices. I'm assuming this money will impact your life and somewhat your ability to provide for your own children with full rides to college/grad school, etc. If you're independently wealthy and this is just gravy, then by all means help out without any conditions.

Especially if it's supporting the mom's smoking habit. You can either find an approach to rip the bandaid off now and find a way to make her (mostly) self sufficient or with defined terms ($500/mo,etc) or you can wait 15 years where the house is now upside down and she is in worse health and needs much more monetary support and has less options regarding age, etc. She has a large house, can anything be done to make use of it (renter/roommate, etc)? Can she afford to keep the house vs. selling it and having an apartment, maybe even getting her closer to the grandkids. Or a mother-in-law suite in your home depending on your relationship with her.

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Re: What to do when a parent's money runs out?

Post by livesoft » Sun Jun 02, 2013 2:54 pm

I don't understand why foreclosure / bankruptcy is not an option. I would not describe it as a train wreck.

Has she asked for help? Have you asked her what she is going to do when the money runs out?
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Re: What to do when a parent's money runs out?

Post by Gnirk » Sun Jun 02, 2013 3:04 pm

Have you looked into social or state programs that can help her? Food stamps? Fuel assistance?
As others have said, $1200 per month isn't much to live on, especially when you have to pay rent or a house payment.
Even though she can save $200 per month by not smoking, it may not be realistic to think that she can stop, at her age.
I admire your willingness to help your mom financially, in spite of her weaknesses.

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Re: What to do when a parent's money runs out?

Post by Scooter57 » Sun Jun 02, 2013 3:13 pm

You might look into what services for the elderly there are in her county. She may be eligible for tax abatement or meals services or other such things she isn't taking advantage of out of a wish not to seem needy. This is rural New England and that kind of behavior is very common.

More to the point, you might want to determine if she is making poor choices because she has developed cognitive difficulties. Some drugs given to older people can have a very negative effect on brain function, but so can natural processes. People often miss the early signs of brain dysfunction in loved ones. So this is an important step before you deal with the situation. If she doesn't have developing brain dysfunction and can manage her affairs better, perhaps you can find her some local credit counselling. Financial advice goes down better when it doesn't come from a child, no matter how loved and loving.

If she is running into cognitive problems that limit her ability to control her spending you may have to take more aggressive steps.

There are far worse things to overspend on than books, and if she's been smoking for decades it is no simple thing to stop. You might offer to pay for a program, but don't make that a condition. If it were simple to stop my guess is she'd have done it.

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Re: What to do when a parent's money runs out?

Post by NorCalDad » Sun Jun 02, 2013 4:02 pm

Can you afford to send her $1,000 a month? I know you said it was going toward your savings, but just because it isn't paying for current expenses doesn't mean you can afford it. As long as you're not shortchanging your kids or significantly undermining your own retirement to send her the money, I would say go for it. If that cash would otherwise go for luxuries you can do without, fine. But if you have kids or your own financial concerns, I wouldn't enter into a long-term payment situation.

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Re: What to do when a parent's money runs out?

Post by Sam I Am » Sun Jun 02, 2013 5:17 pm

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Re: What to do when a parent's money runs out?

Post by Watty » Sun Jun 02, 2013 5:22 pm

A few unrelated thoughts.


I’m a little confused on how she could have a reverse mortgage and a regular mortgage. It would be good to get all the specific details of her financial situation.


One thing to do would be to check to see if she could rent out a room or if the house could easily set up with a separate apartment.


In considering if you should support her one thing to look at is that if you do then you may be able to claim her as a dependent if you set it up correctly so be sure to research this.

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Re: What to do when a parent's money runs out?

Post by zebrafish » Sun Jun 02, 2013 10:38 pm

I think that if you are going to help, that:

1) You need to be in the financial position to do so

2) It is reasonable to expect that providing money will lead to a change in any financially irresponsible behavior

3) If she is in a financially unsustainable position, that she does something like sell the house and downgrade

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Re: What to do when a parent's money runs out?

Post by englishgirl » Mon Jun 03, 2013 9:37 am

This is obviously an extremely difficult situation, as with parents you do have a debt of obligation. But then, you can't throw money away if someone is not willing to compromise.

I think she's going to have to give up the nice house, and move in with family. If it's really going to be that hard to sell, then she probably needs to go into foreclosure. I just don't think I could stomach sending $1000 a month to someone who isn't compromising with their lifestyle - I mean, OK, $2200 a month is not lavish. But she doesn't HAVE $2200 a month. She's going to have to drastically cut back somewhere. I would definitely help her look for programs that might help out, as already mentioned, like food stamps or the like. And introduce her to the library, instead of the bookstore. If she insisted on staying put, and didn't try to at least look for programs to help the situation, then I'd probably offer $500 a month.
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Re: What to do when a parent's money runs out?

Post by ddunca1944 » Mon Jun 03, 2013 10:11 am

She now lives in a large farmouse in the boondocks of Maine. It is too much house for her but now if she moves the mortgage comes due and it is a difficult place to sell. It is also the place of her dreams.

If it is too much house for her now, that is only going to get worse. Either she will have to start paying for help (which she clearly cannot afford) or she will let things go - and the value of the house may well be negatively impacted. Living one’s dream is wonderful - but not if it has to be subsidized.

She's in her early seventies and could, absolutely, spend less. (I had no idea that cigarettes were so expensive, for example , or that it would be possible to accumulate over 2000 books...) But really I don't see how I could "impose" this on her.

You can’t “impose” anything on a 70 something mother. BUT you can refuse to subsidize it....

For now I plan to send what I can -- probably $1000/mo. This is money that used to go straight into savings so it is a bit galling, but she's my mother.

Sending money is the easiest and least intrusive approach. If you can afford it, that’s fine (imo)

I do worry that lifestyle creep will happen.
It will

She has always spent more than what was coming in

And there is no reason to think/hope that will change.

But she has never listened to me in these matters and never will

Probably not, , however if she is outright asking you for financial help, it does open the door for you to say, “Mom, I would love to help; let’s sit down and go over your budget and see what can be done”. In the same vein, I would find out what kind of services are available for seniors in her area (previous posters have suggested this). Also a question - how far from you does she live? And are there siblings who could chip in financially or otherwise?

You are between a rock and a hard place. It's not the same as applying tough love principles on an adult child or sibling. My own mother impoverished herself giving her life savings to her church before we discovered she had Alzheimer's.

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Re: What to do when a parent's money runs out?

Post by MN Finance » Mon Jun 03, 2013 10:16 am

My MIL will be in a similar place when she finally retires. No assets and will have to live on SS and very small pension. Though benefits are regionally dependent, does anyone know how to best find out what resources are available to low income families?

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Re: What to do when a parent's money runs out?

Post by MathWizard » Mon Jun 03, 2013 10:18 am

Get any siblings you have involved. A shared load is easier.

You have my sympathies.

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Re: What to do when a parent's money runs out?

Post by ddunca1944 » Mon Jun 03, 2013 10:37 am

MN Finance wrote: Though benefits are regionally dependent, does anyone know how to best find out what resources are available to low income families?
I'd google search terms like "name of county, state, and senior services", "name of county, state, and senior assistance", and repeat using terms like "senior housing", "senior assistance"."senior resources".. Many counties have an office (or person) devoted to assisting low income seniors, but the names and titles vary. Once you locate this office/person, they can be invaluable.

If you have no luck at the county level, then I'd try the state level.

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Re: What to do when a parent's money runs out?

Post by inbox788 » Mon Jun 03, 2013 10:39 am

StormShadow wrote:
McCharley wrote:She's in her early seventies and could, absolutely, spend less. (I had no idea that cigarettes were so expensive, for example :shock: , or that it would be possible to accumulate over 2000 books...)
Gah! Get her to stop smoking! Pronto! :oops:

In Maine, a pack a day would set her back $2,500/year. Not to mention putting her at increased risk for emphysema, lung cancer, heart disease and stroke.
Yes, do what you can to help her quit. Quitting smoking definitely has health benefits, or realistically reduced risks of I'll effects. As far as cost savings, it will in the short run save the cost of cigarettes, but ironically, because of the longer expected longevity, actually cost more in the long run. For most, that's a good problem to have.

http://www.washingtonpost.com/blogs/won ... ave-money/

Haven't gotten a good sense of why she is so over budget. Would help to know expenditures. If expenditures are reasonable, and you can afford to support it, then keep it up, but I'm concerned that by providing the support, you are enabling unhealthy behaviors, far worse than the smoking. Senseless spending, like those addicted to hsn, buying thing they never open, becoming hoarders. Alcohol, drugs, gambling, etc.

I'd limit your involvement, and see what government programs she would qualify for. Also, counseling and budgeting help may be available, and might be a good reality check. Although not different than wht you would say, it can often be more effective coming from a professional or 3rd party.
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Re: What to do when a parent's money runs out?

Post by Rick Ferri » Mon Jun 03, 2013 10:49 am

She has a house now (w/$200/mo mortgage) and $1200/mo. in Social Security. She says she comes up $1k shy every month. Should I just send her money?
Yes. Successful children do not let their parents live in poverty.

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Re: What to do when a parent's money runs out?

Post by snowx800 » Mon Jun 03, 2013 11:03 am

I had the same issue my mom lost the house they were living in. I kept trying to talk to her
About what was going on then house Went up for auction. It was very tough times my dad didn't know
It even happened. His fault need to pay attention they had to go bankrupt. I came in and bought house from
The guy who bought it payed for and my parents live there and pay for maintenance and
Taxes. That was 4 years ago now they are doing better than ever sometimes it has to go bad before it can get better
Family is family

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Re: What to do when a parent's money runs out?

Post by frugaltype » Mon Jun 03, 2013 11:05 am

All I can add to what people have said is that $24,000 a year is not a lot if she has the type of normal medical expenses a 70 year old person has. Add together Medigap, prescription expenses, this can really add up. So going over her finances and seeing where the money is going is necessary to understand the situation.

I also wonder about taking in a boarder, taking great care that he or she is a responsible, safe person.

It's too bad she retired early. Is she physically fit enough to get a part-time job, assuming there are any in the boondocks? I live in the semi-boondocks and there are older people clerking in drugstores and markets

Update: That said, I absolutely would help.

Also, the libraries where I live have no cost interlibrary loan programs and also belong to ezone (overdrive.com) where ebooks can be downloaded in minutes. amazon has free kindle for pc software, very easy to install to read those. gutenberg has a zilllion ebooks free for kindle. With thousands of actual books, rereading is in order. I do that a lot.
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Re: What to do when a parent's money runs out?

Post by Artsdoctor » Mon Jun 03, 2013 11:06 am

McCharley,

It's your mom, and of course you'll help her out. Suggestions have been great, but there are two things that haven't been mentioned. Instead of sending her the money directly, you can pay an expense (or expenses) directly. This is probably the best option if you're worried about mismanagement. I wasn't clear about the mortgage situation she has but if you're paying the bank directly, you might be able to claim interest expense on your tax return. Second, if you want to pay her directly, you can transfer her appreciated mutual fund shares and then replenish the donated shares with fresh money to your account (you'll reset your cost basis and she's in the 0% capital gains bracket); it would be too cumbersome to do monthly, but you could transfer a sum quarterly (for example) easily if you set up a Vanguard account for her.

If you do contribute to her living expenses, I would suggest that you do take a somewhat more active role in management of expenses; I wouldn't view this as intrusive if done gently.

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Re: What to do when a parent's money runs out?

Post by bottlecap » Mon Jun 03, 2013 11:19 am

Obvious, the situation is personal and the answer will depend on you, your mother and your relationship with her.

It sounds like she's being irresponsible and unrealistic with her choices, but doesn't sound like she's spending like crazy.

If I could afford $1,000 per month I would probably to it, but the problem is that it might turn into $2,000 per month pretty quickly. Maybe think about buying her an annuity? I would probably have a serious talk about her living arrangements - you don't get to live in your dream house when you can't afford it.

I will have no problem helping my mother should she need it, but she is the model of responsibility. If she needs assistance, it won't be of her own doing, so honestly I can't say what I'd do in other situations. But I think you have options other than sending her zero dollars and $1,000 dollars and they might be worth exploring. She's not going to change at this point, but some behavior modification might be possible if, for instance, she realizes that she will lose her dream house if she doesn't impose at least some modest budgeting.

Good luck,

JT

donaldfair71
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Re: What to do when a parent's money runs out?

Post by donaldfair71 » Mon Jun 03, 2013 11:22 am

Two things:

1. You, as would any sane person with half a heart, will send her money.

2. Money doesn't solve money problems. So the money sent will not fix the holes in the bucket. She will spend it as wisely or otherwise as she did her own.

It's a Catch-22. Having a heart means you won't solve any of the money problems. Being smart means turning your back. I will be in the same position as you in my life soon (actually worse- my parents have no savings, no house, not anything saved up) and I will send money understanding that it will not be spent appropriately. It's just the cards some of us are dealt.

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tyrion
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Re: What to do when a parent's money runs out?

Post by tyrion » Mon Jun 03, 2013 11:32 am

Not sure if this has been suggested yet in this thread, but I frequently see the recommendation of paying for specifics rather than just sending cash. Like you could pay her gas and electric bill directly, or send $X to the mortgage company every month. While money is fungible, if she doesn't see it she won't be able to spend it and it may help prevent lifestyle creep (probably not).

scone
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Re: What to do when a parent's money runs out?

Post by scone » Mon Jun 03, 2013 12:10 pm

The $1000 shortfall each month bothers me. Does she have unpaid debts you don't know about? I'm just saying, sending her money is one thing, but you don't want to be hit up by every creditor she might have as the "responsible party." Years ago, I got a call from my uncle's girlfriend saying he had died, and could I come out to help with the funeral and his effects. (I had met my uncle only once before, at my mother's funeral.) While I was there, the hospital tried to get me to pay his final bills, which were suspiciously huge, and far more than Medicare would cover. I told them I would not, nor would I be responsible for any other debts of his, apart from the funeral expenses. I had a lawyer write to the hospital to tell them of my position, and never heard from them again. Later on, a nurse friend of mine said hospitals sometimes try to grab a "responsible party" to avoid a loss, and sometimes give them an inflated bill, even if the grabee has no legal obligation to pay. To them, it's just business. (I can't confirm what I was told, but I have no particular reason to doubt it. Just something to keep in mind.)

On the other side of the coin, my MIL, who has a nice pension and good savings, has a very difficult time spending. She is still saving at 87, right down to reusing tea bags and wearing ancient clothes. If we send her gifts, she generally puts them away "for best" but never uses them. We used to try to encourage her to spend and enjoy herself, but she would get quite annoyed. (All her necessities are taken care of.)

I think the "spendthrift" urge (my side of the family) and the "hoarding" urge (my in-laws) are both reactions to the Depression and WWII-- it's a universal trauma, and the habits formed are almost impossible to change. I say do what you can, don't feel guilty, and don't worry about other people's judgment. Some people will disapprove of your decision no matter what you do, and there isn't necessarily a perfect solution. I'm sure you will do your best, and good luck.
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psteinx
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Re: What to do when a parent's money runs out?

Post by psteinx » Mon Jun 03, 2013 12:37 pm

Some thoughts:

The mother is in her early 70s, retired early, and has apparently gone through a $200K inheritance, the proceeds from at least some reverse mortgage and/or regular mortgage money, and probably whatever savings she had accumulated on her own (probably minimal if anything).

So, let's say she's gone through ~$300K ish, on top of whatever income she had coming in from social security and/or other sources.

She's done this in what, 15-20 years or so?

It's quite possible that she's BEEN short by more than $1000/month ($12K/year).

Now, she's presumably got no income from the inheritance, and possibly some mortgage-related payments she didn't have before. (The mortgage/reverse mortgage situation is a bit unclear/confusing to me.)

If she's telling you she's short $1K/month, be open to the possibility that the current and future shortfall may be much higher.

I think the first order of business, if possible, is to sit down with her and go through ~12 months of expenses - ask her to bring her credit card receipts, bank statements, utility bills and the like.

Get an understanding of what the real picture is. Make sure SHE has a good understanding too.

You may want to do this in association with someone who does this on at least a semi-regular basis (some sort of credit counselor) or someone else who is trusted by your mother and perhaps semi-neutral.

Be prepared for this to be a challenging, perhaps painful discussion. Be prepared for personal strains.

EDIT - Wordsmithed...
Last edited by psteinx on Mon Jun 03, 2013 1:00 pm, edited 1 time in total.

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Re: What to do when a parent's money runs out?

Post by The Wizard » Mon Jun 03, 2013 12:49 pm

I was pondering similarly to what psteinx wrote.
If I was in the OP's situation, I'd have to dust off my Control Freak apparatus in the closet.
I'd do some forensic accounting over the past few years to try to understand what's been going on; and I'd expect to find gaps that defy simple explanation.
Not sure what outcome in my situation would be; would depend on findings...
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Re: What to do when a parent's money runs out?

Post by Meg77 » Mon Jun 03, 2013 1:09 pm

I think this current budget crunch is a huge signal that it is time to intervene and figure out a long term plan for your mother's financial and physical care. Sending "what you can" which is currently about $1000 a month is not the answer. As she declines mentally (which almost every person inevitably does) her ability to manager her own money is going to decline even further. It sounds like $1000 a month is the current hole in her regular budget - what happens when she has a medical issue or the roof on her house needs replacing? Unless you are very wealthy, you may need to save your money to help her with those big and important issues, including the possibility of paying for in home health care or a nursing home at some point. She could easily live another 20 years. It seems to me that sending money each month is a short term fix which may actually just delay the inevitable and hide the signs of her struggle while the problems exacerbate. And she may end up bankrupt and living with you anyway, in which case you'll have wasted all that money trying to ignore the reality of her unsustainable situation.

I suggest telling your mother that you are willing and able to help her. I think you should probably require Power of Attorney over her financial affairs though, whether or not you decide to supplement her income. That way the bills and notices come to you, and you can make sure they get paid so that she doesn't end up in foreclosure or without basic utilities at some point. Even if this seems like overkill now, it is a lot easier to deal with on the front end before you realize she hasn't been paying bills or maintaining the house. This IS the red flag; it's time to confront it. If mom resists handing over Power of Attorney then if it were me I would gently refuse to blindly write her checks to effectually double her income.
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Re: What to do when a parent's money runs out?

Post by Skiffy » Mon Jun 03, 2013 2:41 pm

We're in the same position, except it is FIL. I don't know what game he likes to play, Dumb Bummy or Sly like a Fox! He has never saved any money and spent every penny ++ he ever had. Then thinks someone should pick up the tab, has spent all the $$ the ex-wife (MIL) would give him, now wants us to support his bad financial choices and inability to make a postitive changes. So I feel your pain, and send some warm thoughts your way--

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Re: What to do when a parent's money runs out?

Post by Bill M » Mon Jun 03, 2013 2:46 pm

Of course send the $1K/mo.

But, the bucket has a leak... As part of sending the $1K/mo to mom, I'd worry a lot that the leak will get bigger. She is constantly digging a deeper hole, by spending $1000 more than income every month. Somebody (or some bank) is enabling that. Is it use of plastic??? Whatever the enabler is, remove it from the mix. Cash tucked in envelopes is a straightforward budgeting tool.

Cutting cigarettes, of course, could do a lot to plug the hole. Public libraries have far more than 2000 books. But the first step is certainly a detailed understanding of where the $2200/mo is going.

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McCharley
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Re: What to do when a parent's money runs out?

Post by McCharley » Mon Jun 03, 2013 8:43 pm

Quite thoughtful replies -- thank you all.

To answer your questions, I can afford the $1k/mo. right now. I have a good-paying job, at least for now. I work in biotech, though, and employment is always precarious -- I have, in fact, been trying to save as much as I can for that eventuality. (This forum gave me a lot of support when I was laid off about 18 months ago -- thanks for that, BHeads!)

But you are all correct who said that I would send her money. I sent out the first "installment" yesterday.

Those of you who suggest taking a look at her finances or even control of them are onto something -- I'll need to give this some thought. This is the first time she has asked for help or advice, although I've given her plenty of advice in the past it has always fallen on deaf ears.

I used to think that cigarettes and alcohol WERE my mother's retirement plan: essentially dying earlier. (Yes I know that sounds incredible but she does rather think this way.) But her new, retired lifestyle has left her healthier than ever. I do not think she is suicidal but it does worry me -- she always talked admiringly about how the Eskimo elders would walk off into the snow when they stopped usefully contributing.

She met with a financial adviser a few years back and was told that she needed to get a job, any job. She didn't listen to him, either.

I live thousands of miles away from her. My sister, who lives closer, is in no position to provide financial support (but she may help to sell books, etc.). Ironically, my sister has been living with the kind of frugality that my mother should have. My sister is very angry about all this.

Atilla
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Re: What to do when a parent's money runs out?

Post by Atilla » Mon Jun 03, 2013 9:03 pm

Amazing - almost the exact same story as mine. Mother inherits a quarter million and proceeds to blow through most of it and end up with two houses, three mortgages and no job. Unemployment magically became retirement when she hit 62.

I just send the money - $1,000 every month. What pisses me off most is I can't deduct it. That $1,000 costs me $1,300 or more.

But it's your mom. What you gonna do?
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Jfet
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Re: What to do when a parent's money runs out?

Post by Jfet » Mon Jun 03, 2013 9:14 pm

How about getting her to sell the house to you?

If there is any equity in the house, you can split it between you and your sister.

Then let your mother live in the house rent free, using her $1200 for her other living expenses.

Unless the house is very underwater and is worthless...

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Re: What to do when a parent's money runs out?

Post by livesoft » Mon Jun 03, 2013 9:15 pm

So is there a difference between sending $1,000 a month to one's Mom and sending a $1,000 a month to one's 26-year-old unemployed child?
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