Author Topic: This week's Family Finance trainwreck  (Read 9787 times)

Zikoris

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This week's Family Finance trainwreck
« on: November 14, 2014, 05:08:18 PM »
I read this column every week in the Financial Post and was is awe of this one. http://business.financialpost.com/2014/11/14/with-net-worth-under-40000-big-mortgage-and-retirement-looming-64-year-old-fears-bleak-future/

It's a 64 year old woman with under $40,000 net worth, up to her eyeballs in debt. She wants to retire next summer. Her grand plan is to use the proceeds of selling her $230,000 condo that she was $39,000 equity in to buy a car so she can drive across the country and sponge off her adult kids who live here in BC.

At least they gave her a one star rating.

GardenFun

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Re: This week's Family Finance trainwreck
« Reply #1 on: November 14, 2014, 05:54:03 PM »
She better hope her children didn't mimic her financial decisions, or else they will not have any money to help her out. 

Wow. 

Zamboni

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Re: This week's Family Finance trainwreck
« Reply #2 on: November 14, 2014, 06:54:22 PM »
She needs to keep working, obviously, and it sounds like she is perfectly capable of doing that at least for a few more years.  But why should she have to do that?  EVERYONE KNOWS that you get to retire at 65.

It boggles my mind that she was planning to take what amounts to her life savings and buy a freakin VEHICLE to drive across the continent.  Buy a PLANE TICKET at less than $500 and put the rest in the bank.  This is the kind of planning that has put her in this situation.

irishbear99

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Re: This week's Family Finance trainwreck
« Reply #3 on: November 14, 2014, 07:23:28 PM »
Wow. So much wrong with this that I don't even know where to start. Makes me wonder if there's a finance column Q&A out there that reads something like this:

"Dear Finance Guru,
My 64 year old mother has been a spendthrift all her life. When she got divorced 10 years ago, she had to take a loan from her retirement program to pay her debts, and she hasn't paid it all back yet. What's worse is she's run up another $5,000 in debt since then and has saved less than $2,000 per year for retirement. She just told me that, despite all this, she is still going to retire next year, sell her condo, and move in with me, my spouse, and children. What should I do?"

/headdesk

SwordGuy

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Re: This week's Family Finance trainwreck
« Reply #4 on: November 14, 2014, 07:48:43 PM »
Wow. So much wrong with this that I don't even know where to start. Makes me wonder if there's a finance column Q&A out there that reads something like this:

"Dear Finance Guru,
My 64 year old mother has been a spendthrift all her life. When she got divorced 10 years ago, she had to take a loan from her retirement program to pay her debts, and she hasn't paid it all back yet. What's worse is she's run up another $5,000 in debt since then and has saved less than $2,000 per year for retirement. She just told me that, despite all this, she is still going to retire next year, sell her condo, and move in with me, my spouse, and children. What should I do?"

/headdesk

Tell her to keep working and stop wasting all her money - and that your spare bedroom is full. 

Prairie Gal

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Re: This week's Family Finance trainwreck
« Reply #5 on: November 14, 2014, 08:18:36 PM »
Sadly, there are seniors that live on less than what this woman will be getting in retirement, as evidenced by the fact that she won't qualify for GIS (Guaranteed Income Supplement). At least she will be getting a small pension.

On a personal finance board such as this, these numbers seem shocking, but I bet it happens a lot.


RFAAOATB

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Re: This week's Family Finance trainwreck
« Reply #6 on: November 14, 2014, 08:38:00 PM »
Wow. So much wrong with this that I don't even know where to start. Makes me wonder if there's a finance column Q&A out there that reads something like this:

"Dear Finance Guru,
My 64 year old mother has been a spendthrift all her life. When she got divorced 10 years ago, she had to take a loan from her retirement program to pay her debts, and she hasn't paid it all back yet. What's worse is she's run up another $5,000 in debt since then and has saved less than $2,000 per year for retirement. She just told me that, despite all this, she is still going to retire next year, sell her condo, and move in with me, my spouse, and children. What should I do?"

/headdesk

Lock her in a room and take all her pension money as a payee rep.  Keep her comfortable/sedated as long as the checks roll in.

MrsPete

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Re: This week's Family Finance trainwreck
« Reply #7 on: November 15, 2014, 11:28:18 AM »
In her defense, she's looking at buying a camper. 

I wonder if her plan is to drive to one kid's home for a while . . . then another kid's home for a while?  If the camper is her new home, her plan might work -- if she begins to make frugal choices. 

GrayGhost

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Re: This week's Family Finance trainwreck
« Reply #8 on: November 15, 2014, 12:18:50 PM »
Dollars to donuts, she won't. At least a few of her kids will probably bail her out, and if they don't, she might just go further into debt.

Self-employed-swami

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Re: This week's Family Finance trainwreck
« Reply #9 on: November 15, 2014, 08:47:25 PM »
Uggh. Their 'professionals' are inconsistent.  The next article is about a woman with a 1.2 million net worth who wants to become self employed, and they advise her that she doesn't have enough money.  :/

Zikoris

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Re: This week's Family Finance trainwreck
« Reply #10 on: November 15, 2014, 11:55:46 PM »
Uggh. Their 'professionals' are inconsistent.  The next article is about a woman with a 1.2 million net worth who wants to become self employed, and they advise her that she doesn't have enough money.  :/

To my understanding, they set the family up to meet with a finance professional in their area, who then writes the advice for the article. Since they take submissions from all across the country, the column is pretty different week to week.

Typically the cases are pretty dull, besides a bit of crazy spending here and there - they very frequently profile couples who are government workers with Defined Benefit pensions, who have been working there long enough to get pretty much their full salary upon retirement, including medical benefits, etc. Every once in a while they throw in someone like this to mix it up though :)

dude

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Re: This week's Family Finance trainwreck
« Reply #11 on: November 17, 2014, 08:56:02 AM »
I read this column every week in the Financial Post and was is awe of this one. http://business.financialpost.com/2014/11/14/with-net-worth-under-40000-big-mortgage-and-retirement-looming-64-year-old-fears-bleak-future/

It's a 64 year old woman with under $40,000 net worth, up to her eyeballs in debt. She wants to retire next summer. Her grand plan is to use the proceeds of selling her $230,000 condo that she was $39,000 equity in to buy a car so she can drive across the country and sponge off her adult kids who live here in BC.

At least they gave her a one star rating.

Wow, started reading past columns on this page and damn, there are some really stupid people out there.  This one, in particular, made my eyes pop:

http://business.financialpost.com/2014/07/25/68-year-old-civil-servant-who-lost-all-her-savings-in-two-desperate-bets-struggles-to-pay-off-six-figure-debt/


galliver

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Re: This week's Family Finance trainwreck
« Reply #12 on: November 17, 2014, 10:01:30 AM »
Obviously depending on one's children for retirement isn't the optimal option, but I think before judging you have to consider the lifetime of relationships. If the parent(s) invested in kids' education and helped their kids through college/early career at the expense if retirement savings, then kids helping out aging parents makes perfect sense...and has millenia of precedent. Maybe she doesn't expect to get coddled at her kids' homes, but rather to help out with housework and grandkids, providing a service. None of these things were mentioned, do we can't possibly know how her kids feel and why her plan is what it is.

It saddens me that so many would treat their mother so harshly.
« Last Edit: November 17, 2014, 01:23:12 PM by galliver »

marty998

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Re: This week's Family Finance trainwreck
« Reply #13 on: November 17, 2014, 01:09:26 PM »


It saddens me that so many would tasty their mother so harshly.

Autocorrect strikes again?

galliver

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Re: This week's Family Finance trainwreck
« Reply #14 on: November 17, 2014, 01:23:34 PM »


It saddens me that so many would tasty their mother so harshly.

Autocorrect strikes again?

OMG yes! That's kind of a funny one.

SwordGuy

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Re: This week's Family Finance trainwreck
« Reply #15 on: November 17, 2014, 05:44:05 PM »
Wow, started reading past columns on this page and damn, there are some really stupid people out there.  This one, in particular, made my eyes pop:

http://business.financialpost.com/2014/07/25/68-year-old-civil-servant-who-lost-all-her-savings-in-two-desperate-bets-struggles-to-pay-off-six-figure-debt/

Or she could sell her house and rent a room instead of buy a condo.  If she lived like a college student for a few years she could pay off everything and have enough money to move someplace where the property is way cheaper.   With no rush to purchase a new place, she could wait until she found a cheap foreclosure and save even more money.


GrayGhost

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Re: This week's Family Finance trainwreck
« Reply #16 on: November 17, 2014, 11:36:44 PM »
I have no problem with the idea of an old parent moving in with his/her children and grandchildren, but he/she shouldn't be a burden to the family. The whole idea of a family is to produce a synergistic effect. So the old parent should contribute something. In fact, in my opinion, if you want to live in a family house of any sort, you should put the family first. That doesn't mean that you can't ever have time to yourself or that you can't ever go anywhere or do anything by yourself, it just means that you have certain priorities.

myteafix

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Re: This week's Family Finance trainwreck
« Reply #17 on: November 18, 2014, 11:06:37 AM »
I have no problem with the idea of an old parent moving in with his/her children and grandchildren, but he/she shouldn't be a burden to the family. The whole idea of a family is to produce a synergistic effect. So the old parent should contribute something. In fact, in my opinion, if you want to live in a family house of any sort, you should put the family first. That doesn't mean that you can't ever have time to yourself or that you can't ever go anywhere or do anything by yourself, it just means that you have certain priorities.

^ This.

Move in with your family, but only if you've been invited and only if you plan to contribute. Don't impose on them.

Siobhan

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Re: This week's Family Finance trainwreck
« Reply #18 on: November 18, 2014, 11:27:51 AM »
Obviously depending on one's children for retirement isn't the optimal option, but I think before judging you have to consider the lifetime of relationships. If the parent(s) invested in kids' education and helped their kids through college/early career at the expense if retirement savings, then kids helping out aging parents makes perfect sense...and has millenia of precedent. Maybe she doesn't expect to get coddled at her kids' homes, but rather to help out with housework and grandkids, providing a service. None of these things were mentioned, do we can't possibly know how her kids feel and why her plan is what it is.

It saddens me that so many would treat their mother so harshly.

Uh no, it doesn't.  My parents helped me out in college (co signed loans), and paid for my cell phone bill (10 bucks for an extra line), after college they gave me their beater since my previously (I fully paid for beater) died... that was all they could afford to do.  Is my crazy ass mother coming to live with us...she likes to think she is from time to time, I will flee, screaming in tongues, to another country, before I let that happen. 

My parents made a PLETHORA of bad decisions, mother never wanted to work full time, even after all the kids were grown, they eat out multiple times a week because "it's their only entertainment", spend more on her dogs in a month then she ever spent on me in college, lives in a 3k sq foot house that my dad can't even make it up the stairs of anymore and refuses to sell it...unless of course she can buy a home right on the beach...in NJ....with taxes of 15k a year and through the roof flood insurance.  She refuses to move out of that state, even though it's killing them financially in retirement. And I could go on for hours, nice people, financial train wrecks though. 

Along I come, swearing upon the 3 littles pigs houses that I will never be in the same spot, and my husband and I are fairly well off in our early 30's, to which my mother thinks she is entitled to some of it, like we should buy a bigger house so she doesn't feel so cramped when she visits, or that we should have paid 130 bucks a head for 100 plus people at our wedding instead of getting married on a beach in a small simple wedding like I wanted.  Or my personal favorite, "you better bankrupt yourself to keep me in my house before you ever think of sending me to a retirement home"

If she lives with us, one of us will end up killing the other, my husband and I would probably divorce, and all my hard work will be for naught.

UnleashHell

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Re: This week's Family Finance trainwreck
« Reply #19 on: November 18, 2014, 11:40:56 AM »
Obviously depending on one's children for retirement isn't the optimal option, but I think before judging you have to consider the lifetime of relationships. If the parent(s) invested in kids' education and helped their kids through college/early career at the expense if retirement savings, then kids helping out aging parents makes perfect sense...and has millenia of precedent. Maybe she doesn't expect to get coddled at her kids' homes, but rather to help out with housework and grandkids, providing a service. None of these things were mentioned, do we can't possibly know how her kids feel and why her plan is what it is.

It saddens me that so many would treat their mother so harshly.

Uh no, it doesn't.  My parents helped me out in college (co signed loans), and paid for my cell phone bill (10 bucks for an extra line), after college they gave me their beater since my previously (I fully paid for beater) died... that was all they could afford to do.  Is my crazy ass mother coming to live with us...she likes to think she is from time to time, I will flee, screaming in tongues, to another country, before I let that happen. 

My parents made a PLETHORA of bad decisions, mother never wanted to work full time, even after all the kids were grown, they eat out multiple times a week because "it's their only entertainment", spend more on her dogs in a month then she ever spent on me in college, lives in a 3k sq foot house that my dad can't even make it up the stairs of anymore and refuses to sell it...unless of course she can buy a home right on the beach...in NJ....with taxes of 15k a year and through the roof flood insurance.  She refuses to move out of that state, even though it's killing them financially in retirement. And I could go on for hours, nice people, financial train wrecks though. 

Along I come, swearing upon the 3 littles pigs houses that I will never be in the same spot, and my husband and I are fairly well off in our early 30's, to which my mother thinks she is entitled to some of it, like we should buy a bigger house so she doesn't feel so cramped when she visits, or that we should have paid 130 bucks a head for 100 plus people at our wedding instead of getting married on a beach in a small simple wedding like I wanted.  Or my personal favorite, "you better bankrupt yourself to keep me in my house before you ever think of sending me to a retirement home"

If she lives with us, one of us will end up killing the other, my husband and I would probably divorce, and all my hard work will be for naught.


Don't hold back - tell us how you really feel!!!



I've moved to a different country to my parents. they can visit - but they can't stay!!

galliver

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Re: This week's Family Finance trainwreck
« Reply #20 on: November 18, 2014, 12:01:20 PM »
Obviously depending on one's children for retirement isn't the optimal option, but I think before judging you have to consider the lifetime of relationships. If the parent(s) invested in kids' education and helped their kids through college/early career at the expense if retirement savings, then kids helping out aging parents makes perfect sense...and has millenia of precedent. Maybe she doesn't expect to get coddled at her kids' homes, but rather to help out with housework and grandkids, providing a service. None of these things were mentioned, do we can't possibly know how her kids feel and why her plan is what it is.

It saddens me that so many would treat their mother so harshly.

Uh no, it doesn't.  My parents helped me out in college (co signed loans), and paid for my cell phone bill (10 bucks for an extra line), after college they gave me their beater since my previously (I fully paid for beater) died... that was all they could afford to do.  Is my crazy ass mother coming to live with us...she likes to think she is from time to time, I will flee, screaming in tongues, to another country, before I let that happen. 

My parents made a PLETHORA of bad decisions, mother never wanted to work full time, even after all the kids were grown, they eat out multiple times a week because "it's their only entertainment", spend more on her dogs in a month then she ever spent on me in college, lives in a 3k sq foot house that my dad can't even make it up the stairs of anymore and refuses to sell it...unless of course she can buy a home right on the beach...in NJ....with taxes of 15k a year and through the roof flood insurance.  She refuses to move out of that state, even though it's killing them financially in retirement. And I could go on for hours, nice people, financial train wrecks though. 

Along I come, swearing upon the 3 littles pigs houses that I will never be in the same spot, and my husband and I are fairly well off in our early 30's, to which my mother thinks she is entitled to some of it, like we should buy a bigger house so she doesn't feel so cramped when she visits, or that we should have paid 130 bucks a head for 100 plus people at our wedding instead of getting married on a beach in a small simple wedding like I wanted.  Or my personal favorite, "you better bankrupt yourself to keep me in my house before you ever think of sending me to a retirement home"

If she lives with us, one of us will end up killing the other, my husband and I would probably divorce, and all my hard work will be for naught.
I think you know perfectly well I wasn't talking about your situation, or one like yours. If my parents ever need/want to move in, they'll be welcome. They never gave me a car, and asked to be repaid for my college expenses, but the time and money they invested in moving us to the US, feeding, clothing, housing us,  having us in the right schools, and giving us worthwhile life experiences is certainly worth us helping them out if it becomes necessary. Admittedly, I also know they will pull their own weight as long as they possibly can, because that's who they are and how they raised me.

The article doesn't specify how the woman's kids feel about her moving in. I'm only giving her the benefit of the doubt.

golden1

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Re: This week's Family Finance trainwreck
« Reply #21 on: November 18, 2014, 12:36:46 PM »
I wish my mother had that high of a net worth.  Get ready for a good story guys.

I wasn't paying attention when I was younger (obviously) but my mom and stepfather both and good jobs (lawyer and medical administrator) and spent lavishly on large houses, new cars, and fancy vacations.  I guess I sort of assumed they had money put away for retirement.  I should have seen the warning signs. 

1.  They were always late paying my tuition bills in college.  In fact, after my father died, I was told I was responsible for paying my own way for the last few years of college - fine, I had no problems with that.  When I went to pay my next tuition bill, I found out they were about 2 semesters behind.  I ended up paying for 65% of my tuition bill with my dad's inheritance.  My dad paid another two semesters worth when he was still alive.  Basically, my parents only paid one semester out of 8.  My father was actually incredibly mustachian, and had saved tons of money living a very simple lifestyle, so his inheritance was more than enough to pay off my tuition (thanks dad).  I am not complaining about paying at ALL, just explaining that I should have seen this as a warning that my parents were bad with money.

2.  My mom and my step-father "retired" from their good jobs to go charter boats in the caribbean.  I got my first phone call a few years later asking for money.  I was 24 and stupid and said yes.  This was the beginning of what ended up being $50000 worth of "loans".  They did pay back $30000 of it, but I will never see the other $20000. 

3.  My FIL and MIL eventually realize they can't make it chartering boats, and they return to the US.  After a few years moving from place to place and job to job, they eventually decide to move back here.  They actually asked to move into my house the month before I was due to have my first child.  I finally grew a spine and said no, thank God.  They moved near us, unfortunately, and the requests for money continued sporadically.  I got better at saying no and the requests dropped off.

4.  My FIL and MIL's marriage unravelled and they divorced.  Now, throughout all of this turbulence listed above, my mother almost always held down a good full time job, some of these jobs were government jobs, so I would assume some good retirement options.  She worked at Beth Israel hospital for more than 5 years, and I know they would have had decent retirement plans.  So, I guess I just assumed that she would have some money saved up. 

5.  After divorcing my step father, she bought a small house by herself, a new car and a bunch of new furniture.  Again, I didn't pry, I just assumed she had some savings. 

6.  Then things started to get really dicey.  She lost her job, and couldn't find another one (She was in her early 60s at that point).  Then she crashed her car and couldn't replace it.  She lost her house a few months later.  During this time, I asked her about her retirement savings.  Nada.  I asked about whether she got a settlement from the divorce.  Nope.  There was no money left.  In fact she was supporting him when they filed.  The only thing that keeps her from being homeless is her social security disability payments that she filed for after losing her last job.  I occasionally send her money when I can.

So whenever I start feeling complainypants, or think that the MMM life is too hard, I remember my mother, and realize that I could end up like this if I am not careful.  This is in fact my p[rimary reason for wanting FI, so that I don't end up retiring in poverty. 

rocksinmyhead

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Re: This week's Family Finance trainwreck
« Reply #22 on: November 18, 2014, 01:12:56 PM »
Wow, started reading past columns on this page and damn, there are some really stupid people out there.  This one, in particular, made my eyes pop:

http://business.financialpost.com/2014/07/25/68-year-old-civil-servant-who-lost-all-her-savings-in-two-desperate-bets-struggles-to-pay-off-six-figure-debt/

Or she could sell her house and rent a room instead of buy a condo.  If she lived like a college student for a few years she could pay off everything and have enough money to move someplace where the property is way cheaper.   With no rush to purchase a new place, she could wait until she found a cheap foreclosure and save even more money.

Yeah and I loved this quote from that one:

Quote
It is an investment problem, for it was not carefree spending that put her in financial jeopardy. And now she despairs, her home is at stake.

Sooo it wasn't carefree spending that caused her to only have $20k in her RRSP at age 65, which in turn led her to make those crazy "investments"?

irishbear99

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Re: This week's Family Finance trainwreck
« Reply #23 on: November 18, 2014, 02:00:51 PM »
Is my crazy ass mother coming to live with us...she likes to think she is from time to time, I will flee, screaming in tongues, to another country, before I let that happen. 

All I can say is been there, done that (literally) and got the t-shirt.

Artemis67

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Re: This week's Family Finance trainwreck
« Reply #24 on: November 18, 2014, 02:58:36 PM »
...Or my personal favorite, "you better bankrupt yourself to keep me in my house before you ever think of sending me to a retirement home"

o_O

...

o_O

Eventually, I'm either going to have to let my own mother move in with me, or (more likely) find a small house nearby to purchase as an investment and let her live there. And I'm okay with this, because she will do her best to contribute, and not be a drain.

The trouble with her isn't that she's a spendthrift--it's that she's so damned miserly that she failed to invest her savings to her advantage. She has no pension, and never contributed to a 401k, preferring instead to sock away money in savings accounts and CDs because she doesn't understand or trust other investments, and insists upon maintaining a deathgrip on every penny she's got. I've done very well with my own investments (particularly stocks), and I've recommended some solid, ultra-conservative investments to her, but she's decided that it's all a foolish gamble she's unwilling to take. Her eyes got big when I told her I had $2million net worth, thanks to various investments, but she seems to think I just got lucky, somehow. Head? Meet the fucking desk.

She's currently 70, retired at 67, and gets a little over $1000/month in SS (which, since she's stingy, she can live on). She has $250-300K sitting dead in low-interest savings accounts, and no debt whatsoever. She could be in a much worse position, but goddamn it, she should be in a much better position. But I no longer waste my breath, anymore; she's not going to change, and while I don't have to like it I do have to at least accept it. We've probably got another 7-12 years before moving closer to me becomes a matter for serious discussion, but as maddening as she can be with money, we get along great and she's welcome here.

fartface

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Re: This week's Family Finance trainwreck
« Reply #25 on: November 22, 2014, 11:19:27 AM »
Sadly, this reminds me of my 58 year old aunt.

Twenty years ago she inherited $200,000 from her dad. My mom got $100K even though Auntie had two kids and my mom had five. Grandpa thought b/c Auntie was a single (divorced) mom she'd need more $$$ than my mom. He was right...sort of.

Within 10 years the money was all but gone, largely due to the lawyer bills auntie had pay on behalf of her two deadbeat kids who were constantly arrested for minor felonies/miscellaneous misdemeanors and other transgressions.

My mom used her 100k inheritance and paid for all her kids' college tuition. Giving us each the gift of no student loan debt upon graduation.

Fast forward: Auntie owns her home outright but two years ago didn't have the money for the property taxes. My mom loaned her the money. One year ago my mom gave her more $$$. I'm thinking - in total - my mom has loaned or given her about 10K.

She's 58 with no job and no savings and probably less than 50K in her 401k. She does own her home outright which we all think she should sell. She now lives with her daughter and her son lives in the house. He's promised that he'll have the money for property taxes next month - but I told my mom she CANNOT bail Auntie out again next month if they don't have $$$ for the tax bill. I love my aunt and my mom loves her sister, but to keep bailing her out and giving her cash only enables her IMHO.
« Last Edit: November 22, 2014, 11:23:22 AM by fartface »

BPA

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Re: This week's Family Finance trainwreck
« Reply #26 on: November 22, 2014, 11:32:39 AM »
Sadly, there are seniors that live on less than what this woman will be getting in retirement, as evidenced by the fact that she won't qualify for GIS (Guaranteed Income Supplement). At least she will be getting a small pension.

On a personal finance board such as this, these numbers seem shocking, but I bet it happens a lot.

My mother retired at 65 with $4k in savings.  She collects a modest amount of CPP, OAS, and GIS.

My mother lives better now than when she was working.

The difference between the woman in the article and my mother is that my mother has always been good with money.  She never made much, but she was able to live on what she made.

So, it's possible to survive or even live well like my mother, but it requires a frugal skill set that this lady doesn't seem to understand.