Author Topic: Case Study: Started living on my own at 33 but having parents to take care of  (Read 3511 times)

Romina

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Topic Title: Is my dream of retirement possible for me as well?

Life Situation: I'm 33 with two indirect dependents ages in their 70's. No children so far but the proud owner of two cats.

Gross Salary/Wages: yearly wage would be approximate $18000

Pre-tax deductions: My employer pays it directly

Other Ordinary Income: None

Qualified Dividends & Long Term Capital Gains: None

Rental Income, Actual Expenses, and Depreciation: Currently paying around mortgage monthly $370, remaining of wages goes to cover food and other bills.

Adjusted Gross Income: -

Taxes: Federal, state/local, and FICA.  - employer takes care to deduct the taxes

Current expenses:

mortgage - $370
water and electricity - $80
mobile and telephony - $13
internet and tv - $70 - will be deducting upon transferring to a new house
petrol -$290 - will try to reduce this expense as well
food and supplies - $ 400


 

For mortgage payments, separate the P&I (which stop when the mortgage is paid) from the T&I (and anything else) which continue as long as you own the property. Currently living in Malta.

Expected ER expenses: $15000

Assets: home $130000

Liabilities: $125000

Specific Question(s):
- create a doable plan that I can stick to for retirement considering the fact that I might need to stop working for long periods due to parents health
- create an emergency fund
- save money for wedding
- pay off debt of mortgage
- buy dad a car - (currently using mine so in future if I move either I buy them one or else I give them mine)
- create own company and blog online without spending a lot of money

Updates after reading posts:

In Malta we get paid in Euro. The average wage for my job per year would be approximately Eur 18000. Yes I have Master Degree as MBA and have just started learning about marketing.

Re dad after some posts I saw I will instead start to save some money as an emergency fund instead due to their age
We should receive a small pension once we retire at 65. I am afraid with today's economy this model will not be sustainable so there's that to consider as well.

« Last Edit: August 26, 2016, 12:17:17 PM by Romina »

Lunasol

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Your internet/cable bill seems huge to me

Also, why get your dad a car? is that a necessity?

mozar

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I would focus on finding all the options available for your parents so that you don't have to stop working again. Are they collecting social security,  medicare, low income housing? There are all kinds of state programs. You can go into more specifics about their situation if you want advice related to that, but that's your biggest issue. Unless you don't live in the USA. It would be helpful to state where you live so you can get country specific advice.

TheAnonOne

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I would focus on finding all the options available for your parents so that you don't have to stop working again. Are they collecting social security,  medicare, low income housing? There are all kinds of state programs. You can go into more specifics about their situation if you want advice related to that, but that's your biggest issue. Unless you don't live in the USA. It would be helpful to state where you live so you can get country specific advice.

I second this, someone making 18k a year CAN'T provide for two elderly people (at least in the USA)

Again, assuming you live in the USA, you should be able to increase your income pretty easily...

Dicey

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More details needed, please. Are you in the US? How is it possible for your employer to be paying your taxes? Are they paying both sides of your SS taxes?

Playing with Fire UK

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Currently living in Malta.

Are you paid in Euros or Dollars? Are your parents also in Malta? Will you be staying in Malta?

I'm a red panda

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Malta has FICA?

Are you a US citizen needing to pay taxes in Malta and the US?

 Is there a 0 missing from your salary?  I'm really confused.  $18k to pay for you and your parents seems nearly impossible.
« Last Edit: August 24, 2016, 07:54:48 AM by iowajes »

mskyle

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You guys, I think Romina is just trying to copy from the case study form, even though it has some stuff that does not apply. S/he lives in Malta, not the US.

*Early* retirement is pretty impossible, though, if you're making 18,000 (euros or dollars or anything) and your retirement expenses are going to be 15,000, unless your current expenses are much much lower than your retirement expenses (which does not seem to be the case).

Currently you're spending ~15K a year and earning 18K a year. That gives you the possibility of a 20% savings rate, but if you're also using that savings for things like a wedding and a car for your dad and taking time off to care for your parents, that's probably more like a 10% savings rate, or less. That would put you many decades away from financial independence.

What kinds of pension/old age benefits will you receive from the state or your job when you retire? It's important to take those into account.

I would also recommend that you don't buy a car for your dad - he's in his 70s now, and you anticipate him having serious health problems... at some point he will not be able to keep driving.

I wish I could give more concrete advice about cost-cutting but I have no idea how much stuff costs in Malta! I know smaller countries and islands often have surprising expenses. To an outsider the ratio of your food expenses to your mortgage sounds crazy!

havregryn

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I think she just used the template provided so kept some items that are not relevant to her situation in Malta.

Having family left in a relatively similar country (Croatia, small, poorer EU country, strong focus on tourism, free healthcare ...) I can relate to this situation to some degree.

My questions:
Your parents must have some sort of income and they are most likely living in a place they own without any mortgage and there are probably no property taxes in Malta for primary residences. What is their monthly budget and what is your expected part to play in it? How much is the property they live in worth, could they sell it and move somewhere cheaper (even though I am aware this kind of stuff is unheard of for this generation in the Mediterranean).

Do you have any brothers/sisters?

Your expenses feel quite high but it's hard to say how much lower they can go. Malta is a small island and there's probably not that much choice there for services. Have you tried actively saving money on groceries etc to see if it makes a difference?

Would it be possible for you to live with your parents during the summer and rent your place out to tourists? (that's something a lot of people in Croatia do and those with attractive locations usually make more money from that than from their primary job)

Dicey

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S/he lives in Malta, not the US.
I noticed that the OP has modified the original post. Pret-ty sure that Malta was not specified to begin with. I could easily be wrong, but I did look, because overseas is the only place those numbers made any sense.
Just so's ya'll don't think we're a bunch of knuckle draggers with low reading comprehension skills. Or maybe we are. Dunno. At least we care enough to comment.

havregryn

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Yeah, there was no mention of Malta initially. I noticed and was drawn to her post as I thought she might be from Croatia, her name (that's why I assume she's a she, it's a girl's name where I come from), income, lack of awareness where taxes and social security payments go and the obligation to care for parents would also be very typical for the context there. Income would be a bit on the high side and imply she is in a skilled profession, for Malta I'm not sure. I hope she comes back and discusses the situation further as it is a challenging problem but I'd love to see it work.

I have a sister and mother in Croatia and I try to teach them to be more mustachian but it always feels a bit cynical as it really is a lot easier to talk about stuff like savings rate with our income (two highly educated people with good jobs in one of the richest places in Europe) than it is with theirs.


Playing with Fire UK

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Income would be a bit on the high side and imply she is in a skilled profession, for Malta I'm not sure. I hope she comes back and discusses the situation further as it is a challenging problem but I'd love to see it work.

Yes, it's interesting that location totally changes what the advice would be (spend less vs earn more).

I'd also love to see it work. Understanding the living situation and parents finances would make a big difference. If we can then dial into the post-FIRE expenses and get some efficiencies it'd be possible.

havregryn

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It's a bit confusing with just updating the first post, maybe easier to just write replies?

Quote
Gross Salary/Wages: yearly wage would be approximate $18000
I assume this is your after tax income?

Internet tells me that the average net salary in Malta is around 1100 a month. That tells me that you should be able to cut your spending as you spend more than that.
A single person should be able to live on less than one average salary in any remotely developed country (an assumption I'm making based on having lived in 4 of those in Europe but I am willing to admit that because Malta is an island the context could be radically different).

Unfortunately we can't tell you much without knowing a lot more about the local context and Malta being such a small country it's hard to find someone with local knowledge.

But more specific info is definitely needed.

Specifically for example what is the income and net worth of your parents and if you have siblings.
Given that I assume (and Internet confirms) that healthcare in Malta is completely free on the receiving end and that I strongly doubt that your parents are paying for housing (again making an assumption based on cultural similarities with my home country so I may be wrong, please correct me) they cannot be burdened by some particular extraordinary costs you must bear? Or?
It's rather vague to say that your parents are your dependents without specifying what that *really* means.
Especially as because you live in Europe it's hard to imagine them homeless and incomeless.