So late last November my dad very unexpectedly passed away at just over 60 years old of a heart attack.
My mom is 60 and now finds herself in a bit of a bind.
My dad was in some ways very mustachian (they lived fairly modestly) but married young, had kids, lots of debt and 'lean years', years of being a smoker, and certain hobbies (like fly fishing) later in life means they racked a ridiculous amount of CC debt.
Thankfully, almost 100% of that CC debt is in my dad's name only. And the laws here in BC, Canada mean we can tell the creditors that they have to write it off, since my mom isn't liable at all for it. My dad had a good job later in life and thankfully he named my mom as a beneficiary for all his insurance and benefits so it all goes direct to her, tax free, and nobody can touch it. There's about $10k in his 'estate' which we're dividing up amongst creditors, but the insurance and stuff stays with mom.
Long story short, here's the financial situation:
Insurance: $230k
Line of Credit at 4%: $125k (!!!)
Mortgage: $125k as well.
As you can see it's a bit of a wash. She will have about 50k in RRSP's but she can't really draw from that yet. Her only income is disability payments from the government, and some other pensions and stuff so she'll probably have about $1800 or so income monthly.
Their mortgage rate is really low, around 2% and so I'm not too concerned with that. It's more about balancing either paying off the LOC or a chunk thereof and investing the rest?
She will eventually sell the house (in about a year) and it's worth at least $450k so that's a plus.
I've been doing my best to help lower her monthly expenses too, but at 60 years old and not very computer savvy she can't imagine not having cable TV and that sort of thing. I've managed to sign her up with a new cable provider and bundle in internet and phone as well which will save her around $250 a year.
I'm working around the house to do some minor maintenance items to help lower other utilities (new thermostat has already saved a tonne of money this winter). Just did a bunch of maintenance on her car too which will save her money.
But back to the original question: Is it worth paying off the entire LOC? Or just a chunk of it and investing the rest? What would be a decent investment? I know very littler about investing and personally don't have the time to really keep up with the markets and such. A stable relatively conservative fund would be ideal for her.
We're based in BC, Canada as well, if that helps.
Any advice for helping my mom through this is very welcome. Not only what to do with the insurance, but other things for reducing expenses and all that.