The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: rwrdb on June 15, 2016, 09:18:49 PM
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I'm in an odd lifestyle situation that has significant financial implications, and I'm looking for thoughts/advice/input on how to navigate a few elements; and get some like-minded individuals to help me think through the financial and family aspects of my situation.
Background: I'm 33 years old, married, with 4 kids all under 10 years old. I'm the sole income earner. I am debt free except for my mortgage and mortgages on 2 rental properties, all of which I am paying off within the next 4 years, and am about 50% of the way to a SWR with target to reach it in 7 years.
My mother and father in law live with us, going on 16 months under this arrangement. We bought our current 5 bedroom residence 2 years ago with the intent of caring for them. They are in their 60's but are both disabled. They bring in about $3k/mo net from insurance and social security.
My in-laws have spent every dime they've made, they have a negative net worth of about $16k with about $10k in credit card debt, $28k owed on a car worth $22k. They have medical and prescription costs on a regular basis.
Initially the arrangement was that they would pay $1000/mo, including room, board, and groceries. The intent was that it would be a financial benefit for both families. But about 10 months into it I discovered they were blowing through about $4000/mo, therefore accumulating about $1000/mo debt. They eat out ~10 times a week. Their automotive expenses amount to about $800/month.
I helped them realize they could not sustain this lifestyle, and we agreed it was important that they sell the car and pay down debt, and contribute to the household via non-financial means. Now instead of rent, they do the laundry, mow the lawn, wash half the dishes, cook half the dinners, babysit the kids once every 2 weeks for a date night, and purchase about $300/month of groceries to contribute to the food situation. This is particularly beneficial to me because my wife has poor health, and I end up doing the majority of these things in spite of her staying home. It is enough extra help that I have been able to maintain a demanding IT job, as well as work on completing my undergraduate degree.
But their financial situation isn't improving after 6 months. They came into a few thousand dollars and had agreed to pay down their car so they'd be in a position to pay it off when a buyer was found, but instead of paying down they pre-paid payments and have been living large the last few months and eating out more without the demand of the monthly car payment (paid up until October).
I've been working to sell their car via craigslist for 3 weeks, and now they're talking about changing their mind on selling the car and to just keep paying on it.
Basically, they're financial idiots.
I have a variety of general concerns and questions I struggle with about this situation, but I'm open to helpful advice you may give beyond these questions:
- My SWR needs and timeline to achieving did not take into account extra expenses associated with caring for In-laws. This is a sacrifice I'm willing to make.
- What are my financial obligation to care for them as their disability expires? Legally, or opinions on moral obligation?
- My financial obligation to care for them when they need more assistance than we can provide, eg, nursing home? My wife is their only child.
- Based on this obligation, how heavy handed should I be in intervening in their financial decisions?
- Should I mandate taking over their financial decisions while they're dependent on me in this way, as a condition of living with us? As a condition of living with us rent free?
- If they don't like me taking over their finances, they can move out and attempt to get by without our aid?
- If they move out and rack up a mountain of debt, am I worse off in my obligation to ensure they're cared for down the road?
Overall, I desire to care for them, I believe quality of life is greater for both families in this arrangement, and I want this to work well without putting myself and my family and future security in jeopardy.
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If they are physically able to drive around, and go eat out, and help with the household chores, I would say they're still quite independent, despite being disabled. I would also say that at this age, they are probably very well set in their financial ways.
Would they consider paying you guys rent, and still helping out with the household needs, seeing as their only daughter is in poor health, and there's a lot of little ones needing care? Not for part of the rent, but just because they're her parents and you guys need the help?
If they would be open to that, I would consider going back to them paying rent, them helping with the household as much as they're able and willing to do, and let them run themselves into bankruptcy if that's their choice. Once the credit cards are maxed, they won't have much option to keep spending over the monthly income. If they eventually start stiffing you for the rent, at least you've been receiving it up until that point, and they can continue to help with the household needs.
Long term, as their disability care needs increase, they will have no assets and limited income, and will potentially qualify for state assistance with in-home care. I agree that, when it's possible, it's good to have the extended family together, especially at this point, when they can help, and your wife is their only child. If they were somehow siphoning off money from your income, that would be different, but it doesn't sound like that is the case, at least at this point.
If they eventually need to go to a nursing home, the state will pay for that. They probably won't be able to go to a fancy place, or assisted living apartments, but when it's a nursing home for foster facility that is needed, the state will cover it. At least this is how it has worked for us in Oregon. We just went through this process with my mom over the last year. Towards the end of her time at home, she was able to have a "helper" come in (not a nurse, but a home assistant kind of gal) to wash dishes, drive her to the store or go shopping for her, clean the house, help her bathe, etc. Then, when it was time, she went into a foster facility and the state pays for that. My brother is handling the details, but basically the state will take her social security funds and then they pay for everything for the foster facility.
Whether they stay or move out, their debts are their own concern, and will not obligate you financially, unless you co-sign for something with them. In fact, if they are insolvent when the time comes, obtaining assistance for long-term care needs and intermediate home-care needs will likely be easier. Sad but true.
I wouldn't even bother to try and straighten them out financially, help them or encourage them to sell the car, etc. It is what it is. Quite honestly, I would give them the grace to be financial idiots, and be grateful that you can all assist each other during this time period, and that they can help you and your wife right now. Accept any rent that they are willing to pay, request and accept and be grateful for any household help they can give, and let them blow every other penny they get. :-) Long term, your relationships will be sweeter, and life will get easier as the kiddos get older (I have 4 under 8 right now, and just got off a 3-year health nightmare).
I will be interested to follow your journey! Good luck!
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I'm with mousebandit: while it is difficult for someone who is responsible with money to see others run into financial trouble, you will be better off all round if you can say to yourself: "not my business, outside my circle of control, they are idiots but they are adult idiots with the right to run their finances into the ground if they want".
What will their incomes be like when their disability payments run out? Will they have any income?
In your situation I would be rather concerned about their adverse credit reports/eventual bankruptcies being registered to your address, which might impact on your own ability to get credit or mortgages for further rentals. Nothing you can do about this except be aware of it and try to deal if it comes up. I would also be concerned about the possibility of bailiffs coming round to try to collect on unpaid debts: I would suggest that you read up on how to deal with this situation and ensure that your wife and any kids of age to answer the door know what to do (where I live, bailiffs have no legal right to enter but will use every trick in the book to get the agreement of the person who answers the door to let them in).
In your situation I would be very wary of giving your inlaws any money at all. I think you are right not to charge them rent any longer, as not getting money from them keeps you out of their financial situation, and the help they are giving currently sounds like a decent return for you and your family providing them with a home. Try very hard not to pay out for things like prescriptions and extra help when they start to need it: they need to tap all the outside assistance available rather than just going to you as the most convenient source of cash.
Given that your wife also has health issues, please be careful about the potential burden on your kids of being in a household with three disabled adults. It is very easy for kids to feel responsible for doing more than they should and losing their childhoods to doing too much caring. If your inlaws get to the stage where they are more of a burden than you and your wife can manage it is time for them to find supported accommodation elsewhere.
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I have a variety of general concerns and questions I struggle with about this situation, but I'm open to helpful advice you may give beyond these questions:
- My SWR needs and timeline to achieving did not take into account extra expenses associated with caring for In-laws. This is a sacrifice I'm willing to make.
- What are my financial obligation to care for them as their disability expires? Legally, or opinions on moral obligation?
- My financial obligation to care for them when they need more assistance than we can provide, eg, nursing home? My wife is their only child.
- Based on this obligation, how heavy handed should I be in intervening in their financial decisions?
- Should I mandate taking over their financial decisions while they're dependent on me in this way, as a condition of living with us? As a condition of living with us rent free?
- If they don't like me taking over their finances, they can move out and attempt to get by without our aid?
- If they move out and rack up a mountain of debt, am I worse off in my obligation to ensure they're cared for down the road?
Overall, I desire to care for them, I believe quality of life is greater for both families in this arrangement, and I want this to work well without putting myself and my family and future security in jeopardy.
You're in a situation that I myself fear greatly (a close relative is disabled). So some of this is probably going to come off as pretty harsh. I'm just a random person on the internet, but I've thought seriously about some of these questions in relation to my relative, so I say this from some personal experience.
1. It's really nice of you that you're willing to sacrifice for your in-laws, however, what about your kids? Are you able to fully support them (including paying for college) while also helping your in-laws? And if you aren't able to save for retirement while helping in-laws, you're really just passing the buck to your kids. This is why Dave Ramsey says to save for retirement before kids' college education--you can't eat their education. Think about this. Do the math. Can you honestly support your disabled wife, in-laws, your own retirement, and your kids through college? Seriously think about this.
2. You have no legal obligation to care for anyone except your children. Your spouse, as an adult, is basically responsible for herself. You have no legal obligation to care for extended members of family. It sounds like a very dependent relationship--which means you are basically enabling them. You are enabling their poor financial decisions. If their choices were to cook frugal meals at home or be on the streets, they would have to make that choice. You are preventing them from making tough choices.
3. Financial obligation = zilch, nada, nothing. You are not obligated in any way to care for them or provide care. Your wife and you may feel a moral obligation to help, but help does NOT equal money. Help can be shopping for their groceries with THEIR money so they can stay home and rest. Help can be picking up prescriptions that THEY pay for to save them the trip. Help can be offering to be a co-signer on their checking account so bills can be paid if they are hospitalized, but involving NONE of your own money. You can get them signed up for services like in-home physical therapy, Meals on Wheels, etc. You can offer to drive them to appointments if they can't drive, or teach them how to catch the bus. Those are ways of helping without money.
4. I doubt that they would let you take over their finances--you could certainly float that idea, but that merely makes them more dependent on you. That doesn't change their behavior. I realize that you benefit from this arrangement, too, so it's in the realm of a co-dependent relationship. Read about co-dependent relationships.
I wish you the best of luck.
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How real is their disability?
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We're dealing with a nearly identical situation. MIL is widowed, disabled and a financial wreck. She was diagnosed with a near-terminal type of cancer that gave her, at best, a 5 year life expectancy. DH and I bought a big house with a suite and moved her in so she wouldn't be alone, or homeless and we could care for her when the cancer came back for it's last hurrah. We were not expecting the situation to last more than 5 years. We did not have a backup plan. Yes, this deserves facepunches.
That was 6 years ago. She's now cancer free and is looking at more normal, long, slow decline. DH and I are having trouble coming up with a workable plan that keeps everyone solvent and at peace with each other.
To answer your questions, you are under no moral or financial obligation to pay for them either now, or if they move out. As long as you don't cosign anything for them, you should be off the hook. If they have no assets and a low income, they'll qualify for publicly funded nursing care. It won't be nice, or medically sufficient, but they won't starve.
The trouble with letting them do what they want with their finances is that when they have no money for food or medication, you now have 2 starving, ill adults in your home. Do you feed them? Do you buy them medicine? Are you hard hearted enough to ignore this problem? How do you explain the situation to your children? How do you ensure your children will treat you and your wife with respect when you are old and ill, after they watched you ignore the ILs problems for years?
Since "letting her lay in her financial mess" is impractical in our live-in situation, DH and I are in the process of taking over MIL's finances entirely. One wrinkle that's different from your situation is that MIL co-owns a piece of RE that's worth quite a bit. Just enough for her to live off of and pay for a nice nursing home, if it's managed properly. DH will manage the investment when we liquidate the RE.
As a condition to continuing to live with us, she will also have to sign a POA and give complete financial control (including her credit card) to DH. This is likely to cause a huge rift in our relationships (which are already pretty strained). MIL will hate us when she can no longer shop from the Home Shopping Chanel with abandon. It will also be a drain on DH (and me, by association). If she is not wiling to do this, we will kick her out. Which will put us back to where we were before she moved in. MIL living alone, ill, a financial wreck, DH stressed about whether his mom is OK or not and commuting back and forth to check on her.
I have no advice since I'm dealing with the same thing and our situation is best described as a clusterfuck. However, your ILs are only in their 60s. You have decades of this nonsense ahead of you. Try to plan accordingly.
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Here is my moral opinion on the subject: you are obligated to look after your immediate family and yourself first, and then help others to the best of your ability as long as it does not jeopardize your family financially, emotionally, etc. You have been more than generous allowing the inlaws to live with you, contribute in nonfinancial ways, etc. You also give significant nonmonetary support via the time you spend trying to help them get their finances and car situation sorted out. I think from a moral standpoint you have fulfilled your obligation to them by a mile and that it is perfectly okay to cut it off now. Given that, I think you really need to talk to your wife about this. You both need to be on the same page and you should be honest with her about your discomfort with the situation. If you feel like the inlaws are dragging the family down despite all thr help you need to tell her. I personally would feel very uncomfortable if my husband was supporting my irresponsible parents.
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they are probably going to have to declare bankruptcy.
is there low income senior housing available nearby?
they might be too far above the poverty level with their current income.
But you might want to look into their options if they are going to live on substantially less in the future.
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I would charge them rent. What they do with the rest of their money is their problem. I'd just stay out of it.
When they do reach the point where they are truly disabled they will need to go on Medicaid, food stamps, and get whatever else they are eligible for. I wouldn't mix finances with them in any way.
They really don't sound very disable to me. Driving around, eating out, shopping... sounds like one or both of them need to find part time job(s).
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Yes, try to keep them there, if at all possible.
For social issues, try again to show them how to change slowly.
Like when eating out, only do coupons or early birds and try to go to five times a week.
Have your wife be on board with all your suggestions.
If they move out and get into worse shape, then you have THREE people to help, and that will be more for your plate.
Yes, millions of disabled folks can still drive-major misnomer.
So sorry and hope you can present the logic and ask kindly how they can change some so that all of you are together as a family.
Remember what is important to them solely and try to take it from there.
Good luck and impressed that you are helping your wife and your in laws.
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You should have stuck to your original arrangement. Them paying $1k for room and board. You really are enabling their frivolous spending. They don't appear to be disabled to the point that they need you to provide very much care for them. It sounds more like they're taking advantage of you. Not that you aren't trying to be helpful and please your DW too. It's hard being in your position but you need to lay down the law or they are only going to be in more debt and put more strain on your household.