Author Topic: Non-Mustachian Mother-In-Law  (Read 4733 times)

Saving in Austin

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Non-Mustachian Mother-In-Law
« on: July 11, 2015, 06:13:53 AM »
I'm open to suggestions on how to deal my mother-in-law. Here is my dilemma: While her net worth is about $ 1.3 million, she insists on living in a condo worth $1.25 million. She is 75 years old, has a mortgage for $275K at 4.6% and a HELOC for $25K at 4%. She has about $350K in cash, investments and retirement. Her ridiculous monthly expenses are $ 7,700 ($ 3,800 of which are her mortgage, HELOC and HOA) and she has income from SS, pensions and her work of about $ 6,500.

We cannot tell her what to do because she is defiant and will do the opposite quite often. She respects our opinion on money issues (she knows we have saved $800K in the past 9 years) and can be gently persuaded if the timing is right. She seems content to spend more than she makes and likes the idea of living off of her HELOC. Hit me up with ideas, questions, comments etc. Thanks.
« Last Edit: July 11, 2015, 06:42:47 AM by Saving in Austin »

forummm

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Re: Non-Mustachian Mother-In-Law
« Reply #1 on: July 11, 2015, 06:24:27 AM »
Sounds like you're doing what you can. And that she will most likely outlive her money. It would take her a long time to even burn through her savings, and then she can draw on the HELOC, or get a reverse mortgage. But she'll probably be 90 by then.

Is there really a problem here? It's her life right?

pbkmaine

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Re: Non-Mustachian Mother-In-Law
« Reply #2 on: July 11, 2015, 06:28:21 AM »
I don't like reverse mortgages generally, but she seems like a logical candidate.

Jakejake

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Re: Non-Mustachian Mother-In-Law
« Reply #3 on: July 11, 2015, 06:36:08 AM »
She has a deficit of 1,200/month or 14400 per year.
Her life expectancy is 13 more years: http://www.ssa.gov/oact/STATS/table4c6.html

By then she will have spent $187,200 or about half her savings.

I'm not exactly sure what the concern is. Is it that you feel entitled to her savings, and are worried she'll spend it instead of you inheriting it? Or are you just wanting to make sure she has good insurance to cover long term care, if that becomes an issue?

Saving in Austin

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Re: Non-Mustachian Mother-In-Law
« Reply #4 on: July 11, 2015, 06:40:50 AM »
I'm not living my life planning to inherit her money. I expect to be FI relatively soon. I want to avoid having to support her so I don't want her to run out of money. She has good LTC insurance so maybe this isn't an issue after all.

I don't know all of the details but I thought reverse mortgages are a ripoff.
« Last Edit: July 11, 2015, 06:44:33 AM by Saving in Austin »

forummm

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Re: Non-Mustachian Mother-In-Law
« Reply #5 on: July 11, 2015, 06:54:39 AM »
I'm not living my life planning to inherit her money. I expect to be FI relatively soon. I want to avoid having to support her so I don't want her to run out of money. She has good LTC insurance so maybe this isn't an issue after all.

I don't know all of the details but I thought reverse mortgages are a ripoff.

She's rich. And old. And has LTC insurance. I don't think you'll need to support her. She's more likely to die a millionaire.

Mrs.LC

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Re: Non-Mustachian Mother-In-Law
« Reply #6 on: July 11, 2015, 09:15:33 AM »
The numbers look good - her income covers most of the expenses and she has a load of cash to cover the rest. Let her enjoy life.

Tjat

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Re: Non-Mustachian Mother-In-Law
« Reply #7 on: July 11, 2015, 03:06:51 PM »
I'm not sure what the dilemma is here. The woman clearly has enough assets to support her lifestyle for the rest of her life. Mustachianism is fine when you're in the frugal stage and certainly better than typical consumerist debt accumulators... but at 75 she's already achieved financial independance - let her enjoy it

Do you plan on saving whatever mustachian percentage of your income for the rest of your life? Or is the purpose of saving so much now, so you can achieve FI and enjoy life? When I get to that point, I won't be fretting about money and the cost of my house...

Capsu78

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Re: Non-Mustachian Mother-In-Law
« Reply #8 on: July 11, 2015, 04:15:21 PM »
What is her age at mortgage payoff?  She is cash flow positive by a good bit after that.  I don't see where she needs additional cash flow and her glide path sounds pretty good to me.  She has something difficult to get at 75- a mortgage.  She has won the retirement game in my book and take out the mortgage payment and she is not an over the top spender.

I am not sure what I would want to readjust at this point in her life particularly if it is the life she wants.

Saving in Austin

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Re: Non-Mustachian Mother-In-Law
« Reply #9 on: July 11, 2015, 06:32:42 PM »
She has 28 years left on a 30 year mortgage.

use2betrix

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Re: Non-Mustachian Mother-In-Law
« Reply #10 on: July 11, 2015, 07:39:48 PM »
Doesn't really make a difference how long she has on the mortgage. She has nearly a million dollars equity in her condo. She could take out a $500,000 mortgage against her condo, use that to live off, and STILL come out ahead.

She's sitting very well pretty much any way you look at it.

urbanista

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Re: Non-Mustachian Mother-In-Law
« Reply #11 on: July 11, 2015, 07:39:59 PM »
so I don't want her to run out of money

Most probably, she will not. Her current withdrawal rate is about 4.1% ($14400 withdrawal from $350,000 investments). It is a very conservative rate for a 75 y.o. person.

okits

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Re: Non-Mustachian Mother-In-Law
« Reply #12 on: July 12, 2015, 04:05:22 PM »
I'm with everyone else so far.  You may not agree with your MIL's spending choices but the numbers work.  Maybe you can help in ways that support her choices (can you find her a cheaper mortgage rate for refinancing?  Suggest small savings here and there or more efficient investments?)

Yes, a reverse mortgage is a ripoff.  The HELOC/mortgage seems a better way to access the equity in her home, provided it's at a rate that's fair for the lower credit risk she represents.

Agree that, statistically, she will probably die a millionaire.  Congrats to her for being FI (and good for you, she'll likely never need more than advice from you.)