2016 – A Disruptive Year

I can’t bring myself to write about 2017, until I finish this post which I started writing on December 31^st, 2016:

Many people around the Internet claim 2016 was a bad year.  For me, 2016 wasn’t great but it wasn’t horrible either.  The year my company's HR manager attacked my management skills causing my confidence to plummet for months was worse, so was the year my mom was diagnosed with cancer, the year my father-in-law had a stroke and the year my husband lost his job. And let’s not forget the years of the Great Recession which brought pay-cuts and job losses to many of my friends and co-workers.  For me, even 2015 when one of my key employees resigned was worse than 2016. 

In saying all that 2016 was a disruptive year full of change:

It began with an old oak tree falling in our back yard during a winter storm smashing one of outdoor structures.  This resulted in a month of insurance hassles and clean-up. 

Around the same time, I purchased a new vehicle throwing off my financial independence goal for all of 2016.  I had planned to keep my 2004 Acura TSX for 2 more years, but after putting over $2000 into in 2015 and faced with another expense (new tire rims to prevent my tires from constantly deflating). I decided I couldn’t take it anymore. I went with a Honda this time. From now on I’m going to plan for a new vehicle or new to me vehicle every ten years.

In February I lost my beloved dog Buck who finally succumbed to lymphoma. He had been diagnosed in February 2014, so I was fortunate to have had him in my life for another year, but his death left an empty space in our home and hearts for months to come.

In March, my company’s President signed a contract with a new business software company to convert our software despite members of the software selection team recommending he wait a year.

The summer was good. I spent time with friends and vacationed in the Apostle Islands, a place I had never been.

Fall brought the software conversion.
It started out well enough with everyone working long hours cleaning up our old system prior to the conversion, but once the data was converted work slowed to a halt company wide.  Every single person struggled to learn the new system.  The training and support from the new company was/is poor.  Even my boss who is usually an optimist feels we were oversold. We continue to struggle in 2017 to make this system work for us.

In November my husband had bi-lateral knee replacement surgery:

Yes - bilateral means having surgery on both knees at the same time. Despite all of his preparation - building upper body strength which improved his ability to lift himself out of a chair - life after surgery was challenging.  He was in more pain than he imagined, he was more mobile than I imagined, but his insomnia was worse than either of us could have possibly imagined.

Thankfully his healing has progressed well with no major issues in 2017.

Reading:

One of the bright spots of 2016 was my reading. I read 32 books up from my average of 25.  I have now read 33 nonfiction books as part of my 200-500 nonfiction reinvention challenge.  I did join a book club at my local library, so I read more fiction than I normally do.  Unlike book clubs I’ve participated in previously, the attendees of this one actually read the books, the monthly selections are good and it is well facilitated.* Plus, I don’t have to drive far, spend money on books or dining costs or have to host/entertain in my home.

2016 reading highlights:

The book I talked about, thought about and recommended the most in 2016:

 Matthew Desmond's book Evicted: Poverty and Profit in the American City

Runners up are Andre Agassi’s book:
Open: An Autobiography and What I Talk About When I Talk About Runningby Haruki Murakami  

Best business book:
Drive: The Surprising Truth About What Motivates Us by Daniel Pink, since reading this book I’ve decided to spend a good portion of my 200+ book challenge reading business books.

Book that didn’t live up to the hype: Roxanne Gay's book Bad Feminist

Author I’m not going out of my way to read again: Gloria Steinham. My Life on the Road is the third book I've read by Steinham, for being such an influential part of the women’s movement I find her writing to be uninspiring. 

The book I read everyone should read: Atul Gawande's book  Being Mortal: Medicine and What Matters in the End. (This one was recommended by my financial planner and should be read by everyone who is caring for the sick).

Most well-timed read: Dancing with the Devil in the City of God: Rio de Janeiro on the Brink during the Olympics. Author Juliana Barbassa returns to Rio de Janeiro, her birth city, to report on their preparation for the Olympics.                  

Runner up:
James Feldman's book A Storied Wilderness: Rewilding the Apostle Islands (this one is a bit academic can be repetitive). I read this one after visiting the Islands last summer.

Most relevant fiction book:
 Man Called Ove by Fredrik Backman.  Many employers in my area down-sized older employees with outdated technical skills in 2016. Some of them certainly are also a tad curmudgeonly. 

·        *I was a guest at book club last year, where the discussion of Paula Hawkin's book The Girl on the Train became a competition between two members over who had the worst divorce.

Did anyone else have a disruptive 2016?

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How to Pay off Your Parent’s Mortgage?

 

My Parents divorced when my Mom was 55. One of the first things she did after securing full-time employment was to purchase a condo. Despite refinancing her mortgage for a more favorable interest rate (than the outrageous balloon she originally incurred) and a shorter mortgage term she still owed $60,000 of principle when she was forced to retire at age 75. She quickly discovered with almost no accumulated savings, making ends meet on a fixed income with a mortgage was difficult.

My siblings and I began discussing how we could assist her in paying off her mortgage, then recoup our investment when she eventually sold it.

My mom met with an elder care lawyer to discuss deeding her condo to her children. I knew it had become more difficult to transfer property since President Bush had signed the Deficit Reduction Act of 2005 (this Act increased Medicaid’s look back period from three years to five), but was surprised when the lawyer flat out refused to help us. She said with my mom having virtually no savings she would be ineligible for Medicaid for the next five years until every penny of equity transferred to us had been paid to her nursing home. What if her children couldn’t come up with this money? She refused to put my mom in that situation. 

We asked, “What if my mom doesn’t need nursing home care in the next five years?”
The lawyer didn’t care, she felt my mom’s condo equity should remain with my mom to cover her long term care or other expenses whenever they may occur. The discussion was over.

$60,000 split four ways was too great of an expense for my siblings and I to handle. There were spouses and grand-children to consider, child-care expenses and our own mortgages; $15,000 was a lot of money to hand over to your mother-in-law with no guarantee of ever getting it back. We explored other options such as selling the condo and having my mom rent or live with one of us, but she wasn’t ready for that. Plus, monthly rental payments cost almost as much as her mortgage expense. Instead, my brother reviewed all of her bills and cut every unnecessary expense. It literally made us sick to see how she had been taken advantage of over the years by cable companies, insurance agents, car repairmen, investment advisors, etc. When he finished her monthly expenses were manageable.
Her condo will be paid off next February and I’m confident she’ll make it.

I was reminded of my mom’s mortgage when my husband and I met with a Wisconsin title employee last week. As the representative was going over our mortgage paperwork she said something about it not being a good idea for our children to make our loan payments. Instead, she recommended they refinance the mortgage in their own names if they wanted to make payments.

After the closing was over, I asked her to explain what she meant about children refinancing the mortgage in their own names and if this was the preferred method for a child to pay off their parent’s mortgage.

She actually recommended children not pay off their parent’s mortgage and if needed do so only if:
- A written agreement was drafted by a lawyer and signed by the parent and the child prior to the child making any payments.

- All siblings were aware of the agreement and a written repayment plan was discussed and agreed upon by all siblings.

- Every mortgage payment was made with a paper trail. Never give a parent cash to make a payment.

She knows of several children (including herself) who paid mortgages and other expenses on behalf of their parents assuming they would be reimbursed from their parent’s estate only to have these repayments disputed by siblings. Lawyers were involved, the child was never reimbursed and the siblings no longer speak to each other.

Her bottom line advice on how to pay off your parent’s mortgage:

Don’t do it.

Have you or your siblings paid expenses on behalf of your parents? Has it been a favorable experience?

Switching my Goal to Financial Independence

This week a 60-year old asked me, “How much money do you think the average couple needs to retire?”  I answered 1.2 million.

That was the number I had initially come up with for myself last fall when my husband decided to retire at the end of 2014.  The initial plan was for me to join him in retirement when our total liquid assets reached 1 million.  I added the $200,000 to cover taxes on our 401(k) distributions after hearing horror stories from a couple that didn’t plan for taxes on their 401(k) money.

The 60-year old has been asking this question to everyone he knows.  Most answers fall between $1 and $2 million.  For himself, he thinks he and his wife need between $3 and $4 million. His plan is to retire at 63.  He recently bought a condo in Florida on a golf course where he will spend the winters. He will sell his home in Wisconsin and buy a condo here where he will live in the summers.  His only hobby is golf.  He can play for free at his Florida condo.  His company offers retiree health care and he will receive a pension.

$3 to $4 million!  If that is what a couple needs to retire comfortably I will never be able to retire. 

Which is why I am changing my goal from retiring early to financial independence.  In addition to saving for retirement, I am going to spend the next 5-6 years building an alternative income stream to supplement our retirement funds.

In other news, I had to let my temp go last week for underperformance and am starting over on Monday with a new employee.  My boss told me not to count on having much of a summer…

Financial independence is looking very attractive right now.  What steps are you doing to create financial independence?

Also, how much money do you think the average couple needs to retire?