Too poor to retire and too young to die

Parent Cafe
21

Like others I have mentally ill relatives recklessly blowing through their money.

However, I also have friends who lived below their means for years, followed the advice of bankers and financial advisers, and ended up with huge financial losses in 2008 and beyond. One friend had bought her modest house for cash, but lost all the money that was supposed to pay for her kids’ college and had to mortgage the house since there was no market to sell it anymore, and so on… … I really can’t see where she went wrong except she followed the advice of a paid expert. I think she lost more than a million dollars. She did everything the expert told her, including finally divesting herself of some things probably at the exact wrong time… when she really didn’t seem to me to have anything left to lose, but I don’t pretend to understand what all went on. I know before she hired him she had at least a million in cash (insurance and inheritance) that she felt was too much money not to invest. She will not be retiring at 65.

adding: I know more than one person taken advantage of during those years, some worse than others. I just still can’t believe anyone would knowingly take advantage of a widow with children. fwiw

22

“The first few sentences of that article jumped out at me when the lady pulled into a restaurant. That $21 could have stretched a long way in an Aldi’s.”

She can’t shop at Aldi’s, as the article further explains: the RV in which she lives does not have space for storage. I bet she has very limited cooking space, so a nice hot meal like that was probably something she has not had in a while. It was likely not her usual way of eating. It was a treat, and the leftovers from that steak meal would provide her with 2 additional meals. So at $7 per meal, it is as cheap as eating McD crap.

23

@SouthFloridaMom9 yes we’re in the same age range, mid-late 40s. My dad has always been very knowledgeable about finances, so I’m sure even back then he was trying to build his credit, which hasn’t really been a topic for the masses until recently.

I got my first credit card right after getting accepted to college before I even started classes. I remember because my first purchase on it was going away gifts for my younger sisters before I left for school. Somehow I managed to use it responsibly and pay all the bills all through school. I didn’t manage to get into credit trouble until after I graduated and was expecting my son. Both his father and I were living on low incomes and with the medical bills we were quickly getting in over our heads. Then after my son was born, since his father was working, I made the choice to sacrifice my credit to save his. My bills were always the last thing to get paid…IF there was money left over. It helped keep his credit good enough to qualify for a car loan when we needed it, but when we split up 4 years later, my credit was a disaster. Fortunately since I’ve always been frugal it wasn’t hard to pay everything off and get it cleaned up, it just took a LONG time.

24

I do get that @BunsenBurner. She probably really wanted a hot meal. No sin in that.

It just makes me sad to see people in that situation.

I have a basically homeless relative so this is hitting home. :frowning:

25

You rock @jrcsmom!

26

“We drive a 12 year old minivan”

H drives a 1998 Accord with 180k on it which we bought used in the early 2000’s and I drive a 2005 Lexus which we also bought used. We paid cash for both cars and we’ll wait until H’s car drops dead before replacing it.

H and I were heavily in debt($88k) 25 years ago when we went through several years infertility treatments and finally adoption. For the next five years we spent nothing except on food, mgt, utilities and nursery school for S. I think H was making around $40k/yr at that time. It was brutal, but we did it and haven’t had any debt since.

A few months ago I was out with my friend and she admired my boots and said she had been looking all over for something like them. The next thing I knew she had bought them! They weren’t cheap either (about $300.) And she already has a closet full of boots.

27

Ha ha - Honda lovers here too @emilybee. :stuck_out_tongue: Totally get it. We drive our vehicles into the ground too.

It’s funny you mention the shoe story - my luxury vehicle acquaintance once commented on my $2.50 flip flops from Old Navy. I have them in almost every color. :wink:

I love nice stuff; I just love freedom more. Finally figured that out. But I’m also aware that stuff happens out of people’s control. My homeless relative has had a mixture of bad luck, poor money habits, and a crazy housing market. This person would give you the shirt off their back - one of the nicest people I have ever known. Going into retirement looking at about $700 in social security and that’s it.

28

Most personal investors’ rate of return is worse than that of the overall market, probably because people tend to buy high (when there is excitement about something that is rising) and sell low (when there is a lot of pessimism about it). Most retail bankers and financial advisers are probably no different from others in tendency to buy high and sell low, including in their recommendations to the people they advise.

http://www.forbes.com/sites/advisor/2014/04/24/why-the-average-investors-investment-return-is-so-low/ is another take on why many investors do much worse than the overall market.

29

That article is pretty scary. I can’t imagine driving around looking for minimum wage jobs when I’m 79.

30

Last July I was lunching with a friend. She and her husband’s profligate spending has gotten them into deep trouble. Trouble that included a foreclosure on their house. (That was their fault, not the fault of the economy. She finally got bailed out by a wealthy relative). She was talking about leaving her husband and told me that her plans included buying a condo in Laguna where she wanted to live on the ocean. She had just interviewed for a job that would earn her $15 an hour. She would not be getting any support to speak of from her husband. She had no assets and only debt. I pulled out the calculator and went over the math. Blank stares. I finally suggested that she get help from a doctor who could possibly work with her on this delusional thinking. Needless to say this did not happen. She is still with her husband and just the other day I ran into her getting out of her car with bags from Barneys and Christian Louboutin. She is a charming, stylish woman who suffers from a mental illness and she is just a few more bad decisions away from living in an RV that she can not afford. But then again maybe her relative will leave her some money.

31

It can happen so quickly, and medical bills are a number one culprit. We have crappy insurance, with a 5k deductible, so basically other than physicals, damn near everything is out of pocket. Ive had two procedures this year, and we are up to 3,5I00 in bills, and I still have more. Even with our incomes, its a lot. My hubby is one of the higher comped at his company, but I cant imagine, how the majority of the employees can afford to have a medical issue. Its a lot for us, with having one just out of college, one in college, and one going in the fall.

I really feel sorry for folks who were near retirement in 2008, and those who are nearing it now. Its awful that you cant get a decent rate on a CD or index account at bank. It burns me up, that wall street/banks were bailed out and so many folks are still reeling from 2008. We certainly have been blessed, and we didnt feel the sting, except in our 401ks, and fortunately I am not a panic seller.(its not a loss until you sell).

Again, I dont think folks realize how big of deal it is that hardly any companies have pensions. I would guess well over 80% of the population is not equipped to manage a 401k, nor do they make enough to even put enough away to have a decent retirement.

There are going to be a lot of very poor senior citizens in the near future.

32

Did you read the opening of the story? She is in deep debt and went out to eat rather than the grocery store. Her RV wasn’t cheap to buy nor to maintain. Her lifestyle of moving around is her own choice.

I was serious about “Total Money Makeover”. I know Dave Ramsey’s religious bent turns some people off but the book is not about religion . It is about MONEY and credit and HOW TO GET OUT OF DEBT. It is one of very few financial books that have an actual step by step guide. It is how to take control of your debt instead of it ruling you.
It talks about emergency funds, budgeting, credit cards, buying cars (and why leasing is the worst of all worlds), what bills to pay first, how to handle creditors. And then how to invest your money once you have some so you can retire.

While the steps look simple on paper nobody says it’s easy. It’s hard…But worth it to be able to sleep at night.
My husband gave it to his younger employees. They aren’t in debt but the book just has good sound advice.

My D loved the book (she has no debt but the advice about emergency funds and investing, etc. is a good blueprint for anyone). Her enthusiasm finally got her roommates (who are always broke because they have no money sense–if they had money it was spent) to learn some budgeting skills. One of them has now changed to a higher paying job (with health benefits) and delivers pizza in spare time (something from the book–the extra 100 a week comes in handy) in order to start her own college fund.

33

My friend doesn’t want to get out of debt ( and I’m sure they could easily stop spending so much money. ) I could easily take a hatchet and cut her spending by thousands of dollars every month. But they are waiting for the “big deal” to come through to solve their problems as they believe they are entitled to live the way they do.

It’s like watching a train wreck in slow motion.

34

@gouf78 - my kids did Dave Ramsey’s homeschool curriculum. It was very good, and written at about an 8th grade level (so not too complicated).

One of their favorite sections was how to end up driving a 2-3 year old car debt free. It’s a process but with focus it can be done.

35

gouf78, my husband just ordered the Total Money Makeover. We’ve been listening to Dave Ramsey forever. Don’t know if it’s applicable for our situation, but it sure can’t hurt for anyone to read.

36

You can check out Total Money Makeover from the library, too, if you want to preview it.

I listen to his podcasts when I’m working around the house. Too bad I didn’t hear him in my early 20’s!

37

“It can happen so quickly, and medical bills are a number one culprit. We have crappy insurance, with a 5k deductible, so basically other than physicals, damn near everything is out of pocket. I’ve had two procedures this year, and we are up to 3,5I00 in bills, and I still have more. Even with our incomes, its a lot. My hubby is one of the higher comped at his company, but I cant imagine, how the majority of the employees can afford to have a medical issue. Its a lot for us, with having one just out of college, one in college, and one going in the fall.”

@partyof5, I’m sorry about the misery from medical bills. Health problems are tough enough to deal with, without having to pay massively for them. But I thought that sort of crappy insurance was now illegal, and that there was a minimum standard that companies had to provide. Is that even legal, or was your husband’s company exempted for some reason?

38

@busdriver11 not only is it legal, its the model most companies are moving towards. We have a choice of 3500 or 5k deductible. The only things that are free are the typical physical, mammogram,gyno checkup, anything else we are billed. After we reach the deductible, we pay 20% or 25%, I cant remember.

So while the Affordable Care Act was admirable, most folks are drowning because the deductibles are so high! I also think its awful because things that used to free now cost. For example, when we had a typical PPO, you go get your mammogram, you pay a 25 copay, if for some reason you have to go back because they found something you pay another copay, but the visit was covered.

Now if you have a mammogram, its free, but the hitch is if they find something, any subsequent mammograms are not free.It burns me up

Also, I had a physical in November, I got a bill, so I called the doctors office asking why I got a bill. Apparently because we discussed my sleeping habits during the visit, it was no longer a physical. WTF?!? So I threw a fit, and had them resubmit. One of the reasons I love my doc is because she doesnt rush you out and she asks how you are eating, sleeping etc. I guess I shouldnt answer those questions next time. (insert eye roll)

Now having said all of that, we do have an HSA account, which we could pay some medical bills from however, since neither one of us wants to work until we can get medicare, we figure we would save the hsa money for premiums when we have to pay for medical insurance in our early 60s. So we are stuck with ridiculously high medical bills sometimes. I wish they would get rid of the cat and mouse game of lets bill you one price, but the insurance price is something different. If there was a fair price for medical services a lot of folks wouldnt be in dire straits

My catscan was 6k, they took off the “discount” and Im left with a 2k bill…ridiculous!!

39

“My catscan was 6k, they took off the “discount” and Im left with a 2k bill…ridiculous!!”

What do you think a Cat scan should cost you? Keep in mind the technology behind it. Just curious.

40

Very sad tales. Working minimum wage or close to it jobs does not allow for folks to have ends meet comfortably, forget having savings. These are all scary, cautionary tales.