Unexpected inheritance...

[lokiju]

I vote for paying off your debt.

 

[rasczak]

Originally posted by: CZroe

Originally posted by: MotionMan

Originally posted by: CZroeAs Ichinisan's twin brother, I'm 12K of this and I just wanted to point out that:
#1: The debt referred to is our combined debt, most of which was accrued when taking care of our mother for years with promises (from her) that it would all be taken care of.
#2: The debt in Ichininsan's name is primarily student loans and zero-interest credit card balances. The debt in my name is more pressing, but much less.
#3: I've read in business magazines and other publications that you DO NOT pay off low-interest student loans at once. "Stupid, stupid, stupid." I assume the 0% interest with negligible (no?) payments follows the same logic. [he is not required to pay anything monthly on the 0% transferred balance and only has to pay the $2 monthly minimum charges he is required to make in two transactions - this does not expire and he has maintained it for years]

We got in our "situation" because our mother throws money, both hers and ours, at our fleet of ancient cars instead of the debts she promised to take care of once she got her lump-sums of owed money from Social Security... she got them and blew it on the cars and now get's about $80 a month. Of course, she thinks it is "necessary" and believes that everyone else who refuses to spend thousands maintaining a $600 car is an idiot who doesn't know how much it costs to properly maintain a vehicle. She's never going to use anything but full synthetic oil and she's never going to admit that these old, falling-apart junk cars aren't worth maintaining.

She has paid $2,500 to have the engine rebuilt on a "totaled" 1993 Nissan that cost us $600 and never ran properly in the first place (bent axel, electrical problems). She continued to drive and maintain a 2000 Hyundai Elantra that was wrecked over a year ago because she is too stubborn to accept what the insurance company will give her for it just because they don't value the over-the-top maintenance costs she has invested in it. The driver door is smashed closed and the driver's seat has been broken from climbing over from the passenger side (as has the cup hold, center-console storage, etc). What does she do? She goes and pays someone to replace the drivers seat from a spare non-functional Hyundai that she also purchased for spare parts. It's down-right HILARIOUS to see her driving around town in that smashed undrivable car, but she not only does so, she takes it in for regular maintenance! The mechanics would laugh at her if it wasn't clear that she just throws money at them... they are they ones that told her the other car was totaled... see if they ever tell her THAT again! That $2,500 engine rebuild comes from a period when she spent over $9K on the cars over the summer and early fall. The third car is a '92 Oldsmobile with no radio, no seals on the windows, worn out motors in the door, blown fuel indicator, broken cruise control, and sputters out routinely after a cold start despite all the maintenance... IOW, the best car we have!

When we push back and try to stop her, we get an earful of how we and everyone else are irresponsible with their vehicle maintenance so, either way, we're either going to hear it from her or you guys. She long ago realized that she can't get away with it if we know first, so she does this stuff in secret. The Nissan broke down on me at work. The next day, I flew to San Diego to visit my sister and I heard by phone that the problem was not worth fixing ("totaled"). When I returned nearly two months later (I am considering a move to San Siego), she asked me to go pick it up. "I thought it was totaled?! How much did you spend on it?!" She was evasive and would only answer "it was worth it." I had to get sneaky to find out that she had received the second portion of her SS lump sum (~$9K) and decided to hide it from me by wasting it on the older cars. It's easier to lie about the maintenance costs of "totaled" older cars than it is to explain where the money came from for replacement vehicles.

Why would she do this? To keep me financially tied in supporting her so that I could not move to San Diego. Every scrap of it was supposed to be used to pay the debts we, as a family, have built up while supporting her exclusively over the last 8-years.

Sounds like your mother needs a conservator.

You may want to go talk to the owner of the car shop to discuss the possibility that they are taking advantage of your mother and that the licensing board (or whatever it is called in your state/county/city) and that DA may be interested in whether they do this as a normal business practice (For example, financial elder abuse is a serious business in my state).

Even more pressing is that you two need to cut her off from accessing your money. If you do not want to cut her off completely, you need to buy her the things she needs rather than giving her money to spend as she sees fit (which she obvioulsy cannot do rationally).

MotionMan

Yes, certainly good advice. We have actually looked into getting legal custody of her when it becomes necessary and it is unbelievable that we haven't taken the first step of cutting her access off, but we are rectifying this. The people at the shop are "so nice" and I never hear the end of it. She is always bringing them gifts and talking about their families. She seems to have some obsession with them, but I don't really think they are taking advantage of her. They told her the car was totaled, so it is really her being stubborn.

Glad to hear that you are both taking a more proactive approach to your finanaces. I cannot say whether of not it would be better for you to payoff the low interest loans, (that seems to be a personal preference at this point) but definitely get teh CC debt off of your back.

Good luck with your mom. defintely cut her off from your accounts, go to the bank and request she be removed from your account, or close the accoutn altoghter and start a new one for yourselves. if you can't cut her out completely maybe you can setup an account for her as well, and give her a small allowance but for big purchases she needs to run it by you. she will feel hurt by this, but do NOT give in. she'll get used to it.

 

[halik]

The odds of your "business venture" return being more than your cc APR are slim. PAY OFF YOUR CC DEBT!

 

[halik]

Originally posted by: chusteczka
An inheritance is an accumulation of assets that took a family member a lifetime to accumulate. This money is best used as an investment to increase the quality of your life. It is the passing of assets from one generation to the next that can increase the quality of life for posterity. The best use of this money would be as a down payment for a home or for acquiring an asset that will not depreciate and will increase your quality of life. If you are not ready to purchase a home now, then invest it safely so none of it will be lost and it will be available for a responsible purchase later in life.

I would not use this money to pay current bills. Bills are part of your daily life and your expenses should be feasible within your current earnings. Your lifestyle needs to be regulated by your regular income, not by a single lump-sum gift. If you use your inheritance to pay bills now, then you will whittle away your inheritance little by little while increasing your living standard by spending more. This is the fastest way to effectively waste a relative's lifetime of hard work.

Inheritance is an asset to possess for your entire life or to pay for your education to allow greater earning potential and quality of life.

People find many reasons to spend money that belongs to other people. A parent, a wife, even siblings will all find reasons to spend your inheritance. Do not allow other people to influence your spending of your inheritance.

As a personal example, my brother's pregnant girlfriend demanded his inheritance be spent on wasteful luxuries such as a $2,000 wooden crib. Now he has nothing left from his inheritance. It can be difficult to say 'no' to a demanding, hormonal, pregnant woman. It can be similarly difficult to say 'no' to an insistent mother. I put my inheritance into a down payment for a home and I now have a home to live in.



A business venture is typically developed first, then money is accumulated to fund it. Obtaining money, then finding a business venture to spend that money is backwards and the money will be lost. Anyway, do not use your own money for a risky business venture. This is what business loans are for, so your own money is not at risk. This is also why corporations are legal business entities, so personal assets are not risked by business operations or failures. Your money is a personal asset. Do not involve personal assets in a business venture where rules have been defined to protect your personal assets from failed business decisions.



My advice is to put that money away in a stock index fund and forget that you ever had it. Use it later for a down payment for a home. The money will be lost if anything else is done with it.



The inheritance is going to you, not to a business entity. Your possible future business entity is not named in the will. Therefore, the check will be in your own name. You should not have to pay any federal taxes for this inheritance. I do not know about state taxes on inheritance.



CPA, thank you for providing the correct information on inheritance/probate taxes. My mind has been screaming while reading this thread but I do not have the solid knowledge that you have on this subject to allow me to correct anyone.

That's just simply WRONG!
The APR on your credit card is much, much higher than return in an index fund. You advice is analogous to taking out a loan at 8% to invest in bonds with 5% return. You're facing a NET LOSS.

 

[larciel]

I'm in similar situation as you and I am looking into business because my cc apr is stuck at 0% for life w/ 2 purchases/month and 1.9% no catch thus APR is less than bank so I'm keeping my cc debt while I venture into other stuff with the money

 

[CZroe]

Originally posted by: larciel
I'm in similar situation as you and I am looking into business because my cc apr is stuck at 0% for life w/ 2 purchases/month and 1.9% no catch thus APR is less than bank so I'm keeping my cc debt while I venture into other stuff with the money

Sounds almost exactly like Ichinisan's Discover card. 😉 Two $1 a month transactions with 0% on his transfered balance. All he is required to pay monthly is when comes from those $2 transactions.

 

[zeruty]

1. pay off all debts, starting with highest apr first
2. immediately take away your mothers access to your accounts...
i understand if you feel dependent and need her help to manage your money, but if she would take your money and waste it she is unethical and untrustworthy and you are foolish to allow her access to your money!