Mom's spending - Hard to get under control (funds, pay, million)
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Father past away in 2012
Mom is currently 75
Younger brother 30
Mom/brother in Bergen County, NJ
Mom was left from my father's will around 2.2m and a lot of debt. Took about 200k to pay off all debt for Mom and Dad. Younger brother was lost, so he went back to school in STEM at my suggestion. TBH, I suggested he go into STEM 8 years ago, but he didn't listen. He's graduating this year with a Masters in a STEM field. He worked with my Dad for a few years, but that is about it. I've suggested other jobs, he refused. Offered to help him with a franchise, wasn't interested. Still very down on life mainly because he pissed away time thinking he'd be on easy street. Now, not so much. He works hard at his degree, but I still think he's pretty lazy. I am 37, run my own business, also have a masters, BUT put myself through school. I worked during the day, and went to school at night, no debt. I suggested to my brother to do the same, he refused. He is very coddled and my mother knows this. He's also embarrassed in where he is in life at 30. He often compares himself to me, but we're nothing alike. I moved out in my teens and started many businesses. I've tried to show him how, but it seems he wants me to do it for him instead of him doing it himself. I started a small real estate business a few years ago, and he wanted to get in. I got a building cheap, renovated it, and sold it to him at my cost even though it was worth 3 times that amount. He now says I didn't do it for him, I did it for our mother. Which, I did the same for our Mother to help increase her income.
I manage the money because if my mother did it would be gone; similar to my father. He was horrible at managing money. Low and behold, she's running short again and I fear she will eventually not have enough money. She also pays for my brother's tuition which is a cool 75k. Supposedly it ends when he graduates. I wanted to separate myself from the management, but the fees for someone else to manage are just too high. Plus, it's doubtful they can beat my returns with balanced risk. The account brings in around 4.5% a year off of 2 million left (90k). Plus, the building throws off another 15k a year or so. Since her two siblings are older and still alive and her parents lived into their 90's, she should be here for the foreseeable future. I do not care if she uses all the money to live, but I just do not think there is enough when living in Northern NJ.
She gets around $72k a year in dividends. Around 12k - 15k a year from the building (just started this year). The property taxes, school taxes and income taxes are paid directly from the Vanguard account. She gets the rest. She also receives around 3k a month from her NJ State pension and SS. She says it's the house repairs and upkeep or that she wants to live her life her way now. Yet, she doesn't know how to balance a checkbook. An annuity came due a year and a half ago and it gave her around 100k on top of the money she gets from the Vanguard account. I assume the money went to my younger brother's tuition, house repairs and I do not know what else.
I've made it clear I will not bail her out if and when she runs out of money. If I do not give her the money, the account goes negative. She actually wrote two checks this week for 3.2k and I received a text from Chase saying the account is negative. She didn't even check the account before writing the checks. Her response was that she thought the was much more money in the account.
I do not know what to do. I feel like I'm the parent to a person who gets plenty of money and is spiraling out of control financially. My younger brother isn't helping things in terms of his tuition. Trust when I say I've tried to turn it over to a CPF or CPA, the 1.5% they charge on the total assets would wipe the account out. Do I take myself off the checking account and just let it go negative?
I do not like to be in this position; but she'll not be able to get through herself.
Yes, start to distance yourself. If she doesn't go broke, your bro will help her.
What on earth did she write $3.2k checks for????
Make it clear each time you speak with her. That you WONT replace money that disappeared. Make it clear she will eventually be down to just the $3k SS and pension.
Make it clear she will have to sell her house to live.
When she gets frustrated, she is overdrawn, down and out, AND ASKS for your help, then you TEACH her first how to balance a checkbook, then slowly about managing the money and paying bills.
Right now you are just shooting air, and she is deaf to your pleas.
Take yourself off, and let it ride. When it gets bad enough the bleeding needs to be stopped, she will beg for help. Just dont make it monetary, make it KNOWEDGE on how to manage her affairs instead.
Also, STOP comparing yourself to your "lazy " brother. You said he works hard at his degree, but you still think hes "lazy ". He is NOT you, and you cant compare, HE may need to work hard just to get by. AND he may resent you "raising him" by ordering him to model his life after yours. Stop, now.
Thank you for your reply. In the process of doing that, it's just very difficult to have to tell your parent what to do financially. As for my younger brother, he compares himself to me, not reverse. I do not say this to anyone, am I just relating this in the post. He says he needs money, I say, get a job. That is what I say. And yes, he is lazy in the fact he's going to school part time and not working. If you need money, you get a job. It's pretty simple.
There is probably no good answer. The 1.5% sounds very high UNLESS they will be doing a lot of work with your mother on her day to day financial problems. You might also look into the cost of hiring a "booking" service on an hourly basis to get you out of the day to day management of the money. The service could accumulate funds to pay taxes etc and other monthly expenses and let the excess go to her for what ever she wants. That way the basic bills would get paid. To go a little bit further I think you need her to set up an irrevocable trust with the money going for her support. Another ideas would be to buy a substantial annuity and then move on. I think you have to set the cost of hiring someone aside as the cost of not hiring someone could be more. In short try to set up her finances so she should have enough to live on and let her do what ever she wants with the excess funds.
We had this problem with my grandma. My mom managed her assets, but grandma still had control of her accounts. However, she was developing Alzheimer's, and was a prime candidate for phone scammers. People would call her up and give a sob story, and she'd send them a check. She spent $7000 on a vacuum cleaner that would have cost maybe $200 (it was a terrible vacuum cleaner). Then she bought ANOTHER ONE about a month later. She bought so many garbage bags, we are still using them in our office 15 years later, she bought a gross of cheap steak knives (yes, a dozen dozen). They are cheap Dollar store type knives, we use them to cut sod. Hundreds of lightbulbs that would last about a week. All at like 10x market rate. It was classic elder abuse.
So eventually, mom ended up taking over all her accounts about the same time as she went into a care center. Grandma got a cash allowance that was doled out once a week, and that was all she could waste or give away (her actual expenses and charitable contributions were all covered) without a specific reason that she discussed with mom. In her case, there was plenty of money, as long as it wasn't wasted. But without intervention, she would have been broke and homeless in a year, with everything having basically been stolen.
She had absolutely no concept of money. Her entire life, she would always just write a check for whatever she needed, and there was always money in the account, so it was no issue. $5 was literally the same thing to her as $50,000. Absolutely no concept.
Not saying this is definitely what is going on, but you might need to take a look at what the money is being spent on (if she will let you). I wouldn't advise stepping back unless you are sure that she isn't being taken advantage of. If she is just bad with money and choosing to live outside her means, that is her issue, and I would step back. But she may be a victim of financial elder abuse, or might be developing mental issues and need intervention.
We had this problem with my grandma. My mom managed her assets, but grandma still had control of her accounts. However, she was developing Alzheimer's, and was a prime candidate for phone scammers. People would call her up and give a sob story, and she'd send them a check. She spent $7000 on a vacuum cleaner that would have cost maybe $200 (it was a terrible vacuum cleaner). Then she bought ANOTHER ONE about a month later. She bought so many garbage bags, we are still using them in our office 15 years later, she bought a gross of cheap steak knives (yes, a dozen dozen). They are cheap Dollar store type knives, we use them to cut sod. Hundreds of lightbulbs that would last about a week. All at like 10x market rate. It was classic elder abuse.
So eventually, mom ended up taking over all her accounts about the same time as she went into a care center. Grandma got a cash allowance that was doled out once a week, and that was all she could waste or give away (her actual expenses and charitable contributions were all covered) without a specific reason that she discussed with mom. In her case, there was plenty of money, as long as it wasn't wasted. But without intervention, she would have been broke and homeless in a year, with everything having basically been stolen.
She had absolutely no concept of money. Her entire life, she would always just write a check for whatever she needed, and there was always money in the account, so it was no issue. $5 was literally the same thing to her as $50,000. Absolutely no concept.
Not saying this is definitely what is going on, but you might need to take a look at what the money is being spent on (if she will let you). I wouldn't advise stepping back unless you are sure that she isn't being taken advantage of. If she is just bad with money and choosing to live outside her means, that is her issue, and I would step back. But she may be a victim of financial elder abuse, or might be developing mental issues and need intervention.
Agreed. I went to a financial advisor this morning to try to get ahold of the situation. I then explained it to my mother, she just doesn't understand. She is spending more than the account brings in and will run out of money. Her response is the costs are what they are to run the house with all the repairs. Then then said she cannot take this talk as her head is spinning. I am going to see if she can take over the management with a fair fee. I just cannot take it any longer.
Agreed. I went to a financial advisor this morning to try to get ahold of the situation. I then explained it to my mother, she just doesn't understand. She is spending more than the account brings in and will run out of money. Her response is the costs are what they are to run the house with all the repairs. Then then said she cannot take this talk as her head is spinning. I am going to see if she can take over the management with a fair fee. I just cannot take it any longer.
Another option is a court ordered guardian ship. From what you have said I do not think you are close to this but maybe an elder attorney who has practiced in this area maybe of some help in telling you where you stand.
You might wish hire a hourly-fee-only (not % commission) financial adviser and let this person be the bearer of bad news.
An elder law attorney I know routinely does this for his elderly clients and their adult children. The parents are much more likely to listen to him than listen to their kids.
If Mum still won't listen, I agree with the above poster about putting a professional guardian in place. They are expensive but your mum is even MORE expensive. This will help remove the stress and burden from you.
Does she need the big house? Can she downsize to a condo or something that wouldn't have all the upkeep and hefty property taxes. Bergen County, NJ is one of the most expensive counties in the country (if not THE most expensive), maybe she can move to a town in Passaic County?
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