My 82yo mother ruined her finances (AND bought a timeshare!), and ended up owing $32K on credit cards and ~$12K on the timeshare loan. In a years' time, at the start of 2017, due to interest, it went $37K. She WANTS the timeshare. I stepped in, but had to work with what I had, you know?
Income is SS, a rental house, and her annuity--way better than most people. I just had a meeting with her and her financial advisor to better use her annuity, providing more $/month to be used on debt, rather than a smaller monthly amounts and a big distribution. She remains just barely over her minimum required distribution and should be okay another 12-15 years.
But interest on her debt was killing. My brother and I loaned $12K, directly paid on the highest interest card--we are last to be paid back, and I am aware not many people can do this. But she went from 24% interest on that amount to 0% with us.
She got a one-time distribution (to get the minimum required for 2016), and I applied that to that same card. She WAS paying over $300/month INTEREST on that card, and another $250/month on the rest. So we cut that in half right there.
I got her to cut her spending, then worked with what I had. She's paid off four cards now. On MY schedule, she should have all the back debt on her cards, plus the timeshare loan, plus me and my brother--all paid off by the end of next year. Yes, that is dumping A LOT of money on debt, but that's the way to do it to actually pay it off.
I live 250 miles from mom, but I keep an eye on her stuff. Having a light case of ocd "helps."
Tips:
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I created a spreadsheet with all of her creditors (utilities/insurance/credit cards/everything), contact info, logon info, account numbers, closing date, due date, interest rate, and amount owed (or approx monthly cost).
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I called the higher-interest cards and got the interest rates reduced. The ~25% card is now ~16%.
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I balanced paying down the highest-interest card and the low-balance cards, to make progress at both ends.
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I opened online accounts on every creditor and monitor them practically every other day. She lost a card last week and I got the text alert about an uber charge--fraud. I handled it immediately, getting the creditor and mom on the phone, got the card and those charges cancelled.
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I restricted her to ONE credit card and told her to charge most purchases (so I can see them), but she is to have a couple hundred in cash available per month so that she has some control over her finances. It's not a set amount nor an "allowance."
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I just had her pay off this one credit card that's in use, taking a bit of a hit to her checking account (which is still high enough to handle an emergency up to $5000)--basically so that she can now SEE what her spending is. And she is to pay that card in full every month as we pay down the remaining debt.
I know that she is in much better shape financially than most people IF she is responsible with her money. She wasn't. She is now. By the time we're done, she'll be somewhat "re-trained" about spending.
For the first time in a year, I can relax about her finances and "outliving her money."
Submitted May 14, 2017 at 09:40PM by Callmedory http://ift.tt/2ql7al9
