Long story short - parents moved from Asia to US in late 90s for a better opportunity for me (35) and my sister (39). Dad (64) worked in IT for 25 years (highest salary of $120k) while mom (64) was a homemaker. Parents did a great job raising us but did a bad job with personal finances. Unfortunately, my dad lost his job recently, the future is uncertain, and is house poor. Here is the financial situation:
Current assets - negative $4k - $7k in cash and ($11k) in credit card debt (he rolled his car loan balance into this) and no emergency fund. However, he will get $30k (pre-tax) in severance paid out bi-weekly for 3 months and $700 per week in unemployment for 25 weeks. This will pay off his debt and create an emergency fund of at least $20k. He is currently looking for a new job or a consulting gig.
Other assets - $446k - Car is worth $14k (it's not worth selling as it's been maintained well and will run for a long time) while the house is worth $432k (after 10% selling fees).
Biggest problem - mortgage - $120k balance with a $3.1k monthly payment. Maturity date is October 2029.
Retirement accounts - $140k spread across 3 accounts. The plan is to withdraw all of it and use the $97k (after tax) to pay down the mortgage balance.
Current situation - I took over the mortgage payment for now but it's a huge burden on me. I'm cash flowing it with nothing left over each month. It sucks for me because I'm also paying $2k in rent.
Retirement - parents are expected to receive $3,700 per month in social security but expenses are going to be $4,800 (this includes Medicare starting next year). My sister and I can cover the $1,100 a month shortfall. Ideally, once my parents become really old, we can move them into a 2bdr condo and then the monthly SS income will cover all expenses without any contributions from me or my sister.
TLDR - Dad is house poor and it finally caught up to him at 64. Future is going to be challenging but it should be doable.
Submitted May 28, 2023 at 10:43AM by tryalfeary https://ift.tt/4AMOGEP
