Early Retirement Extreme Forums

https://www.seattletimes.com/business/h ... s-options/

This couple is in their 60's, still have a mortgage (though their house has good value), and only $3K in retirement money and $50K in the bank.

That would give me nightmares.

The Weddells have already started reducing their spending, starting with their grocery bill. They also realized they were spending about $400 a month on digital programming, such as Netflix and Redbox.

“We don’t live this luxurious lifestyle,” Kathryn said. “We just live a normal life.”

“But we haven’t been careful about it,” Larry said.

Larry was hoping he could retire sooner than age 73, and he’s still pondering Marshall’s recommendation to keep working. “We’ll have to figure that out,” Larry said.

Bought the house for $60k 35 years ago... And... now they owe over $200k on it. ahhhhhhh

All these words like "Starting to think about".. "starting to make changes"... All that Netflix and Redbox was distracting them from giving the slightest consideration to their financial status?

At least they have the $2,750/mo social security. If only they could endure the incredible hardship of spending just 3x the poverty level, they could sell the house, move somewhere cheaper, and retire today.

This is kind of like my 50 something pals in CA. Having 90% of your savings in your house is a good and bad place. My friends feel rich in their $1-$2M homes but they realize they cannot sell them because they need to live there to work. Kind of a hamster wheel effect. I guess they can sell out and flee to a cheaper locale but most soldier on. Fleeing means finding a lower paying job and a cheaper home which is probably doable given the cashout from the house...however it is usually too big a step for anyone I know. Inertia and sticking to what they know keeps them on the wheel.

EdithKeeler wrote: ↑

Sat Jun 23, 2018 9:33 pm

$400 a month on digital programming, such as Netflix and Redbox.

brute has no idea how much Redbox is, but isn't Netflix $9.99/month? that would leave $390.1 in the digital budget. what in the actual f.

"Listen, being known as 'the movie guy' down at the office don't come cheap," added Larry.

Obvious need here for some better financial math put aside, is being unable to retire because you feel like you can't sell your house any different than being unable to retire because you aren't sure that even 3% is secure enough, or your NW isn't quite high enough to give you feeling of abundant wealth? Are any of us free from mythologies in this realm?

To their friends and family, they are called Larry and Kathryn. To Dave Ramsey, "brokeass manna from heaven."

Couldn't read the article because I'm stubborn about keeping my ad blocker on. Sounds like they just didn't make a conscious effort to prepare for retirement and so are unprepared. I don't know where age 73 comes from, but SS maxes at 70 and about all they can do is get aggressive about saving in the meantime and do their best to get by on that, or keep working, if selling their house and heading for LCOLA is not something they'll consider.

Obvious need here for some better financial math put aside, is being unable to retire because you feel like you can't sell your house any different than being unable to retire because you aren't sure that even 3% is secure enough, or your NW isn't quite high enough to give you feeling of abundant wealth? Are any of us free from mythologies in this realm?

Sure, I guess maybe they are different facets to the same issue, maybe. But it’s hard for me to understand sinking so much money into a house to the detriment of everything else—cash/investment savings, either in or outside of retirement accounts.

I guess there’s the “3% may not be enough” contingent and on the other side of the spectrum are the folks like my mom who retire with no money thinking “it’ll work out.” (It hasn’t). I personally fall in the middle someplace, planning for the worst, hoping for the best, aware that I could end up in old age with some dread expensive disease, minimizing my spending somewhat and socking money away as well.

I guess what gets me most in that vignette is the Netflix/Redbox bill. What the hell?!

It seems like they have decided to soldier on as Sclass puts it. They have above average NW but it is not usable for cashflow. At some point soon the guy will end this job either by death, sickness or layoff. At that point the house will be lost. The cashflow is not sustainable obviously. It seems the wife should have a higher ss check based on his check. Fifty percent? I don't know and my wife works so not applicable to me. Maybe he simply likes to work and they are basically extremely risk averse. It would be nice if the 40 something y/o kid(s) ponied up some money for the plus loans or made the payments. I live in Denver so I am familiar with outsized housing valuations. Seattle is a little higher although location matters.

I know someone who is cashing out and leaving the state. I am not sure what his particulars are but he has kids in town and is still leaving so there may be other factors at play. The wife has alternated between lower playing contract gigs or not working for as long as I have known them which surely limited their accumulation potential. He also has another financial constraint which I will not go into. Overall I do not think his stache (sp) is large enough to continue here and retire comfortably. He is early SS eligible but will likely work as long as possible. This story resonates with me because of the somewhat similar story I am seeing from him.

It's the a situation where the dreaded reverse mortgage is actually appropriate?

I thought the mortgage had to be paid off first. It seems like they are trapped by financial decisions they have made and continue to make. Who is steering this boat as it seems rudderless. I wonder if the kids are pressuring them to keep working to preserve the "estate"? I will be nice and assume that is not the case. In the end they will cash out one way or another so it will probably work out in some fashion. I hope they get a few years of no work.

BRUTE wrote: ↑

Sun Jun 24, 2018 2:45 am

EdithKeeler wrote: ↑

Sat Jun 23, 2018 9:33 pm

$400 a month on digital programming, such as Netflix and Redbox.

brute has no idea how much Redbox is, but isn't Netflix $9.99/month? that would leave $390.1 in the digital budget. what in the actual f.

Sounds like they are ala carte renting or buying lots of content.

jacob wrote: ↑

Sun Jun 24, 2018 9:34 am

It's the a situation where the dreaded reverse mortgage is actually appropriate?

Or just a HELOC.

If only you could get them to stop watching "Red Headed Step Child Assassin From Hell VIII" to discuss the matter.

Interesting case study. I do feel a bit sorry for them that they cannot, or more precisely, should not keep the house that they poured so much effort and money into and like so many Americans are so attached to.

I also wonder how much they spent on their kids including schooling. If it was a ton I would think they could help out but with the parental financial example they had maybe they aren’t in good situations themselves.

Lingering questions: How does he only have 3k in his 401k? It’s a new job? He doesn’t trust the stock market?

Her SS... probably retired too young.
His SS... similar, considering he's still working. Not clear how much is being withheld/taxed since he's working.
Some of that debt apparently was used to live while laid off and retraining.
401k: there's obviously not enough left over in the budget to put money into it. If there was a 401k or IRA from former employment, I bet it was raided to pay living expenses when he was laid off.

I suspect the digital entertainment bill includes a cell phone plan covering an entire family of iPhone addicts.

I don't understand why the financial advisor didn't recommend for her to get a job? Or putting the cash into a CD ladder where rates are 2%? And what kind of condo (with HOA payments) can you buy for a mere $250k in Seattle area? In other words, the financial advisor is telling them the right things, but not in ways that seem doable for people that have no financial sense.

The basic gist, however, is that they're living beyond their means (to the tune of negative $500/mo) and have done so for far too long, apparently not learning their lesson when he was laid off. On the hook for $39k student loan for the kid(s) plus his own $7k student loan. They're screwed! Unless she hits the lottery, they will lose the house they love, either because they must sell soon or be foreclosed upon as the bills mount & income goes down.


"Look how much our home is worth!"
"Look how much we must pay every month..."

@steelerfan -- I was wondering about the SSI too but I think George is right -- if she took it early it affects what percentage she gets from his.

They should both work, and cut expenses as much as possible, until those student loans are paid off. Then I don't see any reason they couldn't live off of $2750/month SSI, even with their mortgage. We could live quite comfortably in Stepford on that much.

I actually think that while it would be nice if their kids paid those PLUS loans, I don't think they should obligated to ... the parents took those loans, not the kids. I don't think the kids should be punished financially for repeated mistakes made by the parents (especially since selling the house is an easy fix for their situation).