Pay Dirt is Slate’s money advice column. Have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
My older brother got scammed online out of his $200,000 inheritance from our late parents. He had recently retired and now can’t afford health insurance long-term. He reported the scams to the police, but that money is gone. His rent and expenses are very low (he’s single and lives alone), but there’s some credit card debt. What are the best ways I can help him get on his feet financially? Should I pay for his COBRA directly, for example? Encourage him to get a job, or to use what little he has left to pay off debt? I can afford to help, but I don’t want to write him a check (he sent part of a small loan to the scammers before I realized the full extent of the situation). I love and respect him, and am so sad this happened to him. I should be clear that he is mentally and physically OK—just lonely and vulnerable.
—Sad Sis
Dear Sad Sis,
There are a few ways to help get your brother back on his feet and become less vulnerable financially. The scammer in question has most likely passed it on to others so the first step is damage control. If the police haven’t instructed him to already, he needs to file a report with the Federal Trade Commission (FTC) so they can help him come up with a recovery plan to help rebuild his finances with personalized steps that pertain to his individual situation. This plan will provide additional help as needed, like pre-filling forms on his behalf.
Help him contact all financial institutions where he has an account open so he can determine if he needs to close his current accounts while simultaneously opening new ones. Don’t forget to contact all three major credit bureaus to report identity theft and request a credit freeze—this will stop anyone from opening a new line of credit with his information.
It’s OK to offer financial support you feel comfortable with but what you don’t want to do is take on another dependent. Before paying down any debt, or agreeing to pay for his COBRA, ask how he plans to move forward with his retirement now that the inheritance is gone. If he’s unable to financially support himself, he may need to reenter the workforce. He can look for a job that offers health insurance and the ability to help him build a new nest egg while he decides what to do next.
Dear Pay Dirt,
My wife (48) and I (61) have almost no debt beyond her $40,000 in student loans. But despite living in a rent-controlled apartment without a lot of expenses, we are not saving a lot of money. She is self-employed without a retirement plan, while I work and have about $120,000 in various retirement accounts. We have a chunk of money, about $150,000 sitting in a savings account that yields almost no interest. I am terrified we are not setting ourselves up for retirement anytime soon and feel like there is something we could be doing with that cash to make things better for us in the future. My wife wants us to consider paying off her student loans in total.
—Afraid for the Future
Dear Afraid for the Future,
Going into retirement should involve clearing up liabilities and ensuring you’ll still have a source of cash flow after leaving your employer. I spoke with Lawerence Delva-Gonzalez from The Neighborhood Finance Guy about what you should do in order to catch up. Lawrence recommends using your savings account to pay off your wife’s student loan debt and any other outstanding debts you share, like credit cards or other loans. By paying off your debt, you’ll have less to worry about if faced with an income shortage.
“You should work to full or even max retirement age to get more money from social security,” Delva-Gonzalez said. “Based on your average expenses, add an extra 25 percent and multiply that by 25. This is a good baseline for how much you’ll need for retirement.”
In order to figure out how much of an income deficit you’ll most likely be facing, check with the Social Security Administration to calculate the estimated amount you’ll be receiving in benefits. Once you subtract your yearly benefits from your baseline amount, you’ll know how much cash you still need to supplement your lifestyle during retirement.
Want more Pay Dirt every week? Sign up for Slate Plus now.
Dear Pay Dirt,
For a variety of reasons, I (early 30s woman) am ready to call it quits with my boyfriend of three years. My question is this: What is the appropriate and compassionate amount of time to give between our final break-up conversation and asking him to move out? For context, we recently had a discussion where I broached the topic of breaking up. I had actually been thinking of doing so for several months prior to the conversation. When I finally brought it up, he said he wasn’t aware of how bad things had gotten for me and essentially asked for time to reconcile these issues. I had even asked for space that day, but our conversation went on for very emotional several hours into the night. Seeing him in so much pain, while also still loving him, gave me pause and we kind of hit the reset button on things.
Well, it’s nearly three weeks later and I’m still wanting to end things. So, again, how long should I give him until I ask him to leave? For further context, he has had a furnished (sans working fridge) rent and utility-free apartment this whole time (and makes more than enough money to purchase a fridge outright), but we have been living together in my home full-time for about two years. So, he does have a solid place to go. I don’t want to be cruel, but I’m ready to rebuild my life and feel like myself again.
—I Want My Life Back
Dear I Want My Life Back,
In your situation, I think a month is a timeline that’s both respectful and fair. He doesn’t have to worry about where he’ll be living, and the only logistics he needs to worry about is getting his stuff out of your place. Oh, and a new fridge.
Let him know that you’ve made your decision to go through with the breakup and it would be best if he could vacate the home within the next 30 days. Avoid any interactions with him that he could perceive as still having a chance at reconciliation. Don’t share a bed with him (sleep on the couch if you have to), don’t spend time doing things together, and avoid arguing about who keeps what (stuff can be replaced). Do not let him guilt you into giving him more time.
Also, keep in mind that laws vary by state, so double check you don’t have to serve him an eviction notice, or any additional steps to legally cover your bases.
Dear Pay Dirt,
Neither my husband nor I grew up with financially educated parents. We weren’t taught about investing or strategies to grow generational wealth. Our parents lived paycheck to paycheck. Now both in our mid-30s we live in NYC, which is expensive, but make enough money to invest and save some. My husband has done a LOT of research to educate himself on investing and honestly, I kind of just go with whatever he says. We have two children, ages 6 and 2. From what he’s read, it’s ideal to have a living trust instead of a will, because a will costs more money to execute/disperse inheritance due to probate. Is this true? I am the executor of my stepfather’s will and he owns a house that is currently valued at about $2 million. Should I advise him to put his property and assets into a trust instead of a will? Do you have any advice on that and if so, what to say?
—To Trust or To Will
Dear Trust or Will,
It’s great you are proactively honoring your father’s last wishes. It’s essential to have the right documentation to avoid the probate horror stories your husband is probably reading about.
I spoke to financial coach Jonathan Thompson, MBA, about your dilemma, who suggests you do both a will and a trust. “A will can be executed at the time of death, but a trust can be extended for a prolonged time,” Thompson said. “If his home is his only asset and you plan to either sell at the time of his death or move into the home yourself, a will is just fine.” But since it could take time to sell, causing you to manage his asset further, Thomas advises a trust to extend your power for an additional time long after he’s passed.
If your father chooses a trust, he can also specify in more detail what to do with his assets after his passing. For example, he can state the proceeds from his home be donated to his favorite charity or be gifted to his family members for college. Thompson admits that setting both up can be costly, but the benefits are well worth it.
—Athena
Classic Prudie
I have a co-worker who just found out she’s pregnant. She’s only 21, already has a 3-year-old, and recently started taking online classes toward a bachelor’s degree. She can’t afford another child, and she seems to be at the end of her rope.
