Getting Your $hit Together

Have you ever looked around you and seen how messy the lives of people around you are?  There are many types of messes that I could refer to but I am specifically talking about money and general finance messes.  How years of poor money management, spending willy-nilly on every little thing you “need”, or completely ignoring the fact that in order to retire you need actual money to live can really create a huge mess for family down the road.  I have been seeing a lot of this around me recently and it makes me even more thankful that we have our own $hit together.

We haven’t done everything right, but we do have a goal and a plan and we are at the very least thinking about these things.  What I have realized over the past couple of months is that when I am elderly and getting to the later years in my life, I want my finances to be in order.  I want to look back and be proud that we have planned well and that we are all set.  I don’t want family to be scrambling to dig through the disaster that is our lives, trying desperately to figure out how we are going to afford nursing care or figure out housing for us.  I want it all to be easy.  I know we can’t plan for every scenario out there but I want to make sure the major ones are covered.

I will admit that we haven’t gotten everything figured out.  We do have a good grasp on our finances and trying to make sure we will have enough money to fund not only our early retirement, but also our later retirement where things like assisted living and nursing home care could come into play.  We still have some saving to do but I have the goal and plan and I am making sure my projections have extra money during those later years in retirement just in case.

Life insurance is one of the pieces that we have taken care of.  If I die Mr. SFF will have enough to pay off both of our mortgages and would have a really nice income stream from the rental units.  Actually, if I died tomorrow he likely could retire within a year if he figured out how to get health insurance.  If Mr. SFF dies I will end up with only a small mortgage on one property (for the next 6 years) but would also be just fine due to income we generate on the rentals.

Still To Do

We do still have some big holes in our plan.  Disability is one of the biggest holes right now.  And I am not talking about a short disability where you only missing a couple of months of work but the big, life changing types of disabilities.  I ran a calculation and apparently my chances of a disability of lasting 3 months or longer before normal retirement age are 15%.  For Mr. SFF the chances are 10%.  We have pretty active lifestyles which while these help us stay healthy they also carry extra risk so maybe these numbers are actually higher.

This matter is a little more on the forefront of our thoughts recently as we have an extended family member who suffered a traumatic brain injury in a ski accident in March and is just now relearning how to eat, sit and stand.  Yup, almost 6 months later and he is still relearning basic life skills.  Health insurance will only cover care to a certain point and then it is the responsibility of the family to cover the long term costs.  I can’t even fathom what bills still lay ahead for this couple and my heart truly breaks for them.  I do have group disability coverage through work which would certainly help cover any extra costs associated with a long term disability since we don’t need 100% of my paycheck anyways.  But if Mr. SFF were to have some sort of long term disability then things could get harder.  Yes, we have assets and cash reserves that could cover us for a while, maybe even a couple of years, but I am sure that money would be gone quicker than we might think.  This is certainly something that we could cover with an individual DI policy but we haven’t done this as it has not been a priority.  At least for us we could survive a shorter disability without going bankrupt but the average person couldn’t.  The thing about FIRE (Financial Independence Early Retirement) that concerns me is that we might have enough passive income supplemented with part time work to cover regular living expenses but a long term disability would send this plan in a tailspin.  This is certainly in the back of my mind and will be something to at least consider before pulling the plug and quitting our regular employment.

Another thing still on our to-do list is setting up a Will and Advance Directives.  As the majority of our assets are either held jointly or have beneficiary designations this has also gotten sidelined.  If we had kids, this certainly would have been taken care of already but since we don’t it has been pushed off.  But now that we have 2 properties that would end up in probate if both of us died, we really need to get the will pushed further up on our to do list.  I actually starting writing down how certain things should be divided after both of our deaths so I have at least started on this piece of things.  I realized that if everything was split equally among our next of kin the properties could be held by more than one person creating a mess for our families.  It makes much more sense to leave one duplex to each of our siblings so they can either sell or operate the property on their own without having to buy each other out.  Hopefully we will have some time this winter to get this piece in place.

No matter where you are in your life, it is so immensely important to have both goals and the plans to get there.  If I were to guess, the average person doesn’t have these things when it comes to their finances.  Yes, daily life gets in the way but no one else is going to make sure your future looks rosy.  Do you see any major financial matter that we might be missing?

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