Helping Mom Manage Her Finances

Summary

Podcast Summary: Helping Mom Manage Her Finances Jill on Money with Jill Schlesinger | Episode Released April 2, 2025

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Introduction

In the April 2, 2025 episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger, CFP®, delves into the challenges of managing an elderly parent's finances. The episode titled "Helping Mom Manage Her Finances" features a heartfelt conversation with Rose from Indiana, who seeks guidance on optimizing her 80-year-old mother's financial situation following the recent passing of her father.

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Listener's Situation: Rose's Quest to Stabilize Her Mother's Finances

Rose initiates the discussion by outlining her mother's financial landscape:

• Income Streams:

  • Social Security: $900/month
  • Pension (Survivor Benefit): $1,500/month
  • Total Monthly Income: $2,400

• Expenses:

  • Mortgage: Remaining balance of $29,000 at a low interest rate of 2.75%
  • Overall Spending: Approximately $2,400/month, aligning with her income

• Assets:

  • Total Savings: $120,000, primarily invested in Certificates of Deposit (CDs) and a high-yield savings account earning 4%
  • Additional Funds: Proceeds from a recent farm sale and a small life insurance policy from Rose's late father

Rose expresses her concern about her mother's ongoing mortgage debt and her desire to either pay it off or invest the remaining funds more effectively.

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Discussion and Expert Advice

Jill Schlesinger engages Rose in a comprehensive analysis of her mother's financial options. Key points from their discussion include:

1. Evaluating the Mortgage Payoff vs. Investment:

   • Jill's Suggestion: Given the mortgage's low interest rate of 2.75%, it may be more financially advantageous to invest the $29,000 rather than paying off the debt.
   • Notable Quote:

     "Mom, you have very little tax due on the money that we create. Shouldn't we earn a little bit more than we're paying in interest for the next five years?" (08:36)

2. Implementing a CD Ladder Strategy:

   • Explanation: Jill recommends creating a CD ladder by splitting the investment into various term lengths (e.g., three, four, five, and six years). This approach maximizes returns while maintaining liquidity.
   • Benefits:
     • Higher Returns: Potential earnings of around 4%, exceeding the mortgage interest.
     • Flexibility: Funds become available at staggered intervals, allowing for reallocation based on future needs.

3. Maintaining Liquidity for Emergencies:

   • Importance: Keeping funds liquid ensures that her mother can handle unexpected expenses, such as home repairs or medical emergencies, without the need to incur additional debt.
   • Jill's Emphasis:

     "Having access to those liquid funds is important... if something bad happened to her, like she couldn't live in her house, then what would happen?" (10:03)

4. Preserving Dignity and Autonomy:

   • Approach: Jill advises Rose to present the financial options respectfully, allowing her mother to make informed decisions without feeling pressured.
   • Strategy:
     • Present the Rationale: Explain the financial benefits of investing over paying off the mortgage.
     • Respect Her Wishes: If her mother remains adamant about paying off the mortgage, support her decision to ensure her peace of mind.

5. Future Planning:

   • Contingency Measures: Discuss potential scenarios, such as the need for home care or relocation, and ensure that funds are allocated appropriately to address these possibilities.

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Conclusion and Takeaways

Jill Schlesinger concludes the episode by commending Rose for her proactive approach in assisting her mother. She reinforces the importance of balancing financial prudence with emotional sensitivity, especially when dealing with aging parents. The key takeaways from the episode include:

• Maximizing Returns: Consider investing surplus funds in higher-yield instruments rather than exclusively paying down low-interest debt.
• Liquidity is Crucial: Maintain accessible funds to address unforeseen expenses, ensuring financial stability and autonomy.
• Communication is Key: Engage in open, respectful dialogues with elderly parents about their financial preferences and needs.
• Strategic Planning: Utilize strategies like CD ladders to optimize returns while keeping funds available as needed.

Notable Quotes:

• "So maybe, you know, you're bumming out. You lost your job. You're a federal worker. You've lost your job because of just plain old downsizing. And it's time for a great money reset." – Jill Schlesinger (02:45)
• "We want her to have access to the money as long as possible... protecting her and maintaining her dignity." – Jill Schlesinger (10:06)

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Final Thoughts

For listeners navigating similar financial responsibilities with aging parents, this episode offers valuable insights into managing assets, optimizing investments, and maintaining open communication. Jill Schlesinger's expertise provides actionable advice to ensure that both financial stability and personal relationships are thoughtfully balanced.

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For more financial advice and to share your own financial challenges, visit jillonmoney.com and click the "Contact Us" button.

Transcript

[Alex Asulin]

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[Asurin]

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[Jill Schlesinger]

Welcome to the Jill on Money Show. It is Wednesday, April 2, and we are here talking you through whatever is going on in your financial life, in your real life that happens to touch money, anything like that, and you want a set of ears and eyes on your situation, go to the website jillonmoney.com, click the contact Us button, write us a note. And of course, if you'd like to join us live, check the box. Mark will do everything else. Hey, you know, I haven't plugged my book in a while, so buy my book the Great Money Reset. And this is perfect for people who are at inflection points in their lives. We really were inspired by our conversations with you guys during COVID and that really is the. That is the seed of the idea of the great money reset, how you change the things going on in your life, using your money, making sure that you can make decisions about where you want to go, really taking control and making sure that you can turn what sometimes can be a chaotic situation into an opportunity. So maybe, you know, you're bumming out. You lost your job. You're a federal worker. You've lost your job because of just plain old downsizing. And it's time for a great money reset. You can buy the book or you can give us a holler. Okay. Today we are talking to Rose, who joins us from Indiana. Hi, Rose. How are you?

[Rose]

Good morning. I'm doing well.

[Jill Schlesinger]

What can we do for you?

[Rose]

Well, I'm trying to help my mother, who we just lost my father at the end of last year, trying to get her finances in a good spot.

[Jill Schlesinger]

We is like the. You have siblings?

[Rose]

Yes. I mean, I'm doing most of it.

[Jill Schlesinger]

But you're doing it. Okay. How old is your mom?

[Rose]

She will be 80 soon.

[Jill Schlesinger]

Oh, and is she in good health?

[Rose]

Yes, overall. And she has a lot of longevity in her family as well.

[Jill Schlesinger]

Okay. All right, so tell us what's going on for mom. How is she supporting herself right now? Does she have Social Security?

[Rose]

She does have Social Security. And also my dad's pension had a survivor benefit, so she. Both of those.

[Jill Schlesinger]

So what's the pension amount?

[Rose]

The pension is about 1500 after, you know, taxes, insurance, and all that.

[Jill Schlesinger]

And what about Social Security?

[Rose]

900.

[Jill Schlesinger]

Social Security is 900. So. And so she's going to live on $2,400 a month, basically.

[Rose]

Right.

[Jill Schlesinger]

Okay. How are her expenses?

[Rose]

She's. I've been very impressed. She's been holding steady. You know, count goes up and down, but she's essentially spending that much. She does have a mortgage, and that was one of the questions I wanted to ask you about. But, yeah, she's. It's. It's enough to cover her expenses.

[Jill Schlesinger]

So basically, she's breaking even.

[Rose]

Correct.

[Jill Schlesinger]

Okay. All right. Not terrible. I mean, it's amazing. Does she own her own home?

[Rose]

She does.

[Jill Schlesinger]

And. Oh, yeah, you said mortgage. I'm sorry. How much is the house worth?

[Rose]

It's probably worth maybe 125, 150.

[Jill Schlesinger]

Okay. How much of a mortgage remains that we're thinking about paying off?

[Rose]

It's about 29,000.

[Jill Schlesinger]

What's the interest rate?

[Rose]

2.75.

[Jill Schlesinger]

Oh, so cheap. Okay. She wants to pay it off with what? Did she inherit something from your dad's side of the equation? So tell us about the asset assets that she has.

[Rose]

Yes. So she has about 120,000. She had to the some family money that came out of a recent farm sale and also a small life insurance policy on my dad. So there was, you know, stuff that, that had to be paid off, but that's what remains. So she's in the best position that she's ever been in.

[Jill Schlesinger]

Oh God, that's great.

[Rose]

Yeah.

[Jill Schlesinger]

Is the $120,000 just in the bank at this point?

[Rose]

Yes, I've, I've put it, chunks of it into CDs that had higher interest than normal.

[Jill Schlesinger]

Did you happen to find out, like, what longer term CDs look like for.

[Rose]

Her at her credit union? It. I just looked at those amounts I did move. She wanted to set up an account because she debated about prepaying funeral expenses. No, that's what I was telling her. And so we put a chunk of money based on, you know, the expenses for my father into a, a separate long or high yield savings account that's currently at 4%. Obviously that's, that's just due to the current interest rates.

[Jill Schlesinger]

Right.

[Rose]

So that's at a separate bank, but everything else is at our local credit union.

[Jill Schlesinger]

At her credit union. Yeah. So I mean, it might make sense just simply because like, I like the high yield savings and having that money, but it also might make sense for her to have some CDs that are locked in for some chunks of that money. Not all of it, but like some just to have like, you know, that you can get 4%, let's say, for five years. I, I think, I feel like that would be a smart thing. We, we call that building a CD ladder. And so, you know, if you have a certain amount of money that's liquid. Right, right. Available to you, but then you have some money that's in, let's say a six year, a five year, a four year, a three. Just so you have it staggered. And as each one comes due, you can make a different decision about what you want to happen for the money. So I think that might make some sense for her. At what point does this mortgage get paid off? How many more years?

[Rose]

It was five years. And that really bothered her, the thought of being in debt until she's 85.

[Jill Schlesinger]

Is it bothering her to the extent that she's, I mean, I don't want to make her crazy. Is she, is she like, I want to get this done? I mean, you have to be honest with me. If you're like, I can convince her to hang on or no way. Jill, she just wants it done.

[Rose]

I could convince her.

[Jill Schlesinger]

I mean, look, let's think about five years for a second, okay? Five years. She is in obviously a very low tax bracket. Okay, so one way to maybe. Is she. Is she a methodical thinker? Does she like, you know, she like an artist or is she more like. No, I'm like a doer, like a mathematician type of brain. What do you think?

[Rose]

I would say more artist.

[Jill Schlesinger]

Okay, so here's how we talk to an artist about this. Mom, right now you have very little tax due on the money that we create. So, mom, this is what I gotta ask you. Should we. We can put money away for five years right now. We can put that. 30, 29,000. 30 year. $30,000. We could put that in a five year CD and make 4%. Or we can pay off your 2.75%. Wouldn't we rather earn a little bit more than we're paying in interest for the next five years?

[Rose]

Yes.

[Jill Schlesinger]

And that maybe might help her. And maybe you could even say, if this is unbearable to you, then of course we can pay it off. But mom, isn't it better for us to have. For you to have control over your money? Like what? You have longevity. But what if you needed something? What if you had to go get a car? What if you had to. Something breaks in the house and you know you need to pay for it. Like something happens, a tree falls through your roof and you gotta wait before the insurance money comes. So I think that if you can get her to wait and convince her and just look at it and just say, hey, five years. Five years. One, we get four, four and a quarter percent. One, we're paying 2.75 and doesn't seem to make a lot of sense to do that. But honestly, if she insists upon it and you get a ton of pushback, do I think it's the best financial decision? No. Does she deserve to sleep at night? Yes. But I think that that's really it. I mean, she doesn't have any more money that's coming in. As you said, she's. She's done an incredible job. We just want her to have access to the money as long as possible. And you too. For you guys, if something bad happened to her, like she couldn't live in her house, then what would happen for. Would she move in with one of you guys? Would she have to get care in the home or go to a facility? What do you think?

[Rose]

That's a really good question.

[Jill Schlesinger]

As in, you've never contemplated.

[Rose]

I Think we've thought about it. We don't want to think about it.

[Jill Schlesinger]

Okay, well, I think that's a good question to have with her also, which is also, like, you know, another reason to keep some of this money liquid. Like, hey, mom, you're in great shape now. You. Like I said this, I had the exact same conversation with my mother. Like, you slip and you fall on the sidewalk. You break your hip. You're not going into a facility. You want someone to help you in the house. Great. Okay, so now we got to pay for that. That's. That's really the game plan, which, you know, we. And so for anyone who's in that situation, having access to those liquid funds is important. So, Rose, I think the help for your mom, you're doing such a good job, and she's doing a great job. I would prefer she not pay down the mortgage, keep the money in a laddered CDs, and for you to just emphasize to her, I'm not telling you what to do. Like, if this really bugs you, we're going to do it with the way you want to do it. But I want you at least to hear me out about the rationale and maybe play her this podcast.

[Rose]

Yes, that would be awesome. Thank you so much.

[Alex Asulin]

Any.

[Jill Schlesinger]

Anything else going on that we need to help you out with for your financial life?

[Rose]

Nope. I think I'm in good shape.

[Jill Schlesinger]

Way to go, Rose. Thank you so much for getting in touch with us. Hey, if you've got a question about your aging parent, give me a call, because I have one, too. And we want to hear from everyone going through this. It's a lot. You want to take care of these people who took care of you. I understand it, but we have to do it with intention and with a lot of thought in a way that maintains their dignity, but also to protect them. So all those things, that's a lot of emotions behind it. So get in touch with us. Go to jillonmoney.com, click the contact us button, write us a note, and if you want to join us on the air live, check the box. Mark will do everything else. You can subscribe to us on the Odyssey app or. Or wherever you find your favorite podcast. Do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening, and we'll talk to you tomorrow.

[Alex Asulin]

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[Jill Schlesinger]

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[Alex Asulin]

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[Jill Schlesinger]

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