Beating Broke

Personal Finance from the Broke Perspective

Long Term Care: Are you Prepared?

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When we are young, our parents take care of us.  From the time we are mere babes, they wash us, feed us, clothe us, and give us the love and nurturing that we need to grow up into adults.  Even as young adults, our parents are often right there to help us get back up if we fall down.

As our parents age, there may become a time where we have to return those favors, and care for them.  For many, this will likely mean an independent living arrangement of some sort that may eventually become a full nursing home situation.  Not only can that transition be a very expensive one, but it can also be a very emotional one.  While I’m not sure that there is any way to prepare for the emotional toll caring for your parents brings, you can prepare for the financial toll it brings.  We’re financially minded folks, after all, and believe in preparation for all financial burdens.

If you’ve ever become a parent, you likely remember the months leading up to the first childs’ birth.  Baby showers, shopping trips, and plenty of DIY crib and nursery work. People come out of the woodwork to give you things that “every baby needs” or to give you advice on how to deal with “fussy babies.”  All of that serves one real purpose.  To prepare us for the coming of a dependent child.  But, we don’t have any elderly showers.  And we don’t usually know even a month or two in advance to do any shopping or DIY projects when our parents are suddenly in our care.  In most cases, we can’t be totally prepared.  But, there’s no reason that we should be totally caught off-guard.

How do you prepare for the long term care of a parent?

In a way, it’s not that much different from preparing for any life changing event.  There are certain things that we can do ahead of time to try and make any necessary transitions as easy as possible.

Know the possible costs.

There are plenty of ways to find the costs.  Personally, I’d start with something like the tool below.  The costs are going to vary some based on your city and whether you plan on having your parents live in a facility or in your home, but you can get a really close estimate from something like that.

If you think that your parents will need you sooner rather than later, you’ll likely want as accurate of an estimate as possible.  Do your research on the facilities in your area, and then call a few of them to get an idea of how much it the costs will be.

Knowing the costs of long term care aren’t the only concern, however.  Knowing your parents financial situation, and how they feel about the options they may have is something that you need to be concerned about.  For instance, my dad has always said that when it comes time for him to move into a nursing home, he’d rather we just drove him out into the mountains and shot him.  That’s an extreme example. A true one, but extreme just the same.  But, if you really care about your parents, and want what’s best for them, that has to include what their wishes are as well.

Your parents financial situation can sometimes be a touchy subject as well.   It’s something you’ll need to know, though.  Someone has to pay for the care, and if your parents aren’t financially stable enough to do so, it’s up to you and any siblings to figure it out.  Know what your parents finances look like ahead of time.  If there’s any question about whether your parents are getting close to needing care, get involved and get it figured out.

I’m not an expert on the subject.  But, as my parents age, and as my friends’ parents age, it’s a topic that is increasingly coming up in my social circles.  I do know enough to know that it can get complicated.  I’ve seen it get complicated.  I’d love to hear from any of you out there who have been through this process and have stories to share with us.  Sometimes that’s the best way to learn about something.  So, share your stories in the comments below!

The Life Insurance Movement

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Much like the Roth IRA movement that I participated in a while back, Jeff from Good Financial Cents is spearheading a Life Insurance movement today.  The movement is designed to help educate people on the different types of life insurance, the ways to go about getting life insurance, and on how life insurance works, in general.

I’m sure we’ll see lots and lots of excellent articles to help educate the community.  If you want to check them out, Jeff has compiled a list of all the participants and posted them on the Life Insurance Movement homepage.

Where do I stand on life insurance?

I used to be on the fence.  On the one hand, there is a very strong argument for it.  On the other hand, it can be pretty draining on your finances, for something you don’t use (hopefully).

For a young person, struggling with debt and bills, that extra $50-$60 a month to cover my wife and I is a not insignificant chunk of money.  Neither of us is very old, and our probability of dying is pretty small.  So, why spend that money on something that we have no plan on using when it could just as easily go towards paying off some bill?  Maybe when we’re older, we thought, we’ll get ourselves some life insurance.  You know, when we can “afford” it.  I know there are quite a few of you out there who agree with that statement.

But, here’s the thing.  I buy car insurance to help pay for damages to my car should I get in an accident.  I’ve used that car insurance.  My wife and I are good drivers, and neither of us has been in an accident that has been directly our fault.  The few accidents we have been in have always been someone else’s fault.  We had very little control over whether we got into that accident or not.

Life insurance isn’t all that much unlike car insurance.  If car insurance only paid out if you were at fault in the accident, I’d never buy it.  After all, I have never been in an accident that was my fault.  Likewise, if life insurance only paid out if you died of natural causes, it wouldn’t make much sense, statistically, to purchase any before you were at least 45 years old.  But, we all know that people don’t just die of natural causes.  They die in all manner of accidents too.  And those accidents don’t just happen to people of a certain age.  So, it’s really the accidental, not-your-fault sort of death that you are insuring against.  And you have no control over that.  And, should you die as a result of one of those accidents, will your spouse and family be able to pay the bills?  Or, will they be forced to sell the house to pay for the funeral?  Do you really want them to have to make that decision if you die?

What kind of Life Insurance should I get?

There are basically two kinds of life insurance.  Term life, and whole life.  The difference is in how long the term of the insurance is, and how much the premiums are for the coverage level.  A whole life insurance policy is good for your whole life.  Because it’s good for your whole life, the premiums are usually higher for the coverages.  A term life insurance policy is only good for a set term.  It might be a 10-year term life policy, and be valid for 10 years from the purchase date.  At the end of the 10 years, you have to purchase a new plan.  When you are young, the term life policies have much cheaper premiums because, statistically, you aren’t very likely to die young, and so, the chances of having to pay out on the plan is pretty small.  When you renew after the 10 years, the new plan would be based on your age at the time, and would be slightly more expensive because of a higher probability of death.

I can’t really tell you which is the best for you, though.  It’s something that you, and maybe a good financial planner, should look very hard at.  You need to educate yourself on the different types too!  Really do your research, and don’t be misled by Colonial Penn’s “affordable” insurance, for example, look for a reputable life insurance company, that offers everything you and your family might need. I encourage you to click that link above, take a look at all the articles that are part of the life insurance movement, and find out as much as you can about life insurance.  Being educated on the subject will make it easier for you to spot bad policies, and find one that will fit your financial needs.

How much life insurance do I need?

Clearly, we’d all like to have a life insurance policy of several million dollars.  Some amount that would set our family up to never have to worry about money again should we die.  In reality, that just isn’t usually possible.  As the amount of the policy goes up, so do the premiums you pay to keep the policy.  What you really want is a policy that will pay out enough to make the transition from a two person led household, to a one person led household.

  • If you’re single, a policy that would pay off your debt, and pay for the funeral is likely enough.
  • If you’re married, with no children, a policy that can pay off the debt, the funeral, and replace your salary for a couple of years is a good policy.
  • If you’re married, with children, a policy that can pay off the debt, the funeral, and replace 5-10 years of your salary with some left over is an excellent idea.

Obviously, all of that is partially determined by what size policy you can afford.  By “afford”, I don’t mean afford in the way you likely do.  I don’t mean, after you’ve eaten out several times in the month, how much money is left over to buy life insurance.  I mean, it should be included in your budget, just like car insurance, your mortgage, and your utility bills.  When all of that, plus your life insurance premium is paid, you still need to be able to keep your bills current, and buy food to stock the refrigerator.  That kind of “afford”.

In the end, when you go and read all the other articles that are part of the life insurance movement, you’ll likely find several viewpoints that clash with mine.  You’ll find people who think that whole life insurance is better than term life insurance.  You’ll even find people who don’t think you need life insurance at all.  I think the important part is that you think about life insurance, learn about life insurance, and then make the decision yourself (preferably with help) on whether you want life insurance, what kind of life insurance you want, and how much you want the policy to be.

Tip: Check with your employer.  Some companies are offering life insurance to their employees.

For me, I think that life insurance of some sort should be mandatory, just like car insurance.  There should be state required minimums that you have to carry.  Far too many people are leaving behind families without any sort of coverage at all.  Even if it’s a small policy that can cover funeral expenses, that’s better than nothing at all, and you can increase it later too!

Trade DVDs to Save Money

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Why buy anything if you can trade for it?  DVDs aren’t an exception.  I’ve been using a service called Swap-a-DVD to trade DVDs for a while now.  It’s actually a sister site of the site I use to trade books, paperbackswap.  (If I really wanted to, the credits are exchangeable between the two sites.)

The premise is pretty simple.  You list the DVDs that you’re willing to trade away, and create a wish list of the DVDs that you would like to see.  Other users request the ones you want to trade off, you ship them to the user, and then receive a credit for the DVD once it’s marked as received.  Once you have credits, you can then order DVDs for yourself, either off of your wish list when they become available, or by finding DVDs that are already available.  Watch that one a few times, then list it to trade away, and you can cycle through them that way.

The only cost is the shipping to send the DVD off for credit.  Usually, it figures out to be about $2.50 a DVD.  Less than you can rent the DVD for from most places.  Most older titles are really easy to come by, with most of the new releases having some pretty long wait lists, but if you’re willing to wait to see the newer movies, you just add them to the wish list, and you’re added to the queue.  As soon as you reach the top of the queue, the next one added is yours!

We’ve used it pretty extensively to get movies for the kids.  Ones we either can’t find to purchase or rent, or ones we’d like to hold onto for a while so the kids can watch them repeatedly as they usually do.  (We’ve seen Cars about 400 times…  I wish I was kidding. It was the only movie our son would watch for close to two years)  The downside, for us, is that the kids can be somewhat rough on DVDs and they get pretty scratched and we’ve had quite a few of them that were untradeable, if not unusable entirely, by the time they got tired of the movie.

But, if you’ve got slightly older kids that are a little easier on DVDs, it could work out really well.  And it works out really well for the movies that us adults like to watch too.

What other ways do you save on watching movies?

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