The father of a dear friend passed away unexpectedly a week ago. The events that have transpired since have served to bolster my determination to leave my children a debt-free legacy.
Mike is 37. His father was 64. Mike has an older brother who has spent his adult years living off of his parents. The parents are hard-working, blue-collar folks who live in a single-wide mobile home on land they rent. Mike knew there wasn't a lot of money. It's what he didn't know that has thrown his life in turmoil.
When Mike went with his mother to the funeral home to make the arrangements, he quickly realized that he was going to be paying the costs. His mother had $100 in her checking account. So Mike, a schoolteacher, was left to come up with nearly $13,000 on the spot.
In the ensuing days, he began sorting through his mother's finances to get her ready to face life on her own. He learned that his parents owed the IRS for back taxes and owed $10,000 on a car now worth $6,000. The interest rate on the car note? A whopping 18%. Possibly worse, his mother is paying $300 a month for a sofa and a mattress and has been doing so for a year and a half. That means she has already paid more than $5,000 for furniture worth less than half that. The wedding rings were pawned long ago. There are credit cards, but his mother says she quit paying those and nobody is bothering her about them. Mike found a stack of unopened medical bills.
Needless to say, among the many emotions he is dealing with, he is angry. Really angry. Angry at his parents for being so reckless. And angry at his father for leaving him to sort through the mess.
All of this has reminded me why it's so important to get our financial house cleaned up. I never want my children to face what Mike is dealing with. In fact, I immediately reminded my adult sons that we have life insurance and if they provide proof to the funeral home, they won't be facing any upfront costs. We carry enough insurance to pay all of our debts, including the mortgage, with a good sum left over. But I don't want my kids to have to pay our debts. In a time of grieving, I want things as uncomplicated as possible for them.
One more very good reason to keep knocking this out. (And a reminder that we need to update our wills ...)