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A place for Get Rich Slowly readers to ask questions
and exchange ideas
It is currently Fri Aug 01, 2014 4:54 am




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 Post subject: Re: Another windfall question
PostPosted: Wed Oct 10, 2012 11:58 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1123
Khamul01 wrote:
Where I live, 2500sqft/4br is $1.1M.

Wow. I can get a comparable home in my area on the golf course for $200K.
Quote:
One final suggestion, no loans or gifts to friends or family.

Best advice in this thread.


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 Post subject: Re: Another windfall question
PostPosted: Wed Oct 10, 2012 12:22 pm 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5310
dontgopoor wrote:
- Pay off all debts - that leaves you with ~$950k
- Mark $100k as an EF
- Term LI is cheap ($100 to $250/year each for you and wife) at your age if you have good health so I'd recommend it for at least 10 years but if you can get a term that will take the kids through high-school that would be better
- You may be a good candidate for financial planning from one of the big, low cost, mutual fund firms - they'll offer a fairly priced planning session if you invest the amount that you have but they'll of course put you in their funds. But it's not a bad way to go - As part of you education process you may want to start by devouring the articles at the Morningstar website. They often point out the low cost funds in their articles and they have a good reputation.
- I'd park the money in a several money market account for a few months until you've educated yourself. Putting all the money in one is not a lot of risk but I'm
conservative so I'd spread it around several institutions. Plan to be ready to implement your plan by 1/1/13. This is an aggressive deadline so be ready to work.
...


Wait, how did you quantify all that? Why $100k for EF? You don't know what the income needs are. Even if you knew what they were now you would have to back out the current debt payments.

And on what basis did you establish a need for life insurance? (Dog doo doo is also cheap but that does not mean anyone should buy it.)

Spreading MM funds around several institutions is unnecessary, at least for the amount the OP has. Stick with Vanguard or similar though.

The planning offered by mutual fund companies is fine but mostly cookie-cutter. But if the purpose of planning is to determine the need for investment, why incur the obligation to invest first? Doesn't make sense. The mutual fund company is unlikely to recommend paying off debt since they are geared toward suggesting which mutual funds to buy.

DGP - you seem to be making a lot of unwarranted assumptions!


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 Post subject: Re: Another windfall question
PostPosted: Wed Oct 10, 2012 1:05 pm 
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jaiko wrote:
And always, always, keep a copy handy – if you spend hours at work, keep a copy there, too. A co-worker of mine once got a phone call during work that her husband had been in a serious bike accident. Before she could get to the hospital, it turned out they were so worried about his condition, they transferred him to another hospital in a nearby city. This hospital did not have his records on hand, and they would not release any information to her because she did not have a copy of the DHPoA in her possession. Her husband was unconscious and could not give verbal permission to release information to her. She had to go all the way home, pick it up, and come back. To say it was a nightmare for her, was putting it mildly!


That's good advice...and the laws on that kind of thing are changing rapidly at the state level. Where I live those things are registered with the state and you are provided with a wallet card to carry that references a file number that can be accessed on a government website. Regardless of what you physically show them, most hospitals will not honor anything but what they see online.

In addition, I learned recently in some professional training related to my job that a DNR (do not resucitate) is now only valid when an individual physician/rescuer/health care worker actually sees an original copy with their own eyes. It's not enough that a physician or hospital administrator tell you they have seen it and know it to be on file. That basically means that the original document must be available on your person at all times if you expect it to be honored.

The point is, that kind of thing is changing quickly because of issues that have come up so it makes sense to stay on top of it through an attorney

Jaiko, in your friend's case, there should never have been a problem. That was the hospital's error. I'm not sure where you are but someone claiming to be a spouse (even without documentation) should always be given information because they are acting as an agent even in the absence of a written document. (Technically the written document is publicly available through public records and it is incumbent on the hospital to verify if there is doubt.) In every state, a life threatening condition also always incurs consent upon a spouse. An agent needs information in order to know whether to seek legal intervention for example. They shoudl have given full information to a spouse.


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 Post subject: Re: Another windfall question
PostPosted: Wed Oct 10, 2012 1:37 pm 

Joined: Sat Jun 16, 2012 8:06 am
Posts: 91
It doesn't matter that it was the hospital's error, or that it was an error at all. The fact is, it happened, and she couldn't do anything about it unless she produced the document they wanted.

HIPAA is a poorly written and ambiguous law. Interpretation has not been tested in the courts. Thus, there is a lot of CYA going on in the medical profession. You can't blame them for that.


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 Post subject: Re: Another windfall question
PostPosted: Wed Oct 10, 2012 3:50 pm 
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jaiko wrote:
It doesn't matter that it was the hospital's error, or that it was an error at all. The fact is, it happened, and she couldn't do anything about it unless she produced the document they wanted.

HIPAA is a poorly written and ambiguous law. Interpretation has not been tested in the courts. Thus, there is a lot of CYA going on in the medical profession. You can't blame them for that.


Yes, I agree. I was not doubting what happened to your friend. But she could have had a copy of her marriage license and DHCPoA and they might still have ignored it.

Many of the changes to the law are to thwart the decision process of relatives and doctors are caught in the middle. The thing with DNRs for example threatens nurses with murder charges if they help a doctor that does not resusitate if the nurse has not personally viewed the DNR. There is nothing about protecting patient's rights in that. It is all about trying to prevent people from dying even if they want to. It's a huge can of worms, but in any case,m off topic here.


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 Post subject: Re: Another windfall question
PostPosted: Sat Oct 13, 2012 7:38 am 

Joined: Mon Jul 30, 2012 3:59 pm
Posts: 28
DoingHomework wrote:
Wait, how did you quantify all that? Why $100k for EF? You don't know what the income needs are. Even if you knew what they were now you would have to back out the current debt payments.




I've not seen a definitive formula for an EF though conventional wisdom indicates a min of 6 months living expenses. Some argue 3 months yet others 12 months. The primary driver for the # of months of living expenses is the time to find another job. For a young single I'd lean 3 to 6. For a dual income married couple I lean +/- 6. For a family with young kids and big expenses I'd lean 6 to 12. I'm conservative. For up to 6 months use very liquid accounts, i.e., MMF though CDs can work. If you have an EF that includes months 7 to 12, that amount can be tiered in short-term bond funds.

DoingHomework wrote:
And on what basis did you establish a need for life insurance? (Dog doo doo is also cheap but that does not mean anyone should buy it.)


Dog doo doo cheap - really? I can show you where to get it for free.

Two young kids. Private preparatory schools. An implied expectation of college. Expensive life style. Term life insurance for a reasonable death benefit amount makes sense through at least the years when the kids finish high school - when purchased directly from an large, well established company. After that, the kids can fend for themselves in college and mom can sell the house. If the wealthy in-laws can step in and cover the living expenses then perhaps not. All insurance is a trade off b/w a definite annual loss (the premium) versus a potential future loss.

DoingHomework wrote:
The planning offered by mutual fund companies is fine but mostly cookie-cutter. But if the purpose of planning is to determine the need for investment, why incur the obligation to invest first? Doesn't make sense. The mutual fund company is unlikely to recommend paying off debt since they are geared toward suggesting which mutual funds to buy.


You rephrased essentially what I posted - a big MF company, like a Vanguard or T Rowe, may be a good match for them given the caveats I mentioned. The FP services I've seen do not obligate - the client just pays a higher price for the plan. But if you're going to put $500k or $1Mk into Vanguard or T. Rowe, I recall that you either get a free FP or a very discounted one (depends on the amount invested) - it's a no brainer to use the free or very low cost service if investing in that type of established, safe, low cost fund anyway.

And this would be AFTER paying off the debts.

DoingHomework wrote:
DGP - you seem to be making a lot of unwarranted assumptions!


So which are the assumptions and which are unwarranted?

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