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Extremely serious money and inheritance problems
Docken
Registered User regular
Registered User regular
so... I am looking down the barrel of total devastation for me and my family, due to this sub-prime crisis.
My family is pretty well off, and has been for quite some time. My dad, now in partial retirement, has been on the stock market for years, supplementing is his outcome and it has generally served us well. However, I have noticed a trend that started with 9/11 and has reached what appears to be its terrible conclusion today. Over the years, my dad has been receiving poorer and poorer returns (as a said, 9/11 started and took a big chunk of our capital due to improperly hedged positions on the part of my dad).
Today my Dad revealed the full extent of his losses on the market, and it tops $300k. This is due to the fact that two large funds that he heavily invested in collapsed. It`s a huge blow and I still don`t know just how hard this will hit, but it will hit exceedingly hard, especially considering that we sold our house and are renting, in order to invest more.
The problem is, my Dad has been holding my inheritance for years, on the understanding that when I moved out I would use it to buy a house. A quick glance over our position tells me that he can`t give me that money anymore... I mean, he has the reserves, but doing so would completely screw him and my Mom, as their lease is coming up soon and it will definately be upped. Finding alternative housing would be a terrible blow for my Mother especially, considering she has always trusted my Dad to protect and look after her.
'This is just so upsetting (my Mom doesn`t even know yet) and I am now out of a potential home. I was planning to buy mid-way through this year, though I guess I could rent... the problem is where I live the rental market is astronomically expensive and many people have fallen into the rental trap (my work colleages all rent and are in their mid-30s - I am in my mid 20s and the prospect of renting for a decade does not appeal).
I am sorry this post is so long, it`s just that... I don`t know what to do. It`s like there is no way out and all I can see is this long spiral into oblivion and I can`t do anything about it, either for me or my parents... If I take the money, I screw them. If I don`t, I screw myself...
My family is pretty well off, and has been for quite some time. My dad, now in partial retirement, has been on the stock market for years, supplementing is his outcome and it has generally served us well. However, I have noticed a trend that started with 9/11 and has reached what appears to be its terrible conclusion today. Over the years, my dad has been receiving poorer and poorer returns (as a said, 9/11 started and took a big chunk of our capital due to improperly hedged positions on the part of my dad).
Today my Dad revealed the full extent of his losses on the market, and it tops $300k. This is due to the fact that two large funds that he heavily invested in collapsed. It`s a huge blow and I still don`t know just how hard this will hit, but it will hit exceedingly hard, especially considering that we sold our house and are renting, in order to invest more.
The problem is, my Dad has been holding my inheritance for years, on the understanding that when I moved out I would use it to buy a house. A quick glance over our position tells me that he can`t give me that money anymore... I mean, he has the reserves, but doing so would completely screw him and my Mom, as their lease is coming up soon and it will definately be upped. Finding alternative housing would be a terrible blow for my Mother especially, considering she has always trusted my Dad to protect and look after her.
'This is just so upsetting (my Mom doesn`t even know yet) and I am now out of a potential home. I was planning to buy mid-way through this year, though I guess I could rent... the problem is where I live the rental market is astronomically expensive and many people have fallen into the rental trap (my work colleages all rent and are in their mid-30s - I am in my mid 20s and the prospect of renting for a decade does not appeal).
I am sorry this post is so long, it`s just that... I don`t know what to do. It`s like there is no way out and all I can see is this long spiral into oblivion and I can`t do anything about it, either for me or my parents... If I take the money, I screw them. If I don`t, I screw myself...
Docken on
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Having to build up your own bank account isn't the worst fate in the world.
Wow, you sound like a really nice person. I bet your parents are proud.
What city do you live in that the rent is astronomically expensive? Is it an area of the city or the actual city itself. Either way, other people must be doing it, so it certainly means you can do it to. This also doesn't mean you'll never be able to purchase a house. It'll take a lot of saving and sacrificing on your behalf, but it's certainly doable. Perhaps you'd be able to ask your parents for 10% of the house cost and let them keep the rest, and this way you can purchase a house (if you can afford it - don't get yourself screwed) and be building equity instead of renting.
Seriously, billions of people in the history of mankind have been living their lives and buying houses without inheritance - you'll be OK.
This.
Renting for a while - or even living with your parents for some time - isn't exactly horrible. If renting is expensive where you are, surely buying a house is, too?
Hey fuck you buddy. Here I am extremely upset, looking at what I thought was my future disintegrate before my eyes, and you go and be a fucking dick.
Jesus christ, I thought this was a good idea, but if I am just going to get fuckwit remarks like that I guess I should not have bothered.
Yeah, I mean that is the only honourable thing to do. My dad has really messed things up... At this stage its going to be really tough supporting myself... the rental market where I am is absolutely brutal. The problem I really can't stay with my parents either, as that just puts a strain on them now. Up until today it was doable, but not so much anymore.
It's just... I don't have the money, and I am currently recovering from a knee reconstruction and broken leg (don't ask, terrible luck), which put me out $15k, so my emergency money for this type of stuff is non-existent... I don't even have any money more furniture...
Things can change, even if you do have to rent, you may not need to keep doing so for 10 years if you play things right.
It sounds like the first thing that needs to be done is making sure everyone in your family knows exactly what's going on, and what you're worried about. After that, as someone else has mentioned already, maybe you should consider talking to your parents about a compromise, giving you enough for a down payment on a house (instead of buying outright), and let them keep the rest.
You'll do what the rest of us without large inheritances do (or at least I thought you would before you edited and added the bit about medical bills) ....If they can't give you enough for a down payment, you'll rent and find a way to raise one, then move.
I can certainly understand how you would feel this way, and I really do sympathize, but - as someone who is currently renting and in his mid 20's (and in the DC metro area, no less), it is most certainly not a "long spiral into oblivion"
You need to re-orientate. People manage without a lump-sum to kick start their new home. They rent until they can afford to buy, they buy somewhere cheaper to get themselves on the property ladder, maybe they wait until they are in a two-income household before buying (eg, they get married or buy with a partner), they do without so they can save up a deposit for a home.
Are you in college, out of college, or what? And what city are you in?
You're just going to have to either live with your parents or find an apartment, maybe with a couple roommates if you really can't afford one on your own. And save money until you can afford something else.
You are right, I do need to re-orientate. It's like someone has just cracked me in the head and I am still coming out of a dizzy spell... I just need to concentrate on myself for the moment, as thinking about my parent's future will probably make me cry...
I originally had enough money to put down 50% on a typical apartment in an area reasonably close to work, with the other 50% coming from a mortgage which I have the income to support (though it would have been tight, it would have been doable as long as I only went out once a month or so).
After today's news, I have no lump sum, along with very little savings. The only houses I could afford would be around 2 hours or so to work via public transport (I don't own a car). Plus those areas are massively depressed due to the sub-prime collapse and will not being going up in value for a long, long time. I thought about it, but it just doesn't make good economic sense to make that kind of move.
To be honest, doing the numbers, there is no type of house I can realistically afford - the mortgage would either be too high, or the apartment would be too small and would thus I would not be able to get a loan for it as banks have a minimum land area criteria (I have a lot of knowledge about this as I used to work in this area).
It's just that I am so unprepared for this... any advice on how to approach renting? I never spent any time researching this subject because I never expected myself to be in this position? Like, how much as a percentage of my income should be allocated to rent? Are there any things I should avoid, or actively look out for? I have no experience... it's actually scaring me a lot...
Got out of college last year, have worked for 1 year now. Thinking about it, after today I need to act quickly in order to ease the burden on my parents...
Room-mates? Maybe that's not such a bad idea...
You will be able to buy a house sooner than you think. Manage your credit wisely, and make sure you establish your credit. Pay your credit cards in a timely manner, and when it comes time to buy, you'll be in a much better position. Investigate buying a house with one of your coworkers if that is an option.
Also, remember that although a house or apartment is an investment, it is first and foremost the place you are going to live. If you can live comfortably in a house that will not gain much value over the next few years, then you still come out better than renting, right?
This is the heart of the matter.
Step One - Deep breath. You are a capable bright person and you can do this.
Step two - research. Don't trust me or anyone else to do your homework. Read up on that stuff. Take a grain of salt any advice where the person gets something out of it. Google is your friend, so is this forum, and so are your friends and family. Ask, listen, learn.
Step three - there's no secret to life or renting houses or anything. There are just normal people who try their best. Do your homework and make the best call you can. Don't get bogged down in trying to do everything perfect (you can't) and don't sweat it too hard when you fail (you will).
its also possible to get an 80/20 loan.. with the '20' being a 2ns loan for the down payment... i don't know where you are, or what you can afford, but while this might lower your total house price some, its better in the long run. Especially with rates this low.
Its your first house. Nobody can afford the dream house they want at first.. unless you are in an area where you have awesome income and cheap houses... it takes you selling house to be able to move up to that next level....
and if you live in CA or some other 'hot zone', you are daft for buying there anyway.
Librarians harbor a terrible secret. Find it.
The reason people were being dicks is you are acting like life is over because you don't get a free house. Most people are not going to give you sympathy since that plan changed.
Basically, if you have already been working a year, and are competitive and in a stable job market, you don't have anything to worry about.
You'll do it like most other people have to, except for the fact you still have a leg up due to already being done with school and probably not being in debt for it, and already having job experience.
He had invested it into two AAA rated funds that were operated by two leading banking institutions. Both funds collapsed.
I am acting like my life is over because this will very likely mean that my parents will have to move out of the place we are currently staying in to a much smaller place. It means in a very real sense that the life I had planned for is finished, and now I have to start a new one. True it is a recoverable set back, but will mean that I will do it tough for quite some time now. Sure, plenty of people do it tough, but that doesn't diminish my predicament. It also means that my Mother will be devastated that her hopes and dreams have been dashed by no fault of her own.
So yeah, forgive me for being a little upset.
By 10 months, I had saved $30k. Due to my injuries, I had to spend $15-16K in medical fees. I will now spend about a thousand more on rehab. On top of that I bought a computer to help entertain me, I was I was rendered fairly immobile for 3 solid months (though I still managed to get into work for 2 of those 3 months).
That leaves me with $12k in savings. Whilst a reasonable amount it is a pittance in terms of getting a house/apartment, plus in the country I live in, interest rates are the highest they have been in 15 years and my area is a "hot" zone, which means don't bother with anything under $400k. Unfortunately those are the unalterable facts, so I have to live with them.
Living with your parents is a long way off the American Dream (or anybodies dream for that matter), but desperate times etc. and you could be living in much worse places.
Then you need to seriously consider renting a house or apartment, and not buying.
Yes, you've made it clear you hate the idea.
It sounds like it's going to come down to either doing that or being in an even worse situation, however - you're going to have to compromise on your dreams somewhere for now, no matter how painful it is.
Yeah, believe it or not, some of us sorta know how you feel....Due to a combination of some investments tanking and now getting a divorce, my parents have basically had their retirement plans beaten down - my dad's had to leave the house I grew up in for 20 years, and my mom will probably leave also soon and just sell it.
Who knows what I might have inherited or how much closer I might be to buying a house if they stayed together and still had their finances in decent enough shape to help out.
Again, life will go on if you put some work into staying on your feet and making some necessary sacrifices. You're not the first one to be in this sort of situation.
It would've been a great thing, but since you have to do without (and indeed, you have to: there's no way that your parents COULD give you what's left even if they wanted to, at the age they're likely at... retirement, bills related to old age health problems, etc... await them for the rest of their lives), just follow the advice above. Try an apartment for a while, build up your savings.
It'll take a lot longer than if it was handed to you, but you can do it. Indeed, millions of people in America do it every day.
If it really is an inheritance, I'm going to go against the general consensus here and say you should not give it to your parents. Your father has made some very bad decisions in investing. Chances are, he'll make bad decisions again with that money and you're essentially only putting a bandaid on the situation.
Also, from what I know about home loans, it's very unusual to put 50% down on your first home. What you might think about doing is waiting until you can actually afford a mortgage with only putting 20%. Then you can use that extra 30% to temporarily help your folks out and get yourself set up renting an relatively inexpensive apartment and buy the necessities for your place.
The secret to living truly cheap is roommates. San Diego here is not incredibly expensive, like some places, but it still ranks pretty high up there in terms of cost. The lowest price you can get for even a studio here pushes 900 dollars, which is a bit much for a piddly-minimum-wage worker like myself. So I got a 2-bedroom ($950.00-$1100.00) with three roommates (me plus 3 more, we each share a room with 1 person, plus common areas) ($240.00-$275.00). See how easy that was?
if you have friends to move in with, friends that you can move in with that have a desire to, then, by all means, take it. Not only do you get cheap living, but you also (hopefully, depending on the relationship with your friends) get a really unique and fun living experience out of it. I know I'll be moving out eventually and not be with my friends anymore, but it's such an awesome way to live that I'll definitely be sad to see it go.
Finally, have you considered moving? 30k in ten months would seem to indicate a pretty well-paying job; if you can't find a way to rent a place (and yes a roommate might be a necessity), maybe you need to consider living in a different area of the country. Hell, you might get a higher-paying job with cheaper housing to boot.
Work, make money, save, and buy a house, like 99% of the rest of the world has to do.
He knows he can't get the money now, so he's asking how to deal with it. He didn't even lose it through any of his own actions, so it's not surprising that he's a little upset about it. The fact that he hasn't disowned his parents and still wants them to live happy lives w/o taking what was pledged to be "his" means that he didn't expect the money at any cost, but that he believed it was "extra" that was set aside for him to use for serious purchases (house, etc.).
That being said, Docken, this is not a "problem" so much as a setback for you. The money is gone, and there's nothing you can do about it. You have to develop new plans, and deal with this setback with a new outlook, rather than wallow in your lack of a future house.
However, and I don't mean this to dump on you, you did one really stupid thing. You didn't maintain health insurance, which sucked $15+ out of your savings. If you didn't have that savings, you would be destitute. More importantly, GET HEALTH INSURANCE. It would be exceedingly bad luck if you ended up in the hospital again in a year or two, just when you start to get on your feet financially, but you seem to have a bit of bad luck. I know a guy who purposefully doesn't buy health insurance, and then had to get xrays and was out almost a thousand bucks, and bitched about it for over a year (while he was paying for it). I just got an xray 2 weeks ago and it cost me $5.40.
I know that hindsight doesn't help current situations, but if you had health insurance you wouldn't've lost $15k over what I assume is random bad luck. It's worse financially than a bad investment because in an investment you can only lose the money you invested. With medical bills, they don't care how much you have and can whack you into debt in no time.
You have an excellent base with over $10k in the bank. Live cheaply for a year or two, and maybe keep an open mind about moving to a cheaper area. It sucks that you can't start your adult life with what you were planning, but that doesn't mean you need to live like you're homeless. I've run into this with a lot of people who come from more well-to-do families -- they have preconceived notions of what MUST be in a house or condo, or that they MUST live in a certain area. Inevitably they end up priced out of areas because the places they're looking are for older families with higher incomes. Having to "settle for less" is a big shock and disappointment. Even you pointed out that with your inheritance, you'd only be able to scrape by with the kind of things you were looking at. That's not all that cool of a place to buy -- it's far better to live where you can afford, rather than what you assume is "best."
So maybe that involves moving, or a new job. I'd use this as an opportunity to explore that option.
Still, bad luck. You've probably come off fairly light with this sub-prime nonsense though, my impression is it's pretty much ruined quite a lot of communities (especially poor ones).
Rent. Work. Stop whining.
I don't think this is a big deal. I thought this would be about you being worried about supporting your family or something, but you're upset you cannot buy a house when you planned to. You'll be ok. I think you need to reevaluate what is important.
Move there.
Work.
Save movey.
Eventually buy your own place.
Welcome to the real world where large sums of money aren't given to you.
My advice is to try and live with your parents or family for as long as it takes to get what you need. I can't imagine it'd be a problem especially in light of your fathers lack of finances.
Save up, put money in a CD or something to make a little extra (if you don't need it right away) and save save save!
And for many people, moving in with your in-laws is tantamount to slitting your wrists. Jeez. Also, how many people save cash during college? It's a money sink! Everyone graduating is in debt, they aren't sitting on Scrooge McDuck money bins. How much money to you think he'll have?! I have a grand total of about 25000 USD in debt, almost two years after I finished uni.
And honestly, how many people does everyone know who are in the mid-20s who own a house? I'm mid-20s. None of my friends own a house. No-one I know under 30 owns a house. No-one is becoming destitute. No-one is eating off the ground.
I honestly don't know how most of the people in the thread seem to think that owning any property a year after college is in any way standard practice.
OP: I know it sucks that you were promised money that you now can't have, but perhaps this is a good thing. You can start to think about what it means to be financially independent. And it feels great. So just suck it up, go out and get a job, and start renting until you can afford to do whatever you need to.
He didn't invest it.
You've lost nothing (the money was never yours, technically), and will be renting. Who's problems would you rather have?
I remember my mom telling me she would give me her house when she moved. Turns out she actually wanted the money from it when she sold it, go figure. :P No big deal. I didn't even think twice about it. She needed that money for her new house and retirement. I'm fine on my own, and honestly don't need any money from her.
Sometimes parents promise more than they can afford to. As an adult, it's your job to recognize your own independence and make your own way in the world. After you've reached 18, they don't really have any more legal obligations to provide for you. Think of you inheritance as something that you'll have to sacrifice to ensure your parents are set for retirement. Don't fuck them over in their later years just to make things easier for yourself.
However it really isn't the end of the world. Your life isn't over, it just isn't quite as easy as you thought it would be.
I'm going to assume you have a job and you make some sort of reasonable amount of money. Here's what a lot of normal people do because most people's parents aren't able to give their kids a lot of money.
1. Get a place to rent. Preferrably with roommates to keep the cost down. - Sure it isn't always fun "throwing money away on rent" or having a roommate, but it isn't all bad. There is a lot of stuff involved in home ownership. You usually have a pretty heft mortgage and given your situation I'd assume you'd likely not have enough down payment to avoid mortgage insurance, where you spend extra money each month that you don't get back. Not to mention you're responsible for all the upkeep in your house. Who knows what could go bad in it. Your water heater might break or whatever. Sure owning is better than renting, but at your age renting is fine.
2. Balance your budget and just save a little bit of money over time. Try to stash some cash in a high yield savings account if you're not comfortable with investing (and I can imagine you're not after all this). Sure you won't be owning a home as soon as you wanted to, but you'd be surprised at what you'll be able to save up.
3. Just keep saving and maybe you'll meet someone and get married. Believe it or not, it is a lot easier to buy a place with 2 people than with one person. You'll both be saving money towards a common goal.
4. Marry a sugar mama :P
I wish you the best of luck. Just remember to chill out and relax, I promise the world is not over and you're not doomed for the rest of your life.
I'm in my mid-20s and I own a house. In fact, most of my friends (who are mainly teachers, so aren't making huge wads of cash) also purchased a house in their mid-20s.
I was speaking metaphorically. That's why after I mentioned that only his hopes were dashed. See, cause he was investing in the idea of owning a home with this money.
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