Must downsize due to no regular income
October 25, 2016 1:10 AM Subscribe
Wife and I need advice on the best way to downsize.
We have no regular monthly income and very little savings due to many previous substantial medical bills. We have no health insurance (because of no monthly income).
One idea is to sell our home and find a 2 bedroom place or condo.
I am aged 85 and have two pensions which are paid in UK £ Sterling. Due to Brexit, exchange rate is currently £1 = $1.28 (historically was $1.61 and higher). I was getting a reasonable income every six months from a family trust, but this has now become payable annually and has considerably decreased (mainly due to oil prices).
Our home (we live in Florida) has no mortgage. Valuation according to Zillow is $199,000.
We applied for a reverse mortgage but wife is underage (both applicants must be 62+). She (aged 58) has been disallowed Disability and other Social Security benefits. She has a 401(K) but now is unable to work due to health problems.
Monthly car payments: We have made 17 payments, with 55 payments remaining. The payoff amount is $25,375.87.
I am aged 85 and have two pensions which are paid in UK £ Sterling. Due to Brexit, exchange rate is currently £1 = $1.28 (historically was $1.61 and higher). I was getting a reasonable income every six months from a family trust, but this has now become payable annually and has considerably decreased (mainly due to oil prices).
Our home (we live in Florida) has no mortgage. Valuation according to Zillow is $199,000.
We applied for a reverse mortgage but wife is underage (both applicants must be 62+). She (aged 58) has been disallowed Disability and other Social Security benefits. She has a 401(K) but now is unable to work due to health problems.
Monthly car payments: We have made 17 payments, with 55 payments remaining. The payoff amount is $25,375.87.
How much cheaper would a smaller place be? Unless it was substantially cheaper, the costs of buying and selling could eat up all the benefits. Does your current place cost a lot to maintain?
posted by kitten magic at 4:15 AM on October 25, 2016 [2 favorites]
posted by kitten magic at 4:15 AM on October 25, 2016 [2 favorites]
Can you trade in the car as well for something cheaper and drive your payment? How much is in your wife's 401k? Is she currently taking withdrawals from it?
If all you want to do is find a cheaper place to live, talk to a realtor. There's nothing magic about downsizing, it's just selling and buying. (Do watch out for condo fees though.)
posted by mskyle at 4:39 AM on October 25, 2016
If all you want to do is find a cheaper place to live, talk to a realtor. There's nothing magic about downsizing, it's just selling and buying. (Do watch out for condo fees though.)
posted by mskyle at 4:39 AM on October 25, 2016
Hold on to your house unless it is way too big and needs a lot of maintenance. A condo, even if you pay cash for it, will have monthly fees and those can go up. Get rid of your overpriced car and buy something more economical. Can you use public transportation?
posted by mareli at 4:41 AM on October 25, 2016 [7 favorites]
posted by mareli at 4:41 AM on October 25, 2016 [7 favorites]
We have no health insurance
What about Medicare and Medicaid? Open enrollment for 2016 "Obamacare" begins on Nov 1.
posted by she's not there at 5:00 AM on October 25, 2016 [9 favorites]
What about Medicare and Medicaid? Open enrollment for 2016 "Obamacare" begins on Nov 1.
posted by she's not there at 5:00 AM on October 25, 2016 [9 favorites]
Sell the car and use the funds to pay off the balance. Buy a used car or -better plan- use a taxi/uber/public transportation to get places. If neither of you are working, you likely aren't driving places daily (my apologies if this is incorrect). You can easily call a cab for medical appointments and the like, and the cost of all the cab rides likely won't be much more than you were paying for insurance/gas/car payments anyway.
I'd also recommend looking at any recurring expenses such as cable, landline, hobbies etc and seeing if you can remove/downsize any of those. Good luck, I hope you and your wife are in better health now.
posted by valoius at 7:32 AM on October 25, 2016 [2 favorites]
I'd also recommend looking at any recurring expenses such as cable, landline, hobbies etc and seeing if you can remove/downsize any of those. Good luck, I hope you and your wife are in better health now.
posted by valoius at 7:32 AM on October 25, 2016 [2 favorites]
Can you rent a room out?
posted by TrinsicWS at 8:22 AM on October 25, 2016 [5 favorites]
posted by TrinsicWS at 8:22 AM on October 25, 2016 [5 favorites]
Keep appealing her disability rejection. Get a lawyer. They get paid when the claim is, so you shouldn't have to shell out money in advance.
posted by charlielxxv at 8:29 AM on October 25, 2016 [5 favorites]
posted by charlielxxv at 8:29 AM on October 25, 2016 [5 favorites]
What's the resale value of your car? I'm not sure exactly if the math works out due to depreciation, but you could probably sell the car, then buy a new cheaper (maybe slightly used) car. I am guessing your car is fairly nice if you still owe $25k after a year and a half, so there are plenty of decent but more bare-bones models you could look at.
I also agree that you should appeal the disability rejection, and look into Medicare.
posted by radioamy at 10:38 AM on October 25, 2016 [1 favorite]
I also agree that you should appeal the disability rejection, and look into Medicare.
posted by radioamy at 10:38 AM on October 25, 2016 [1 favorite]
There are a lot of open questions here, and I'm guessing you've got some immigration wrinkles involved in your story as well (some of which might interfere with your eligibility for medicare).
If a reverse mortgage will get you the financial stability that you need, one way to look at this is that you only need to figure out how to hold on for another 4 years (until your wife is 62).
You say you have no "regular" income, but you have a pension (which I assume is paid monthly, though it is only 80% of what it used to be), and you get an annual trust payment (also reduced, and maybe poorly timed). As mentioned, your car loan is very large. You might want to look at swapping for something cheaper. But, how would things look if you kept the car and dedicated the trust payments to it? Could you do that with the next payment?
I would get together all of your numbers: actual current pension payments in $USD, actual expenses, actual kelly blue book on car, etc, etc, and then I would call the FL Department of Elder Affairs and ask about what other options you can be pursuing.
Both the reverse mortgage and the selling/downsizing options worry me, to be honest, because of your age difference. You need to be careful that you're not making decisions now that could be affecting your wife for decades after you are gone.
posted by sparklemotion at 12:35 PM on October 25, 2016 [2 favorites]
If a reverse mortgage will get you the financial stability that you need, one way to look at this is that you only need to figure out how to hold on for another 4 years (until your wife is 62).
You say you have no "regular" income, but you have a pension (which I assume is paid monthly, though it is only 80% of what it used to be), and you get an annual trust payment (also reduced, and maybe poorly timed). As mentioned, your car loan is very large. You might want to look at swapping for something cheaper. But, how would things look if you kept the car and dedicated the trust payments to it? Could you do that with the next payment?
I would get together all of your numbers: actual current pension payments in $USD, actual expenses, actual kelly blue book on car, etc, etc, and then I would call the FL Department of Elder Affairs and ask about what other options you can be pursuing.
Both the reverse mortgage and the selling/downsizing options worry me, to be honest, because of your age difference. You need to be careful that you're not making decisions now that could be affecting your wife for decades after you are gone.
posted by sparklemotion at 12:35 PM on October 25, 2016 [2 favorites]
Also your wife will be able to take penalty-free distributions from her 401k starting at age 59 1/2 - that's a year and a half away at most.
posted by mskyle at 12:40 PM on October 25, 2016
posted by mskyle at 12:40 PM on October 25, 2016
Could you find an apartment that would cost significantly less to rent than you could rent your house out for? That could potentially free up monthly income while holding on to the asset of your house for at least four more years. Additionally, you may be able to move to a more walkable neighborhood that would lessen your need for a personal car.
posted by thecaddy at 3:11 PM on October 25, 2016
posted by thecaddy at 3:11 PM on October 25, 2016
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posted by Thella at 1:25 AM on October 25, 2016