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Color of Money Book Club

Michelle Singletary,Paula Span,Elinor Ginzler
Thursday, July 22, 2010; 12:00 PM

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Michelle Singletary: Good afternoon everyone. Thanks for joining me today to talk about a very imporant issue.I also want to remind you that today the Post is launching my first video chat. I'll be answering left over questions and talking about the hot financial topics right after the online text discussion is over. So stick around just after 1 p.m. to see me live. Who knows what I might say out loud!

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Serious concerns: What should we do when our parents have no savings and the children work, yet we earn enough to keep our own lives? We earn too much for assistance but not enough to pay for the upcoming expenses of nursing homes.

Elinor Ginzler: A short web-based program called Benefits QuickLink, www.benefitscheckup.org/index.cfm?partner_id=22 can tell you all the programs and services available to your parents.

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when to move/money: Paying for elder care is a timely topic for me! My aunt currently needs home aides 24/7. She's renting an apartment, and can handle the bills for awhile, but who knows how long she'll live. What's the calculus for deciding when someone who needs 24-hour assistance should give up their place and move to a continuing care community? At some point she'll spend down so much she doesn't have the entrance fee, even if her income would hold up under the monthly payments, so it seems like a decision that could benefit from having some guidelines to consider. Of course she doesn't want to move -- but she's single with no family besides her neices and it's not like we have the kind of relationship where she'd be moving into our homes.

Paula Span: And continuing care retirement communities operate on a number of different models: some require very steep upfront payments, which may or may not be partially refunded later, but some charge month to month. The national organization website (www.caremanager.org) has a locator to help you find a GCM near you.These are usually social workers with additional training who are familiar with the eldercare services and options in your area, can assess your relative's situation and level of functioning, and accompany you through this long and sometimes fraught process. And in my experience, sometimes outsiders with credentials can move the discussion and the decisions along in ways that are difficult for family members themselves.Moreover, when tensions arise, many GCMs are licensed clinical social workers who can also serve as sounding boards/therapists/negotiators to lower the temperature and keep everyone on track towards solutions.

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Helping aging parents downsize: Do any of you have recommendations/suggestions to help with the downsizing process?

Elinor Ginzler: A whole new breed of business is growing of professional organizers who can help specifically with downsizing.

Paula Span: They don't come cheap, but I've seen them handle some tough situations. www.nasmm.org.Ditto the National Association of Professional Organizers. www.napo.net

Michelle Singletary: So we stop pushing and are letting him slowly get rid of his stuff for what I think will be an eventual move to an assisted living facility.This is hard for all of us -- him and us.

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personal finance: What makes more sense as one heads into their 50's and 60's, long-term health insurance, or life insurance?

Elinor Ginzler: In any case, it is very important to understand exactly what coverage you're buying, what it costs now and what it will cost in the future.

Michelle Singletary: Find a good insurance person, one who will put his or her sales hat to the side for a moment to really talk you thu both of these types of polices. But before you do the sit down, do a lot of research. I've written about this, AARP has a ton of information on it's web site as does other nonprofits.

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Saving for Reitrement when you don't have much: Hi Michelle, I am a single woman, 33, and am getting ready to purchase a home. With all of the expenses that go along with a new home, and not making a lot of money (am a professional in higher ed), I worry because I'm not saving enough for retirement, or saving much at all. I'm already working two, sometimes three jobs, and I don't want to do it forever! How can I start planning now?Thanks!

Michelle Singletary: now may just make things worse. You need an emergency fund and a life happens fund in addition to money to buy your home. and upkeep of a house may push you over the financial edge. I'm not saying don't buy, but you may need to wait just a bit more to sure up your financial house.

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Closing on First home tomorrow: Hello!I have been a fan of your chats for a long time. I have been saving money for years now to buy my first home and will finally be doing so tomorrow. I will still have an 8 month emergency fund that I will not touch, as well as a savings account (about 20k) for "life happens" stuff and a smaller savings account (about 5k) for unexpected home repairs. Obviously, being a first time home buyer I am still a little nervous about the new expenses even after crunching the numbers a million times. What kind of financial advice can you give me as I begin this new chapter in my life?Thanks so much for your advice, delayed gratification is truly a blessing.

Michelle Singletary: I hope the person who asked the earlier question about buying a house reads carefully what you've done to prepare for your new home. Bravo or Brava to you.You really have put all your financial ducks in a row. So my one piece of advice is don't try to fill the house up with new stuff right away. Don't buy much at all in fact. When I moved into my first single family house I went NUTS! I was at Target like every day. My husband actually had to put me on Target probation, meaning I couldn't go there for months. It's funny now but not back then. I just wanted so many little things to spruce up the house -- towels, new dishes, plants, rugs, etc.Just be careful and take the decoration slow.

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Mint.com exclusively or a back-up system too?: Hi Michelle (and others) - What is your take on personal finance programs such as Mint.com? I find it a fantastic way to budget and track, but am wondering if I should have a back-up system that is not entirely on the Internet like Excel, Quicken, iBank, etc. What do you think?

Michelle Singletary: I think if the site is helping you budget great. But I alwasy like backups!

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Caring for elderly parents - self care: Thanks for discussing this important topic that so many of us are dealing with. My question is for Paula Span. My parents are in their late 80's and were raised during the Great Depression. They really need more help around the house but they are afraid to spend their money. It's as if they're saving it for a rainy day - and that day has finally come - but they're just so worried it won't last. (Truthfully, they're middle class and have obviously saved their whole lives. They also have 3 adult children who would always be available to help them.) Here's another example, on several occasions they should have called an ambulance, but they're so afraid of being billed an outrageous sum that they've risked great injury. None of their children live in the area so we can't intervene on the spot. Any tips would be greatly appreciated!

Paula Span: Nobody likes to feel dependent.And of course, it's all harder when you're trying to help long-distance. If they're reluctant to have "a stranger in my house," could a local church or service organization help arrange for someone -- a well-vetted someone -- to come in privately and assist? And though of course your parents would never pay for the GCM, with three adult children, perhaps you could split the cost.Remember, your peace of mind about your parents' well-being is worth something, too.

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HOW TO GET MOM INTO NURSING HOME?: My Mom has caused me to be in a dilemma. When I could no longer care for her at home, I tried putting her into nursing homes where she became a patient from hell. She would accuse the attendants of sexual misconduct and call the police on 911. She did the same at 4 different nursing homes. I eventually was banned by all the nursing homes in the city where I live and they have put her on the do not admit list that they all share. Now she is home and says she wants to go back to a nursing home since she knows that she cannot get the same level of care that she did there. But the only one that I have been able to find says that they only take Medicare patients. My mom is a Medicare patient, but she also must be admitted from the hospital as a Medicare patient and not a Medicaid patient, which she will become after the Medicare runs out. The hospital won't admit her since they cannot do anything for her medically. So I can't get her into that nursing home either. What do you suggest as to how to get this revolving door of health care behind me?

Elinor Ginzler: Ask them for assistance.

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QUICK RICHES: If I ever win the lottery, I will work part-time and have a "purpose". I won't just sit and lounge. I will definitely contribute to the children's college fund, tithe, pay off the mortgage (and maybe move to a house with plenty of closet space and an updated kitchen) :-). I will do my best to just keep living "normally", just with the security of knowing the money is there. I would hire a great lawyer and financial advisor (are you available?). I like the security of knowing the emergency fund is fully funded, retirement is no longer a worry, travel is paid for, mortgage is gone and I don't have to wait to get old to have all of these checkboxes marked with a big "X". I have worked a long time, so I will see it through to retirement. I have seen a lot about lottery winners who lost their minds and went broke in a year trying to make everyone happy. I would claim the money anonymously, if possible, and go back to work like nothing happened. I would work part-time only and spend a lot more time with my children. I miss them everyday while I am out commuting, shuffling paper in the office and missing their childhood...all chasing a buck. There must be a different way to live. Lastly, I would replace the 14-year old van immediately and pay CASH.

Sarah Halzack: Today's e-letter: Quick Riches

Michelle Singletary: I like your plan. And if you win, I am available for adoption if a trust fund comes along with it!If you aren't sure what this person is talking about follow the link to my eletter for today. I discuss the New HBO documentary, "Lucky" about lottery winners.I'll also be talking about that during the live video chat in the next hour.

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Mom Running Out of Money: My mother has been at a wonderful nonprofit continuing care facility for almost 13 years. She is now 94 years old and although she had a mild stroke 10 years ago, she is in pretty good health and has all her marbles. First she lived in an independent apartment but two years ago, after a series of falls, we moved her into assisted living. She is now at Care Level 2 at a cost of roughly $84,000 per year. Here's the problem: she is running out of money. She will never hit zero because she has my father's pension and Social Security, totaling about $50,000/year. We have sold off most of her stocks (she was a very good investor when she was younger) to pay her bills and she has an annuity of about $240,000 she has held for many years. We will start tapping that but if she is raised to Care Level 3 or moves to the nursing home on the campus, that will be gone in as little as two or three years. The nursing home charges $12,000/month. The facility says it will take care of Mom through its benevolent care fund but they won't put anything in writing. I'm afraid we will spend her annuity down to zero and then the facility will tell us they can't care for her any longer. I'm sure others have faced this dilemma. We don't know whether to bring her home or keep her where she is and hope for the best. She is very happy, has lots of activities which she enjoys, and values her independence highly. We took Mom on vacation with us a few weeks ago and after a few days she couldn't wait to get back to her own place. Thanks for any advice you can give!

Elinor Ginzler: Let them know that everyone wants her to stay there and the way to make that happen and for you to be able to continue to pay until she runs out of resources is to have their commitment in writing.

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403b money: Hi Michelle, Thanks for all your great advice! Here's a question: I just turned 30, have had a few different non-profit jobs in the area in the last ten years, and I have retirement savings at 2 of these organizations that I never rolled over or transferred that is just sitting there. What should I do with it? I am now working for the federal government so I don't believe I'm allowed to roll the money into my current TSP. I am pretty clueless with all of this. Help!

Michelle Singletary: But be sure the money is a direct transfer from the accounts to the new IRA so you don't have to pay taxes.

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Adjusting to higher income: Hi Michelle, I really enjoy your column and chats. I have an issue that is kind of ironic, I guess. When I was a recent college graduate on a very tight budget, I was really good at keeping track of all my spending, setting limits on my discretionary spending, and making sure I was able to save, travel, etc. Six years after beginning full-time work, I have a significantly higher income, but basically the same necessary expenses, so I have much more disposable income. The thing is, now that I know I have so much room in my budget, I've become very lazy at keeping track of spending. I never categorize my purchases and have no idea how much I'm spending on dining out every month, for example. But I know it is a lot, and I'm sure I'd be horrified at the numbers if I added them up. I have a rainy day fund and I'm putting 5% in my TSP, so at least I'm not totally out to lunch, but I know I should be doing better. Do you have any advice for getting back on track with my budget? Thanks!

Michelle Singletary: You need discipline my friend and a plan for your "extra" money.First, face the money. You need to figure out how much you are wasting. So I have an assignment for you (it's what I recommend people do in my new book "The Power to Prosper."Starting tomorrow and for 30 days I want you to keep a spending journal. In that journal I want you to write down every penny you spend, from the online bills you pay on a particular day to the bag of chips from the vending maching -- EVERYTHING. Record all your expenditures in the journal. And beside each entry write whether it was a need or a want.When the 30 days are up look back and see what you spent. It may give you the resolve to be that great budgeter you were when you didn't have as much money.And then come back and tell me how it went.

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a foot in both worlds: My Dad was diagnosed about 4 years ago with Alzheimers. His progression has thankfully been slow. What's challenging is that he still retains some capabilities -- and wants to live more independently (he's in an Independence Plus program) -- but clearly he can't live on his own. I don't know how to bridge the gap for him. He's bored and lonely. Another issue: he spends unwisely and is particularly attracted to any purchase that includes a free offer (of something he doesn't need).

Elinor Ginzler: Here is a link to help find a care manager in your area who can do an assesment, http://caremanager.org/.

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Nursing home costs, savings, and loss of assets : I've heard scary stories of elderly people having to "spend down" their savings or transfer ownership of their homes in order to enter nursing homes. Do these situations relate to only certain types of circumstances, and how can this be avoided?

Paula Span: Typically, someone entering a nursing home pays for her own care as long as she has money, then applies for Medicaid, which takes over. But with the average national cost of a semiprivate room in a nursing home at about $70,000, most seniors do need Medicaid eventually. People can keep a house, usually, and they can reserve some assets if there's a spouse who is still living independently. www.naela.org

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Saving for retirement: Sunday's article was very informative. How can anyone with $25,000 savings think they can afford to retire? With all the articles in the paper, TV, workshops at work, how can people be so under-educated about their retirement?

Sarah Halzack: Sunday's Column: Your money, not your age, signals when it's time to retire

Michelle Singletary: He or she thinks they can retire because they haven't run the numbers!

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Sarah Halzack: She'll be weighing in on some personal finance topics in the news and also answering some questions she couldn't get to in today's chat.

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eldercare: What do you do when parents refuse to spend money on things that could make life easier and safer because they're afraid to run through their savings? It seems like mine expect me to spend my own money, which I really can't afford, but they have too much of their own money to qualify for financial help. I know they have a right to live any way they want, but I worry!

Michelle Singletary: I so know and feel what you are going thu.We also understand the fear. Live long and you could run out of money.Just keep being there and encouraging your parent that he or she needs to spend the money he or she saved in a lifetime to make things easier. Then just let go.

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Paula Span - Great book!: Paula, I want to thank you for writing your book. I've been taking care of my elderly parents, now in their nineties, for the past 15 years. I've heard all the stories, been through it myself, seen my friends' struggles. What you've written really rings true. Appreciate the lists, too.

Paula Span: Thanks!

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Long-Term Health Insurance: What is your opinion on Long-Term Health Insurance? I am single and in my mid 50's and applied for a policy that would be paid up in 10 years. The benefits or amount to be paid out from the policy were realistic (I cannot remember the exact amounts and timing) but the monthly premium was just under $600/mo. The insurance company has initially denied coverage due to a misunderstanding of a childhood diagnosis, but this is in the process of being resolved. I realize I need to correct this medical denial, as it is an error that should be removed from insurance records. But I am having some doubts about obtaining the insurance with such a large monthly premium. I do not own, have no debt and do have about 6 months + living expenses saved. I have been laid off twice in my career due to the economy and worry that this is always possible. I would appreciate your opinion on how I should proceed. Thank you.

Elinor Ginzler: AARP has developed resources, especially designed for Boomer women to help them through the long-term care planning process, www.aarp.org/decide.Good luck.

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Medicare Coverage : Unfortunately, I have not had an opportunity to read either book being reviewed today but I plan to. I am beginning to research alternatives for in-home care and assisted living care for my mother who lives with me and is now 81. She thinks we should check out what Medicare may cover in terms of in-home care. Do any of you have any knowledge of what may be covered?

Elinor Ginzler: For that matter, Medicare does not cover assisted-living either.

Paula Span: Of course, with nursing homes costing an average $6000 a month or so, it's all too easy for an older person who's saved all her life to become poor. Here, when old people need help, they and their families are pretty much on their own until they become impoverished. I need to fund my own long term care.

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Budgeting when one person is self-employed: Michelle, this is off today's topic, but I'm hoping you'll help. My husband is self-employed, and his income is erratic. Some months he'll have big paydays, others are really light. My income covers almost all our expenses, but we still need his for a few. Right now, we just bank what he brings in and draw it down a little each month. Are we on the right track?

Michelle Singletary: You are on the right track. Just a few things. First please, please make sure you are paying your quarterly taxes and on time. You are right to bank the big checks and the little checks and pull from them what you need every month. What typically happens with people with uneven money every month is that in the big check months they spend it all, without saving some to even ou the months when the money is low. Hopefully, you can bank enough so that throughout the year so that the months with the larger money is used to offset the low-earning months, with some leftover to carry into the next year to start the process all over.

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Quick Riches: I love my job, so I would keep working, but it would be nice to:1) Pay off my student loans and mortgage.2) Pay off my parent's mortgage and my brother's mortgage.3) Set up retirement trusts for myself and my wife, as well as our immediate family members.4) Set aside enough a fund to comfortably cover vacations, new vehicles, etc..5) Donate, donate, donate.

Michelle Singletary: Sounds like you've given this a lot of thought. Just be careful about paying off stuff for people if they aren't good money managers. Often that means they see all this extra money and go on a spending spree putting themselves in debt.

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Parents and money: My mother simply will not have any conversations about this stuff, even though she's in poor health. I talked to a geriatric care manager who told me that as long as she's competent, she's entitled to refuse to discuss it with me. I'm at my wit's end. How am I supposed to prepare myself for the time when she needs my help when she won't cooperate? It's like she wants me to help her, but when I offer my help, she turns it down.

Elinor Ginzler: Here are a couple of "tricks" you might try to open up the conversation. An example would be, "Mom, I'm so worried that I won't be able to help you when you need it because I don't know enough about your financial situation." AARP the Magazine often covers the unfortunate story of an older person being financially exploited. Again, come at this from a caring perspective and urge her to see your interest as a way for her to stay in control in the future if you need to make decisions on her behalf.

Michelle Singletary: I very much agree with Elinor. We had to take it slow and my husband and I used that I strategy a lot. And it worked! There are still a lot of issues but so much better when we didn't have any information at all.

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Free information from the National Institute on Aging: Michelle, I wanted to point out that there's some great FREE information from the National Institute on Aging. There is even a whole section on Planning & Decision making, covering topics like end-of-life issues, saving for retirement, choosing a facility, and long-distance caregiving. Oh, and did I mention that they're FREE?

Elinor Ginzler: AARP is also a great source of information, articles, checklists and tools to help you, www.aarp.org/caregiving.

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Back to School: My husband is going to law school this fall and while he did get a scholarship, it will not completely pay for his education. We will have to take out some loans. He will be going to school full time and not earning an income. We have saved enough money to pay our mortage for the school year and I earn enough to pay our other bills, but that is it. We will not be able to save for the mortgage next year. I am already cutting out everything we do not need--well, really trying! Do you have any recommendations besides taking out student loans for our mortgage? We cannot sell or refinance our house because it is underwater. Thank you for any advice you can offer!

Michelle Singletary: Certainly don't take out loans to pay on a loan. Just a deeper hole.Keep doing what you're doing and think out of the box. Can you take in a boarder to help with the mortgage. Can your hubby get a nighttime job even for a few hours to help. Just continue to do what you can to avoid piling on debt because I will tell you there are a lot of attorneys who piled on a lot of student loan debt and are finding they aren't earning the big salaries they had hoped for.

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Wife's Student Loan Debt: I have no student debt from college but my wife, who just finished law school, has sizable debt. I also have much better credit than her. I'm considering cosigning her loan to get a better rate and allow for more flexibility but what will happen if we get divorced? I know i'll still be responsible as a cosigner but would I be able to receive compensation for absorbing her debt?

Michelle Singletary: Nope. No compenstation unless you try to get some form of alimony or whatever.Basically you co-sign, you get divorced, still your debt.But why so negative? You aren't helping her, you are helping the two of YOU!

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Caring for elderly parents: Michelle,I am 44 and currently reside with my mother of 82. She has battled shingles and is coping with arm pain receiving PT up to 3x a week. One of the things I notice is that she will tell me things that happened either from a phone call to watching TV days ago and will repeat some things too. Is this normal for elderly to talk out loud just to hear themselves?

Paula Span: Is your concern that she may be showing signs of memory loss or some other kind of cognitive impairment? We take our children to pediatricians because we understand that their bodies function differently from adults', but we don't have nearly enough geriatricians who specialize in the way older adults' bodies and brains behave. The elderly metabolize both prescription and over the counter drugs (and alcohol, too) differently from younger adults. If it's her mental state that's worrying you, a neurologist or memory center might be the way to go.She's lucky that you are keeping an eye on her and noticing what might seem subtle or unimportant changes.

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long-term care insurance: What's the right age to start looking into long-term care insurance? I'm in my early 40s.

Paula Span: Tricky question, because costs are lower in your 40's than they will be later -- but you are paying those lower costs for more years.But you're smart to think ahead, because if you start developing serious health problems, many insurers will no longer sell you a policy, at least not at rates you can afford. If you know you have a family history of diabetes or heart disease, you might err on the earlier side. And my policy also allows me to buy additional coverage at pre-set ages -- 60, 65 and 70, I think -- so I can pay less at first and then more later.

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In Home Care: My mom wants to stay at home as long as possible but needs extra care. We are looking at hiring a caregiver. Any suggestions?

Elinor Ginzler: AARP has information on both.For help, check out www.aarp.org/relationships/caregiving/info-02-2010/choosing_a_home_care_worker.html

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Elder Care from Far Away: My parents are currently in their early 70s and very healthy for their ages. Geographically I am the closest of their 2 children but I am still 9 hours away. My parents have never discussed their finances with me, other than to let me know where the important paperwork is located and who I should call in the event of a tragedy that takes them both at the same time. How do I start a conversation that helps me understand the plans they've made for themselves and their expectations of me and my brother, given how far away we both live? Running down for frequent visits just isn't practical or possible, but I anticipate significant resistance to any suggestions that they move closer. I remember having this problem with my grandmother years ago and I'm hoping my parents won't be as stubborn as she was, because it really damaged our entire family.

Elinor Ginzler: Good luck.

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Mortgage Payoff Success!: Michelle, I've been reading you for years and I had to write and tell you that I am paying off my mortgage TODAY, almost exactly 10 years after purchase!Here is how we did it:(1) We were lucky that we had no previous debt. My parents paid for my education.(2) I was in grad school when we were first married, receiving tuition and a modest stipend. When I graduated and got a job, we didn't increase our standard of living very much. This enabled us to save, me to take a year off without pay when our 3rd child was born and my husband to stay home or work part-time after that.(3) We are lucky in that my current job, which I love, is in a delightful part of the country that is not crazy expensive. We bought a nice house, probably not the most expensive we could have qualified for.(4) We put down 20% and prepaid quite a bit, based on the savings and living-below-income described above.(5) My very frugal dad died at age 70 in 2008, and I inherited a bit more than my annual salary. I miss him, but I learned from his financial prudence growing up, and I'm benefitting from it now as this windfall is enabling us to finish the mortgage debt.Our only other debt is a no-interest car loan with 16 months to go. I plan to save what we were paying.Frugal in New England..

Michelle Singletary: I love debt-free stories.Congrats to you!!!!! debt. I'll read your stories during future video chats. So send them my way via this chat today or to my e-mail at singletarym@washpost.com. Please let me know where you live.

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This is so timely!: My dad is 75 and has heart problems. He is currently living in Central America and has friends and a housekeeper checking in on him. He has basically no money, due to years of mismanagement and irresponsibility. I know there will soon be a day when he can no longer take care of himself. Frankly, I'm having a hard time coming to terms with that. We do not have a close relationship. He was abusive in the past, and has spent most of my adult years being very self-involved and rude. Or stealing my sibling's credit cards and ruining her credit. Or criticizing me and being rude to my fiance. Having him in my household would severely damage my relationship with my fiance, but I can't afford to put him up anywhere.What should I do? He is a member of a Native American tribe that would take care of him on the reservation, but he refuses to move there. And why do I feel like such a terrible person?

Paula Span: I think understanding our limitations is key to taking care of our parents, especially if they're resistant, far away (let alone on another continent!), and impoverished. Mental health agencies who offer therapy on a sliding cost scale might be a good investment, too -- for yourself, because you are suffering from a lot of competing demands with not a lot of obvious solutions. It's a lot to shoulder.

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Paula Span: Good luck to us all (my own dad is 87 and doing okay for now, but every time the phone rings before 8 a.m. I wonder, is this the call?) with these complicated questions.

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Michelle Singletary:

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