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Sunday, June 28, 2020

The Last of the Big Time Spenders

My mother lived on a single middle class salary for most her life. But I would never have known it. As a child, she was a single parent raising me on a teacher's wage and a small child support check of around $400 per month. Her parents managed to save. Her mother kept the home. Her stepdad was a traveling jewelry salesman. They saved enough to retire in a 55 and older community and eventually move into an assisted living.
For the majority of her life, my mom's credit cards were maxed out and I had every toy I ever wanted and more. I went on trips to Broadway, museums. I ate at fancy restaurants. Anything a kid could want. There were subtle signs of financial struggle. My grandma had encouraged me to start a savings account when I was around 5. Over a few years I had built an account with a few hundred dollars in it. One day it was gone. My mom needed the money. She would tell me how teachers got paid for 10 months and she would need a loan to get through the summer. But I always had fantastic clothing and any gift I wanted. When dinner guests came, my mom bought far more than anyone could eat and showered them with presents. If she went out to a restaurant she had the tab of whoever she was with.
I know she felt the stress of her debt. She got by partially because she got bailouts. My grandparents bailed her out of debt twice. I remember loud arguments and forcing her to cut he credit cards. She benefitted again from the housing boom in the mid 80s. She sold her tiny ranch at a profit, paid off our debt and had enough to purchase a larger town home. She purchased all sorts of designer furniture. Somewhere in between there was a second mortgage and borrowing against her pension. She also received another bailout. This time from a wealthy uncle. By the time I graduated college she was in debt again. But again was able to sell her home for twice what she paid for it. She used the money towards another home. Then my mom ran into the start of a series of bad luck. Within months of moving into the new home the water heater went. The air conditioning needed to be replaced within a year. Of course she got a top of the line system. Bought new designer furniture. She received another major bailout when my uncle passed. He left her 100k. She wisely paid off her credit cards and invested the rest into equity in her home.
Then she got cancer. Only she didn't know it. A horrible doctor ordered the wrong tests and allowed her cancer to grow for months. More on that later. But as always when I needed her, she was there. I got married she through my wife a shower she couldn't afford at a country club. She somehow came up with 10k to give us towards the wedding. At every holiday sbe would buy people 4-5 more gifts than were necessary and made many in the room uncomfortable. My grandma would refer to her as the last of the big time spenders and beg me not to be like her.
Then my mom found out she had cancer. She also learned about the malpractice. It's then she made the smartest financial decision of her life. She chose to pursue a lawsuit against the doctor. The first few lawyers wouldn't take the case. Although he didn't diagnose it properly, the feeling was the doctor didn't cause it. She never accepted that response. She found a lawyer that ran her medical information by his doctors and decided to take the case. She was awarded a large settlement.

She decided off the bat to put some money aside. My third child wasn't born yet.. She got the first two large 529 plans. Then she bought a car, then a house, including lots of designer furniture. She bought my older daughter a designer bed. Then came crazy numbers of gifts each visit. But my mom was actually living within her means this time. She was retired with a pension. With no mortgage or car payment she didn't burn too big a hole in her pocket. She did spend money search for clinical trials and the best care she could find. She did remodel the house and pay for landscaping. But when she passed a few days ago, she still had her home paid and clear, and a sizable account. I will inherit all of it. I would trade it all for more time with her. For all her quirks, she was one of the kindest, strongest and loving people you'd ever meet. She made her upstairs a fantasy land for my children. And now I have a sizable inheritance, but all I really want is my mom back.

I see this money as a potential legacy for my girls, literally paid for in blood. I would hate to see it squandered by me or them. But the fact remains that 70 percent of wealthy families lose it within two generations. Ninety percent lose their wealth in three generations. I've made talking about savings and spending a priority for my girls. I will invest conservatively and continue to build wealth. It may surprise some, but the majority of this money will not be used to turbocharge Dividend Seedling. I will continue to invest a portion of my own money in individual equities. But the majority of my moms money will go into index funds through Vanguard. I will also make a large mortgage payment and bring my 3rd child's 529 in line with the other two. My mother may have been a big time spender, but nothing was bigger than her heart. She will be missed dearly.

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