Can we make daughter move?
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She does not plan on going to college but wants to go to cosmetology school. She works part time so she will have no insurance, and also no car and no cell phone. She has $3,000 in the bank.
I really want her to go with us but I understand why she doesn’t want to. I have tried to tell her that if she would go with us and get her cosmetology certification, that if the relationship was meant to be, they could get together next year. What should we do? We don’t want to force her. — Reader, via e-mail
DEAR READER: Legally, your daughter is an adult, mentally one is forced to wonder. What type of job will she have? Where will she live and how will she pay for it? With no car, how will she get to work? She’s going to have to answer all of these questions. At that age, these things seem irrelevant but soon she may learn they aren’t. The reality is you can’t force her to do anything. If she chooses to stay in Michigan and squanders her $3,000, that is her right. It is not irreversible, however. I’m sure as a parent you will want to make sure that she is on solid ground.
DEAR BRUCE: I’m 30 years old with a household income of $80,000 a year. Currently, we owe $18,000 on my wife’s student loan at 4.375 percent with payments of $221 for another seven years. My student loan is $14,000 at 5.5 percent with payments of $434 for three more years. My car payment is $300 for another 34 months at 3.99 percent. I have $4,300 in a value trust and $1,700 in stock. We also invest $1,000 a month in a 401(k) and Roth IRA. Would you sell the investments and put the retirement investments on temporary hold to get out of debt? The way I calculated it we would be out of debt in 24 months. — Reader, via e-mail
DEAR READER: The last thing I would do is put your retirement investments on any kind of hold. You are 30 years old, which means you have 35 to 40 years to take advantage of the tax deferment that retirement accounts offer. Every dollar you put in will work in that tax-deferred environment for 35 or more years. To give that up just to be “out of debt” earlier, in my opinion, would be a major mistake. First of all, think in terms of compensating balances; you’ll find you would not really be out of debt any quicker. Since you are talking about investing the money, what difference does it make if you owe a dollar to company A and have a dollar invested in company B? You are still no richer or poorer. You young folks are doing very well and I would continue your focus.
DEAR BRUCE: I have been looking at long-term nursing home insurance, which is fairly expensive — about $2,500 a year for the two of us, for 80 percent coverage, and for a maximum of six years. I am 62 and my wife is 61. Based on the life span of our parents, I expect that my wife will live 10 years longer than me. Since the kids don’t seem to be interested in helping with the premiums, why should I put out the cash and deny ourselves the use of that money during our retirement years? I am considering on taking it out on only one of us — whichever one is most likely to wind up in a nursing home — to give the surviving spouse some protection. — Reader, via e-mail
DEAR READER: Statistically, many of us will eventually require this type of care. The premium, while seemingly steep, is relatively modest given the fact that nursing care can average over $60,000 a year.
Under the parameters you’ve listed, 80 percent of that $60,000 a year nursing care bill, multiplied by the maximum of six years’ worth of coverage, would be something on the order of $288,000 — if you were to collect a maximum on one person. But relatively few people as young as you both take out long-term care insurance.