Retirement

Reached Financial Independence. Now What?

August 11, 2008 By Jennifer Derrick 12 Comments

I have a friend who has reached financial independence at the relatively young age of thirty-eight. He is completely debt free, having paid off his modest mortgage several years ago and owing nothing else. He has enough money invested to live quite comfortably, if modestly, from the earnings those investments produce. In other words, he no longer has to work to make a living. (If you want to learn more about financial independence and how it can be accomplished, I highly recommend the book, “Your Money Or Your Life” by Joe Dominguez and Vicki Robin.)

I’ve never considered him wealthy; he’s not a trust fund baby or a dot-com millionaire. He didn’t inherit millions. He does make a good income, but it’s not exorbitant for the area in which we live. He reached financial independence the old fashioned way. He works hard. He never buys things he can’t afford. He lives very low to the ground and stashes all the extra money in high-yield investments and savings accounts. Having been friends with this man since college, I can attest that he did nothing more than live significantly below his means for the last twenty years. At times he worked multiple jobs to pay the bills and still have some left over to save.

I can hear some people saying, “Well, that’s fine but he’s deprived himself all these years when he could have been living a better life.” Maybe, maybe not. He could have spent more money, certainly, but would it have bought him the happiness he has being debt free and free from work? I doubt it. He’s always had fun doing things that are cheap or free and I’ve never once heard him complain that he can’t have or do something. He made a decision years ago that he would achieve financial independence and he’s worked toward that goal. Even if most of us wouldn’t choose that path, it’s certainly admirable that he made a financial plan and stuck to it. That in itself is rare these days. And most of us would love to have his freedom, we’re just not willing to sacrifice in the short term to achieve a long term goal. Harsh, but true.

Anyway, the other day I was sitting on the porch with my friend having a beer and he told me he’d just quit his job that day. I wasn’t too surprised because I knew he wasn’t thrilled with the situation and, now that he had reached financial independence, he didn’t need to work there anymore. But I wondered what he would do now. He’s not the sort of person who will be content with a life of leisure for long. He has to be doing something or he goes nuts. So I asked him, “What are you going to do now?”

His answer surprised me. I thought he would say travel the world or work on the house. Maybe work part time. Something easy. Nope, not this guy.

“I’m going to volunteer full time.”

“Volunteer for what?” I asked.

“Whatever groups need me and I feel like I can help at the time.”

Now, this is a man who is in a position to simply donate money to organizations that he wants to help and leave it at that. But instead of the easy way, he’s choosing to actually give his time. And not easy desk job stuff.

I asked him what groups he was considering working for and he named off a few. Habitat for Humanity, some local conservation and environmental groups, some local literacy groups, and, my favorite, teaching some classes on finance at the local community college that serves the underprivileged areas of the city. He’s going to be building houses, cleaning rivers and roadsides, and teaching. This is not a life of leisure.

He said that he’d start off working for several organizations and then see if he wanted to specialize or keep working for whoever needed him. He’s exploring opportunities in other states and countries as well, so he can combine some travel with his volunteer work. He said he’d probably take some part time paid work in his field, as well, to keep him from having to touch his saving too much and to stay involved in his industry. “Just in case,” he added with a shrug.

I sat there drinking my beer and thinking how astounding this man is. I was exhausted just listening to his plans. How many of us (be honest), if we found ourselves in his situation, would choose this harder path? Wouldn’t most of us choose to indulge our travel habit, or work part time and spend the rest of the time in leisure pursuits, chasing golf balls around the green? There’s nothing wrong with that: When you’ve earned the money, you’ve earned the right to do with it what you will. But to choose to work for those less fortunate and, even better, to teach others the skills that earned you your money and your freedom, well, that’s something special.

I asked him why he made that choice. He said that he simply felt it was fair. He had so much energy, time and talent that it wasn’t fair to waste it on the golf course or let it atrophy by doing nothing. He felt like volunteering would give him what he needed to be happy: Contact with other people, a chance to make a difference, a chance to use his talents in the pursuit of something greater than money, exercise, time outside, and a chance to teach others some of what he knew. He said that he recognized that most organizations are short on people who can give a lot of time, are young enough to give physical labor instead of just money, and who are motivated to see something through, rather than just racking up hours to satisfy a community service requirement. He met those criteria and decided to give what he had: time, energy, and ability.

“Besides,” he said, “I’m never sure what these organizations do with my money when I give it to them. At least I know for sure what my labor is doing to help.”

“Wow,” was all I could say.

In the end, my friend gave me a lot to think about. Should I ever find myself in his position (and I’m actively working to get there by my mid/late-40’s), what will I do? Will I also do something that matters or will I waste my time and talents doing trivial things? I hadn’t really thought about it until I spoke to my friend. To be honest, my wishes to this point have been pretty selfish and not very well thought out. I always figured I’d work part time, but I have no idea doing what. I want to travel extensively, I want to pursue a lot of hobbies that get neglected, I want to be more social. I want, I want, I want. There’s nothing wrong with satisfying some of my wants, but now my friend has me thinking: Is that going to be enough? I doubt it.

What my friend opened my eyes to is this: We spend so much of our lives trying to get money, to achieve financial comfort or independence, and for what, exactly? So we can buy more stuff? So we can sit around all day and do nothing? That’s fine if it satisfies you, but I doubt it will be fulfilling for long. Assuming you remain in good health, you’ll probably want more. It’s a question worth considering. If you’re ever fortunate enough to reach the point where work is optional, what will you do? Will you keep working in your field, or will you try something new? Will you work part time or full time? Will you give something back?

I know I will spend the next few years looking for volunteer and part time opportunities that combine my interests and hobbies with the chance to do something meaningful. Volunteering can be a great way to remain active and involved in life, to combine your interests and hobbies with the chance to give something back, and to acknowledge your gratitude for your position in life. Or, as my friend says, it’s simply fair.

Image courtesy of Brandon Cirillo

Don’t be Mr. Cheap

June 2, 2008 By S. Shugars 20 Comments

Dear Mr. Cheap,

You know exactly who you are so I don’t feel a need to name you. While I know that you think that you are being sly and saving yourself a lot of money, let me say that your true nature shows through loud and clear. This would not be an issue except that you call yourself “frugal” when in fact all you are is “cheap.” In claiming to be something that you are not, you do a great disservice to all of us that are truly frugal. You see, many people have the impression that cheap and frugal are the same thing because of people like you.

Let’s lay it all out from the start. First and foremost, you get on everyone’s nerves to no end because cheap people are annoying. Me saying that you are “annoying” is being quite diplomatic about it and I’m sure that many others would use a few more choice words that can’t be printed in this article. No, they probably don’t say it directly to your face because they actually have some manners, but I assure you that they say plenty about how they feel when you aren’t around.

As an example, when we go out to eat as a group, none of us cares whether we split the bill by the amount each person bought or divide the bill equally among us. What we find extremely annoying is having you immediately grab the bill each time when it comes and deciding which way we will pay that day depending on what is less costly to you. Furthermore, if someone leaves an extra generous tip in their share, that doesn’t mean that just because you have chosen to be in charge that it is acceptable to only leave a 10% tip and pocket the difference.

I wish that I could say it stopped there, but unfortunately your cheapness shines through in many more places. While you complain that you are overweight, this is a direct result of you being cheap. There are many people in the office that are kind enough to bring in cookies, pastries and candy from time to time to share with everyone. This is by no means expected, although the kindness is always appreciated so it’s not an issue that you never do this for others. However, this does not mean that once you have calculated that everyone has had one of these snacks that the rest are yours. In fact, I am probably being generous in assuming that you calculate that far. While it is obvious that you don’t realize it, people don’t bring the snacks so you can replace your meal with them on those days.

In the same vein, when the office manager places free things on the “free for anyone” table, this doesn’t mean that everything given away is exclusively yours. There are others who would enjoy taking home a freebie from time to time, but since you pass by the table every hour on the hour, nobody else has a chance. This alienates you among your office workers and it is another reason why you may feel that nobody here particularly likes you. Another little hint, it could also be a prime factor in why you don’t have any friends which you constantly like to complain about.

But by far the most annoying habit that shows your cheapness through and through is your belief that in the name of saving money that common rules don’t apply to you. Just because the office provides free toilet paper for the bathrooms doesn’t mean that you are free to take it. Not only is it theft (I’m sure that your friends and family will be exceedingly proud of you when your 15 minutes of fame comes to you upon your photo appearing in the local newspaper for being arrested for stealing toilet paper to try and save a buck), it’s a real pain when I’ve finished going to the bathroom to find there is no toilet paper in the stall — or any of the other stalls.

I would probably be willing to forgive these transgressions if I knew you weren’t making a lot of money and money was tight, but the fact that you make more than most of us (and definitely more than I do) only perpetuates our hostility toward you even more.

Being cheap is not a badge of honor that you seem to think it is. What is so pathetic is that you believe that being cheap is saving you money, but in reality it’s just making you look cheap. There is a difference between getting the lowest price and getting the best value for the price. Cheap people always go for the lowest price while frugal people will always look for the best value. This is the fundamental difference that you have failed to master which can be seen in the way you decorate your office and actions you take.

Stop pretending that you are wise with money and nobody but you understands what it takes to save a buck these days. We do and we know a fraud when we see one.

The rest of the office

Image courtesy of Ghostboy

I Want the Toys and I Want Them Now

December 12, 2007 By Cortni Marrazzo 3 Comments

“I want the toys and I want them now.” It sounds like something a toddler would say, doesn’t it? Yet this is what I hear nowadays from many people in their 20s and 30s indirectly through their spending habits. “I want toys and conveniences and I don’t want to have to wait for them.”

When I was in high school I used to think that once I got a full time job I would be able to buy whatever I wanted and play with all my stuff on the weekend. But then I got older and realized that my financial future was more important than toys. Unfortunately, not everyone has learned this. I’m amazed at how many people will whittle away their money on trivial things with no regard to saving and investing for their future. The future may be out there a little ways, but it will be here before you know it and many people will be very unprepared. Let’s start with a few of the things that younger people want to splurge on instead of saving and investing more.

A Big House: Who really needs a 2,500 sq ft house for two people? Or even 2 people and a baby? Granted I wanted a big house when my husband and I were house hunting, but I quickly realized that by buying a bigger house than we needed we would be throwing more money towards mortgage payments, heating/cooling bills, furniture, taxes, etc. We won’t need a significantly bigger house until we have multiple kids and they need somewhere to run around, but for now we’ll save the extra money and put it towards our future.

The same goes for houses with all the extras like 6 car garages, hot tubs, pools, monster walk-in closets, 17 bathrooms, and whatever else people can add to houses in order to charge more for them.

Cars: I would love a brand new car. The new car smell, all the new features, and all the extra cost. There are many people who don’t seem to care that their new car will depreciate about 20% as soon as they drive it off the lot, thus costing them thousands more than if they had bought a slightly used newer car. And there are those who decide they need a gas guzzler SUV that costs them more money in price, gas, tires, etc. Maybe if you have 3 kids or more you might need an SUV, but even a station wagon could fit almost as much (granted they don’t look as nice I admit). What’s sad is that many families just starting off with only one child think they need an SUV – and all the extra expenses that come with it.

Clothes: Young people tend to care about fashion more than older people, so younger people tend to spend more on their clothes to get the right brand and/or the right look. There is nothing wrong with being fashionable, but if you are dressed to impress but have nothing to invest (hey that rhymed) then you need to re-evaluate your priorities.

Designer Purses and Shoes: This is similar to the clothing issue above. Some women have to have the Coach purse or the Dooney and Burke one because “they are so cute.” And don’t forget $70 pairs of heels.

Eating Out: Younger people, especially single young people working full time, tend to eat out a lot. They tend to figure that they don’t have a family to cook for and they are making good money, so why not? Without realizing it, many young people spend more than $200-300 a month just on eating out.

Coffee: Similar to eating out above, the coffee craze is deep, especially where I live in the Northwest. Starbucks isn’t just a good cup of coffee any more, it’s status symbol. Many people like to meet others at Starbucks or stop there at the beginning of an outing and who can go without getting something? And arriving at an event with a hot Starbucks drink in your hand during cold weather or an iced latte in the hot weather is almost like a designer accessory these days.

Hair & Nails: My, how women, especially young women, like to get their hair and nails done. A haircut can cost anywhere from $20-$50 while a foil can cost upwards of $50-$100+. Not to mention the upkeep on highlights since you can’t let your grow-out show. Even at a conservative $50 a month every other month, you’re still looking at $600 a year. Plus there is the cost of fake nails and manicures costing up to $40 every 2 weeks!

Boats/Motorcycles/Other Big Toys: These are the ones that can get really expensive. Young people today want vacation homes, RVs, boats, motorcyles, snowmobiles, whatever can help them have fun when they are not working. Since these are rather expensive items, who wants to wait to save up for them? “Just make monthly payments” is how the thinking goes.

Stuff: This incorporates anything else that does not fit into the above categories. Many young people just want to have stuff. Big TVs, nice furniture, ipods, you name it. “The more stuff the better” tends to be the current mantra.

So what if people want to spend their hard earned money on stuff they enjoy? Is that so bad? Well, it can be if it’s not controlled. Especially for young people who are in the early stages of their financial journey, this kind of spending can ruin their financial future. How?

It Creates Debt: Most people can’t afford all the toys and conveniences they want at the time they want it, but they do have credit available to them. The more money young undisciplined people make, the more they tend to get into debt. I saw a couple on tv the other day that made $250,000 year, yet were $300,000 in credit card debt. How does that happen? You’d think they’d be sitting pretty making $250,000 a year, yet they are majorly in debt with minimum credit card payments reaching above $10,000 a month. Debt doesn’t just lower your credit score, but it keeps you in bondage as your continue paying for things that you probably aren’t even enjoying as much anymore. It puts you behind in your financial journey.

It Leaves Them Vulnerable for Emergencies: When young people have very large monthly credit card payments, or even if they can afford to pay for these toys outright, there’s a good chance they are spending most of what they are making, leaving little or no room for saving for an emergency fund. If they were to lose their job, it wouldn’t matter how many toys they have – they could still lose their house or go into bankruptcy and ruin their credit. It’s so important to have an emergency fund in place for things that could go wrong (and probably will at some point), yet I see so many people spending this money away, never giving it a chance to see their savings account. Hey, but at least they look good, right?

It Causes Them to Lose Valuable Compounding Interest: This is one of my biggest pet peeves about young people spending so much so early in their lifetime – they are losing valuable compounding interest on potential investments. Saving a few dollars today by skipping a new toy or convenience could be worth hundreds of thousands in the future when you retire. And the best part is that you will probably hardly miss the money today, but you will greatly appreciate it in the future. The advantage that young people have is more time until retirement, meaning that their saved dollars now will go farther than if they were older.

It Prevents Patience and Discipline Building: The above listed things are great to have and I agree that life should be enjoyed, but sometimes you have to wait for things and in turn you end up enjoying them a lot more because you are more mature since you had to wait. If you don’t go through the process of waiting and saving until you are on good financial ground, then you lack the character and maturity you would have built in the meantime. People who wait to buy things until the time is right tend to be less selfish and controlling about what they own because they realize life isn’t about all that stuff, but it’s about being smart and making the right decisions to take you to your desired future.

Image courtesy of David Zellaby

Reverse Mortgages – Only Consider as a Last resort

December 4, 2007 By Jeffrey Strain 41 Comments

By David John Marotta and Beth Anderson Nedelisky

Before reverse mortgages, pensioners wishing to tap into home equity were presented with two options: either sell the house or get a home equity loan. But since their humble beginnings in the late ’80s, reverse mortgages provided seniors with an additional tool for accessing home equity. The going offer: get cash now, make no monthly payments, and keep your home sweet home. For retirees struggling to make ends meet, a reverse mortgage can provide a much-needed way forward.

A reverse mortgage should be considered only as a last resort. With early retirement planning, such ‘last resort’ options can be easily avoided. Still, reverse mortgages are a far cry from the blinking neon signs offering fast cash in exchange for a car title. At least with a reverse mortgage the borrower gets to keep the title and avoid the ugly monthly payments.

To understand the way a reverse mortgage works, let’s look at its opposite: the traditional home mortgage. Both are mortgages. But with a standard home loan — also known as a forward mortgage — over time the homeowner’s equity rises and the debt falls. A reverse mortgage does just the opposite. With a reverse mortgage, the debt rises and the homeowner’s equity falls.

Unlike a home equity loan or a home equity line of credit which immediately begin monthly collections on the loan, no payment is due on a reverse mortgage until the borrower sells or moves. Borrowers are given a guarantee of lifetime occupancy of the home. But, once the borrower no longer resides at home, the loan must be repaid. Typically, repayment is made from the proceeds from the sale of the home. The good news here is a reverse mortgage will not hold the borrower personally liable nor can they owe more than the market value of the home.

Minimum qualifications require borrowers to be age 62 or over and must either own their home free and clear or have little remaining debt against the house. But, meeting the initial requirements won’t mean the loan is a done deal. Borrowers should be prepared for an extensive interview and educational component before they can sign on the doted line.

Reverse mortgages are becoming ever more popular, in part, due to the customizable distribution options. Seniors may choose to receive one lump sum or monthly advances — either for a limited time or spread out over the course of their lifetime — for as long as they reside in the home. Others may choose to open a line of credit or pick a combination of payment options to suit their cash flow needs.

But, the convenience offered by a reverse mortgage comes with a price tag. Although loan fees can be financed as part of the loan, origination fees can easily cost borrowers in the neighborhood of $12,000- $18,000. Add to that the principal loan amount, interest, and maintenance fees, and the total cost will likely account for a sizeable portion of the home’s total value, if not all of it.

In addition to the costs of maintaining the home, borrowers are also expected to continue home owner’s insurance and property tax payment in addition to paying for routine maintenance on the home.

Currently, reverse mortgages come in three flavors: single-purpose, proprietary, and federally-insured loans. Single-purpose reverse mortgages are very low-cost. But, unlike the other two, they can only be used for one purpose, such as paying property taxes or making house repairs. Proprietary loans are offered through private banks. Although they are more expensive, they lend larger sums. Of the three loans types, the most common is the federally insured Home Equity Conversion Mortgage (HECM).

The actual amount a homeowner can hope to borrow using a reverse mortgage will be significantly less than the market value of the home itself. Although a HECM offers lower interest rates than private lenders, borrowers are subject to regional 203b loan caps ranging from $200,160 to $362,790. Ultimately, the total loan amount will be determined by the value of the home or the regional loan cap (whichever is less), the borrower’s age and the going interest rate.

So how do you know if a reverse mortgage is right for you? AARP advises prospective borrowers to consider three questions: How much would I get?, How much would I pay? and How much would be left at the end of the loan?

Although the lender almost always wins, a reverse mortgage does offer a Band-Aid solution to pending cash flow problems. Some seniors take the loan to eliminate remaining forward mortgage payments still owed on their home. The majority, though, choose a reverse mortgage to pay medical bills. In either case, a reverse mortgage allows the homeowner to live at home while shoring up immediate, and even long-term, cash flow shortfalls.

There are some cases in which you should never take a reverse mortgage. Avoid a reverse mortgage if you are close to the minimum age requirement. Assuming a reverse mortgage early on will provide you little income and will ensure you will have no equity left in your home at the end of the road. If you currently have little equity in your home, a reverse mortgage is also not worth the cost of the loan origination fees. The fees alone will likely eat up what little equity you have. Finally, avoid a reverse mortgage if you expect to move in the near future. The hefty costs of getting the reverse loan will be wasted and the loan will come due as soon as you move out of the home.

Before going forward with your reverse mortgage, consider your options carefully. There are many creative ways of managing cash flow needs without taking a loan against the value of your home.

As always, begin by looking at your budget and cutting unnecessary expenses. Generating additional income may be as simple as renting out a portion of your home. Or, you may consider moving to an area with a lower cost of living. Sell high and buy low. Then, invest the profit from the sale of your home. By doing so, you may be able to create a permanent cash stream without taking on any debt at all!

Finally, investigate community assistance programs. You may find that you qualify for additional social security benefits or for property tax relief.

More information about reverse mortgages can be found by visiting the AARP website at AARP. Of course, the best way to avoid a reverse mortgage is by planning early for retirement. You can also find out more information about traditional mortgages at mortgage-guides.com for those interested.

David John Marotta and Beth Anderson Nedelisky work at Marotta Asset Management, Inc. of Charlottesville which provides fee-only financial planning and asset management.

Image courtesy of *Susie*

Medicare Basics: What You Need to Know

November 27, 2007 By Jeffrey Strain Leave a Comment

By David John Marotta and Beth Anderson Nedelisky

Many seniors look forward to saving on medical insurance costs by enrolling in Medicare at age sixty-five. However, navigating the Medicare system is not for the faint of heart. Medicare is an alphabet soup of plan choices. Currently Medicare is organized as parts A through D.

Medicare Part A provides hospital insurance to seniors. For the majority of seniors who have paid into the plan, enrolling in Part A comes at no cost. Part A covers hospital stays, home health care services, and hospice care. However, if you just need a check up, you’ll need to resort to Part B or Part C to help with those costs.

Part B helps to cover doctor’s services, some outpatient care, and routine preventative services. However, unlike Part A, you’ll have to pay a monthly premium to buy the coverage. The costs of Part B are dependent upon your yearly income. In 2008, seniors will pay $96.40 per month if they were married filing joint and reported $164,000 or less in income. Monthly premiums climb as high as $238.40 if you report lots of income in retirement.

In some cases you will have to pay the $135 deductible plus 20 percent of the remaining costs.
However, unlike Part A, Part B may require you to first pay the $135 deductible before Medicare will pick up the tab. For other services, Medicare will cover 80 percent of your medical costs, requiring you to pay the other 20 percent. Still in other cases, you’ll wind up paying both the $135 deductible plus 20 percent of the remaining costs.

Don’t try and save a few bucks by skipping Part B coverage. If you fail to enroll in Part B at age 65, you’ll be slapped with a 10% penalty for each year you delayed enrollment.

Your Part B insurance will provide you with some free services such as a flu shot, diabetes and cancer screenings, and ‘Welcome to Medicare’ physical exam. If you take advantage of these services you may avoid more costly and more dangerous conditions.

Most seniors sign up for the Original Medicare plan, a combination of Parts A (hospital insurance) and B (medical insurance). However, if Uncle Sam’s doesn’t provide you with sufficient coverage, you may be better served by a private insurance company offering a Medicare-approved insurance plan.

Part C, also known as Medicare Advantage Plan, includes coverage for parts A and B through private insurance companies. The plans are usually offered in the form of a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO). Your premiums, co-payments, coinsurance and deductibles will vary based on your specific plan benefits. And, although offered by private companies, Medicare Advantage Plans are approved by Medicare.

Choosing a Part C plan may mean you already receive prescription drug benefits. If your prescription drug coverage is deemed “creditable” by Medicare, you won’t have to pay an additional premium for the Medicare prescription drug plan, also known as Part D.

Part D, the Medicare Prescription Drug Plan, is the newest of all the Medicare programs. However, Medicare does not provide the insurance directly. Instead, each state has contracted with insurance providers to offer the drug coverage. If you are a senior, you must decide if you should sign up, and then which plan you should purchase.

Most states offer at least 40 different drug plans. Premiums average $28 per month, depending on the level of coverage and the types of drugs covered by the plan. If you are enrolling in the Original Medicare or don’t already have “creditable coverage”, you’ll need enroll in Part D, or face a penalty. If you fail to enroll at age 65 but decide to enroll at a later date, you’ll pay a 1% penalty for each month you delayed enrollment.

The costs of Part D vary, and if you don’t think you will need the coverage you should find the lowest cost Part D to avoid the penalties. That way, if you need the coverage later, you won’t be stuck with premiums inflated by penalties. You can always change providers at a later time, if you decide different coverage suits your situation better.

If your income and assets are low enough, you may be able to save money on your Medicare costs. This assistance is done through your State Medical Assistance and is often called Medicaid. Call even if you aren’t sure if you qualify. Call 1-800-MEDICARE to get the telephone number for other states.

The initial enrollment period begins three months before your sixty-fifth birthday and ends three months after your birthday. Be sure you enroll to avoid unnecessary penalties.

You can get more information by visiting Medicare or by calling 1-800-MEDICARE.

David John Marotta and Beth Anderson Nedelisky work at Marotta Asset Management, Inc. of Charlottesville which provides fee-only financial planning and asset management.

Image courtesy of happysnappr

The Final Leg of the Journey

November 14, 2007 By Meredith H. Kaiser 2 Comments

Yesterday, as I washed two coffee mugs that my aunt gave me, I said unexpectedly to myself, “These will be among my final things.” An image flashed before me. I saw myself, old and shrunken, seated at a little table surrounded by the few belongings worth keeping through the years; a lifetime of journals, my favorite books, a handful of photos, a watch my husband gave me and these two mugs, one for him, and one for me.

You see, these mugs have been with me since I was 10 years old, given to me because they have horses running around them on a ribbon of ivory backdrop with brown scribbles of grass beneath their delicately painted hooves. They maintain hot chocolate at the perfect temperature until the last sip and they rest perfectly in the palm of my hand, providing warmth just like my aunt’s long hugs.

Look around your house, your office, your garage, your storage unit and ask yourself, “Which of these items is worthy of being among my final things?” How much of the stuff that you spend time maintaining, storing, moving around, dusting, or repairing is worth carrying along to the final leg of your journey?

If you have ever helped an older relative navigate their final years, then you know the number of things that get thrown away in the down-size moves that lead to the final destination; a retirement home, or a couple of rooms in a relative’s home. It’s sad to see a lifetime of carefully collected items placed on the corner for garbage pick up or dropped off at a local thrift shop. Overwhelmed caretakers usually don’t have the time or energy to disperse the elderly person’s belongings in a way that that person would have wanted, much less to sell them for a decent price. Here are a few steps to help manage your belongings and to lighten your load.

Write a Will: Record your wishes in a will so that your cherished belongings end up with those who you feel will most appreciate them. Be specific and include photographs of the items to eliminate confusion and/or manipulation of the facts. In the few estate settlements I’ve observed, I was surprised and disgusted by the predators that descended like vultures landing on a fresh carcass. Protect your family from themselves by writing a will.

Give Away Items Now: You don’t have to wait until you are old and/or ill to disperse your belongings. If you have your great grandmother’s full set of china in your attic and one day want your niece to have it, what’s wrong with now? Invite her over and show it to her. Tell her all of the stories you know about it and those who had it before you. Make a day of packing the dishes for the move and plan to share a meal on them once a year to pay tribute to the memories they hold and to make new ones.

Sell Them: If you collect items as an investment, maintain the collection so that it can be liquidated easily, not only by you, but by whoever may be left to do so in the event of your death or disability. Keep meticulous records of purchases and appraised values. Also, develop a relationship with a dealer who you trust and who would help your family liquidate the collection if the need arose. The last thing a grieving family needs is the stress of educating themselves about rare coins so that they don’t get fleeced when they try to sell them in order to pay hospital bills.

No matter how full, a life that spans decades will come down to a handful of precious memories distilled in a photo, a pocket watch, a doll. Look around and decide what will make the cut. Then ask yourself, “Do I really need the rest of the stuff that I’m dragging along?”

Image courtesy of David Zellaby