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This & That & When not to be Cheap

July 31st, 2010 at 07:05 am

My lazy days of summer have been replaced with crazy busy crazy. Yikes! What a week. 7/31 is a deadline at work, but its just one of those times where the stars aligned and everything went wrong. Too much client drama (divorces, fighting partners - stuff like that).

I told dh at some point, "This is worse than tax season!" But, it was only one week, and I feel like I have dug my way out. Phew. I feel a little more relaxed today.

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**Read an article in the paper about DIY security putting pressure on security firms. I can't find it online, unfortunately. I found the article kind of funny because I grew up in the land of engineers. Security IS DIY. So they were talking about DIY security stuff that we have had for decades. BUT, I do admit that the ability to unlock your front door remotely from the computer, and stuff like that, is a step up in an interesting direction. (The rest is yawn, a lot of this stuff has been around well more than 10 years???)

I also shared this because I notice random regional differences here and there. Anyone around here who cares about their finances does DIY security. I Was surprised how much stock other people (forums) put into those security monitoring firms. I think it comes down to regional differences. & I realize more and more every day, the region I come from is *Weird.* Big Grin

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**Speaking of this newspaper article, I got the newspaper subscription renewal. Dh fights to keep it every year. I pulled up Quicken real quick to see what we paid the last few years, $111, $111, $129. Now they are asking about $150. Ouch! At $111 dh told me it was worth the ads/coupons alone. I am not sure I will be so easily convinced this year. Will see!

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**I just got the notice from my credit union asking me to sign up for overdraft protection for debit card transactions. So they can charge me all sorts of fees when I go over.

Actually, I never use my debit card and I never have overdrafts. So, I will obviously NOT opt in.

But, I have heard some banks are pretty obnoxious about asking you a zillion times. I can't help but feel their measly $3 overdraft fee is not a HUGE moneymaker for them. But, I could be wrong. They are obviously trying to spin it, calling it a "New Courtesy program," to let us overdraft and charge us lots of fees to do so. Big Grin

The overdraft thing is just not anything in my realm of understanding.

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**On a final note, it has been asked in the forums, "What would you never scrimp on, or be cheap about?"

That is a hard question for me to answer. I can be cheap with just about anything, honestly.

But, a bell has gone off in my head a few times. My answer would be LEGAL SERVICES. Realtors and estate lawyers, come to mind.

I know a lot of people don't feel the same way, but a lot of people haven't seen as many people as I have, completely screwed over, losing tens of thousands of dollars going cheap.

We've done a fair amount of house buying and selling in our young lives, and we unintentionally ended up with a M.O. of sniffing out bad realtors on the other side. Particularly, bad selling realtors. When house hunting, this has never been particularly our plan, but this is always where we end up. Good for us, but all I See is money down the drain for the sellers. They'd be better off FSBO. I've said, you'd be better off with no realtor than with a bad one. (But a good one is worth their weight in gold!)

& then there are legal fees.

The biggie that I see a lot at work, is Estate planning.

The wisdom is that if you live in California, and you own a home, then you need a living trust. I think most people are skeptical of this advice. PArticularly frugal people. They don't really understand what a living trust buys them.

As I watch the drama unfold all the time at work though, I KNOW why I need to have my estate affairs in good working order. At the least, it takes a lot of stress off my heirs. At the most, it ensures my intentions are carried out, and not unintended consequences I didn't foresee.

Anyway, I share, because this week a client sold a house. She inherited it when her mother died, about 3 years ago.

Her mother didn't want to spend $1k or so on a will and living trusts. (Actually, in this case, this was not the reason - but I will pretend it is because it is an example I see ALL the time!)

This means that they had to go through probate court, to settle the estate. They pay a percentage of assets to the probate court, for all the legal fees and such, and after 2 years, the title is changed and everything goes where it should. As the sole heir, this was a pretty cut and dried estate settlement.

MEanwhile, she had to maintain this home for about 3 years (property taxes, insurance, etc., etc.) and got to list it in a TERRIBLE market. IT took many months to sell, and the house is worth about half what it was 3 years ago. So, she may have lost $150k in that.

Of course, the lost home value if the least of it. HAving to deal with all of this for THREE years after losing her mother, has been very hard. I have seen this over and over.

For comparison? Clients with living trusts, have been able to settle all of their affairs within a couple of months, and immediately put homes up for sale.

I had a client with a net worth of over $3 million, who passed away this year. Her entire estate was settled and distributed within a few months. Many different properties, etc. The legal fees to do so were a drop in the bucket compared to how much probate would have cost.

I understand this is a regional thing, too. But all I know is I wouldn't do that to my family. I spent about $1500 to make it as easy on them as possible, by getting a proper estate plan. Money WELL spent. I think the motivating factor is not even the money. BUT, doing so will obviously save our heirs well over $1500, in the long run.

2 Responses to “This & That & When not to be Cheap”

  1. Elissa Says:

    I'm glad my mother has a living will. She's a CA resident, and since she's ill, likely to die in 2011 or so, so she's anxious about the estate tax on behalf of my sister & I. She owns a very modest house in L.A. valued on the current market at about $680K (my comparable-size house in PA has a market value of about $125K), so she's very worried about estate tax applying as her total estate at current market values is about 1.3 million. She's thinking about taking her $400K worth of IRAs and converting them all to Roths this year--paying about $150K in tax now and lowering the size of the estate. I tell her that there may be cheaper ways to lower the total taxes that will be paid and she should consult her attorney who set up her living will, but so far she is resisting the consultation, which I believe is false economy. Smart in some ways, dumb in others.

  2. rob62521 Says:

    Although I scrimp on many things, I would concur with you on the realtor. A few years ago mil died and dh and his bro inherited the land the house was on. Instead of hiring a realtor who had an office in the same city, bro wanted to hire a "good ole boy" who lived 30 miles away because he wouldn't charge as much. DH didn't want to cause a ruckus so he went along with it. The first year passed and no offers. None. This property was on a major highway and could have been developed...before the recession hit. The realtor wanted to sign for another year. DH said no, but finally agreed on 6 months. Right before the 6 month extention, he brought a low ball offer. DH wanted to take and quit paying power, water, insurance but bro didn't. We finally sold out to bro and he held on to it trying to sell it by himself. He finally made some money, but real estate was starting to lose value. I think if we had gone with a realtor who deals with these sort of deals and lived in the community, we all would have fared better.

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