|
 |
|
Dream or Nightmare? Money Can Be Both
From the editors at WIFE |
Tamara had dreamed that one day
she’d have wealth.
One day she did, but it came as a nightmare rather than a dream, when a fiery plane crash
killed her husband and two of her four children.
For five long years she battled the airline at fault for the crash. Often she came close
to abandoning her lawsuit: she had lost so much and the grief was overwhelming. But she
persevered, cleaning houses to support her family during the tough times after the
accident.
Finally, in 1993 she received a settlement of 2.2 million dollars, a substantial sum of
money, but little consolation for what she had been through. With her sons in their early
twenties and married with families of their own, Tamara, then 48, could live comfortably
if she managed her money carefully.
The CPA who structured the settlement suggested she come to me to help her invest. Tamara
especially wanted to be debt-free, and once we had paid off her home mortgage and huge
credit card bills, Tamara believed she could live comfortably on $70,000 a year.
That was twice what she had lived on before, and she was pleased that she would have a
comfortable lifestyle and secure future. I was pleased as well. Seventy thousand dollars a
year was only a 3-1/2 % return on the $2 million principal she had available to invest, so
we could reinvest some returns to hedge against future inflation.
We selected quality bonds for income and equities for growth within a variable annuity for
tax deferral. Each month we transferred $5,800 to Tamara’s checking account, from
which she paid her bills. With the plan in place, and the investments positioned for
current income and long-term growth, I thought the rest would be easy.
But within a year, things were not going as planned. Her investments had performed better
than expected, but Tamara had requested additional transfers as her sons needed money.
Down payments for new homes, furniture, cars, and private school tuition all came from
mom's money. Emotions surrounding money are powerful, and with money Tamara tried to
replace for her sons that which was irreplaceable. In all, Tamara had spent over $300,000
to support her sons’ new lifestyles.
Soon the spending problem became worse. Her oldest son stopped working, and he wasn't
paying his mortgage or taxes. With foreclosure looming, Tamara took over those payments
too! This had to stop. I had fulfilled my responsibility to make good investment
decisions for Tamara, but she needed more from me. Tamara needed someone to help her say
"no."
MORE » |
