2013 New Year’s Resolution: Get Our Crap Together

It’s already March, and I’ve yet to make a New Year’s resolution. Then along comes this NY Times article about a mother of two who’s young, healthy husband was killed while simply riding his bike:

In the many months of suffering after Mr. Hernando’s death in July 2009, she beat herself up while spending dozens of hours excavating their financial life and slowly reassembling it. But then, she resolved to keep anyone she knew from ever again being in the same situation. The result is a Web site named for the scolding, profane exhortation that her inner voice shouted during those dark days in the intensive care unit. She might have called it Getyouracttogether.org, but she changed just one word.

The site offers some basic financial advice, gives away free templates for a master checklist and provides starter forms to draft a will, living will and power of attorney. There’s also a guide to starting a list of all of the accounts in your life that someone might need to access and shut down in your absence.

Let’s be direct; The site is GetYourShitTogether.org. The site is okay, but I felt the story itself was more powerful.

After his death, this much was clear: The family with the six-figure income and the four-bedroom house that they had bought in the Mount Baker neighborhood one year before had a will with no signature, little emergency savings and an unknown number of accounts with passwords that had been in Mr. Hernando’s head.

I haven’t blogged about this as it brings up bad memories, but a few years ago a family situation resulted in us each hurriedly bought $1,000,000 of term life insurance. We didn’t comparison shop, I just walked into my State Farm agent’s office and asked to get the insurance as soon as possible. State Farm actually has some of the highest financial strength ratings available (AA S&P, A++ AM Best). The final rates we got were probably somewhat higher than I could have gotten with slightly lower-rated company, but I don’t regret the decision.

Having life insurance along with hefty savings gave me adequate peace of mind for a while, but now with a child I worry about the future differently. We have a lot left to do. We contacted a lawyer friend who specializes in estate planning and trusts to help us with our first will. We talked to family members about child custody if something should happen to both of us. We’re looking into long-term disability insurance beyond what is provided at work. I already track most of our passwords using software (1Password), but after reading this article I’ve been filling in the gaps in the database and quizzing my wife every day to make sure she knows the master password.

We are one of those households where one person takes on all the financial duties. I pay the bills, track our monthly budget, and manage our retirement investments. I need to teach her the essentials and lay out a simple plan for managing things if I’m not around one day. I don’t worry about the spending as she is a frugal and smart person, but I have nightmares of some high-cost, low-quality financial salesperson mismanaging her money. Lots of smart people end up trusting the wrong person. I thank Mrs. Reynolds for helping me make my 2013 resolution.

Comments

  1. Great post. We’ve said we need to do this after our daughter came along – now it’s a year later and we still haven’t. I also am the keeper of the financial information and try to update my wife every few months. I store account information in Quicken and use KeePass 2 (free) as a password generator/storage vault.

    Thanks for the excellent reminder. But also remember to put your child’s guardian as an insurance beneficiary with a percentage you deem necessary. They will be raising your kids and you don’t want to put undue hardship on them during that time.

  2. “I need to teach her the essentials and lay out a simple plan for managing things if I’m not around one day.”

    Let me know when you figure out how to do that. Every time I try to do this with my girlfriend she becomes overwhelmed.

  3. My wife takes zero (no, negative) interest in our financial affairs. She actually doesn’t even know her ATM PIN. I do have life insurance, but need to get more. We have two small children at home and just like you we need to get this shit together. We need a will and maybe a trust (I don’t know). When you go through your estate planning please post on whether and why and how you decided to form a trust. Some talking heads seem to insist you need one but I just don’t know the ins and outs. Thanks.

  4. Alexandria says:

    VERY important. In my line of work I have seen this over and over. As I am an accountant and am always dealing with the aftermath of lack of planning and cheap/bad wills (This is an area you get what you pay for – and adds stress and problems when you are gone – which is the last thing anyone needs while grieving). In addition, I know many many people who lost a spouse, and a couple different families who are guardians to someone else’s children (whose parents passed). I always say, “It just doesn’t seem THAT rare to me.” I am continually appalled by Stay-home-mom friends who have like teenagers and have never done a will and who don’t have *any* life insurance. *shudders* It is so simple to take a few precautions so you don’t end up on the streets if something happens to your spouse.

    In your shoes, I am not sure I would bother with the State Farm life insurance or disability insurance. You will at least cancel/decrease these when you are financially independent? When your mortgage is paid off ? You seem so close. My experience was State Farm was crazy insane expensive to alternatives, and you probably only need to insure a very short time period. If you are buying a 30-year-term AND need it for 30 years, then the high rating would come in more handy, as you would be more concerned about the longevity of the company. Anyway, all this to say, I think this post is awesome, but don’t over-buy insurance – you are in a unique situation and probably don’t have a lot to insure for the long run. I think $1 million/each is far more life insurance than you probably need.

  5. My wife and I had a will and power of attorney created shortly after we had our first child. We haven’t updated it since we had our second child, so we need to do that. I use a password tool similar to 1Password for my password management. But I can definitely do a better job of sharing the information with my wife.

    A few checklists and my master password would go a long way toward easing my mind. I also have a lot of life insurance. I’m confident my wife and family would be well cared and provided for, but I can do some things to make their job easier, should I predecease my wife.

  6. There is already a great product available for this type of situation.

    Family Love Letter

    http://familyloveletter.com/

  7. I have the same fear and you poured out my thoughts. Its always a uphill task atleast for me to talk about to my better half. I think this is a great goal to have this year.

  8. It is sad when a tragedy is what gets us moving to do the things we should have been doing all along. My wife begged me to get our will put together. it wasn’t until my dad passed away suddenly that I finally got it done. We ended up using the lawyer my Dad used to get his affairs in order. I’ve slept better ever since. I also have a million passwords attached to everything in my life. I have a central list on my computer. I need to tell her exactly where it is. Thanks for the post. I am motivated to get things a little straighter now too.

  9. I have tried year after year to show and tell my wife our financial status, net worth updates and what to do if something happens to me. She tries to act a little interested, but really isn’t!

    Now I have a special flash drive which she is to load up if I something happened to me. It has the following: a goodbye letter for her and the kids, a instructional letter with what to do with all of our current accounts and life insurance money, a letter for a financial planner we know, and a detailed list of each account and password. I update all of this yearly or more often.

    We update our wills every few years. You can make your own will using online tools and then have it notarized at your local bank, etc. You don’t really need a lawyer and I think that is what stops most people from having an updated will.

    If you are the spouse primarly in charge of the household finances, there’s no excuse in my opinion to leave your grieving spouse a incomprehensible mess!

  10. This is a timely post for me. A good friend of ours had a heart attack a couple of weeks ago. He is fine but he 90% blockage in his arteries and had to have emergency surgery. What hits home is that our friend is only 48 years old. I am thankful that he is okay but I shudder to think about what his wife would have gone through, on top of her grief, had it gone the other way.

  11. Cooper's Dad says:

    To J (and perhaps Jonathan): Think smaller. This needn’t be an exercise in teaching her how to do what you do to manage your finances, though that’s certainly prudent. But if it’s also the hurdle between doing something and doing nothing to empower her. consider simply informing her about your financial tools and processes.

    Where can she find a master list of your financial accounts, especially life insurance policies?

    How can she access Quicken, Mint.com, MS-Money or whatever money management software you use?

    Who are your key advisors and financial service providers (names, phones #s, emails, etc.)

    How can she access your password management software (you do use one, of course) so she can gain access to all your accounts from a single, secure source?

    Even if she has a small degree of knowledge of what to do with these things in your absence, she can do nothing without the basic information above. Make that your starting point.

  12. Great post…I’ve done some of these things but could (and will) do more.

    Regarding the life insurance: you should be able to easily cancel your old term life insurance and purchase new policies, if it will save you on premiums. http://www.term4sale.com seems to be a pretty good source for term life quotes from many companies. I’ve see this site recommended on Bogleheads. I used the site myself succesfully, using a local agent recommended by the site. Typically the big auto insurers that also offer life insurance don’t offer competitive rates.

  13. One of my goals this year to get life insurance for me and my husband. I also started compiling a master document to put all our financial life in one place, I still have not finished that. Even though my husband brings in most of our income he doesn’t have a clue on where the money is. If I were to die today, it would take him months to track down most of our important accounts. We have monthly “financial dates” where we talk about how we did that month and what needs to be done to meet our goals, but when it comes to actual details on accounts and passwords he is clueless. Not sure how to make him interested.

  14. “but I have nightmares of some high-cost, low-quality financial salesperson mismanaging her money. ”

    I think this is why people have very high insurance policies – no matter what happens with the money management, it will be enough.

    Anyway, it seems like the best way to prevent this, in my opinion, would be to use an investment manager that you trust now, that way you would at least already have a relationship in place and the survivor would have to consciously make the decision to look for somebody else.

  15. What about situations where you are the only member of the family in this country and your family is in another country. Any thoughts on how to handle this complex scenario at least in terms of ensuring your family gets your money which is in the US?

  16. Not sure if anyone mentioned this above, but estate planning laws differ in different states. For example, in CA, if your assets are more than $150k, you’re better off with a trust than just a will document to avoid probate.

  17. Also, nolo.com offers some great software and templates to set up will and trusts for DIYers.

  18. Baughman says:

    Thanks for the timely reminder post. I set up a Suze Orman will that you recommended 4 years back, but never got it notorized because I’m an idiot. I just spent 2 hours reading through the getyourcraptogether webstie and the nolo willmaker website. Seems like a great software.

    There really is no excuse not to have my crap together. Thanks for the encouragement!

  19. @Jason – Thanks for the tip regarding insurance beneficiary. We might also be setting a trust as the beneficiary, not sure yet. I’m definitely giving myself to the end of 2013 to get this sh… stuff done.

    @J – I’m thinking a set of short YouTube videos, which will give me blog materials and thus two birds with one stone. :) Too bad I can barely use iMovie.

    @Andy – That’s funny regarding ATM PIN (or not I suppose with the topic this discussion), I’m pretty sure Mrs. MMB asked me what it was twice last year. But then they installed an ATM right at her work and she uses it regularly now instead of raiding my wallet. You should look into that. ;)

    @Alexandria – I hear you, I think that I will probably try and re-qualify for a shorter-term life insurance with a lower annual payment. Mrs. MMB got into the super preferred category with a rock-bottom rate so we’ll see if we can get much lower.

    @Craig Kingston – It does say something about how we just don’t like to deal with such things until we are smacked in the face with it. I mean, I didn’t even want to read the comments on this post until tonight.

  20. You ought to check out a service called lastpass (https://lastpass.com/) to manage your passwords. It’s great. They have a chrome/firefox plugin. They integrate with google’s 2-step authentication app. Great solution.

  21. I’m actually putting together a book (document) of instructions should I pass away unexpectedly. I think it would be much easier on my wife and kids if they just had a set of instructions to follow without having to make a lot of calls or wonder who to call. It will all be there.

  22. Well, she could be lucky and get Mr Mooney as her trustee. :)

    I use LastPass (mentioned above) – they have a premium version for $12/year (I think for mobile apps mostly)

    Good stuff as always – I’ve enjoyed your blog for a while. Thanks for sharing your info with us.

  23. Thanks for sharing the info. I had been putting off creating a will for the family for the last couple of years. I need to seriously look into this.

  24. You mentioned Suzy Orman Will & Trust kit in your previous post, http://www.mymoneyblog.com/free-suze-orman-will-trust-kit-gift-code.html, however I do not see it mentioned at http://getyourshittogether.org or the NY Times review http://www.nytimes.com/2010/09/11/your-money/11money.html?ref=estate-planning&_r=1& from the GYST.org. Do you have any advise on how the Suzy Orman kit compared to the GYST.org or the one mentioned in the NYT?

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