Recently, my son-in-law passed away at the age of 38. He and my daughter were married for 15 months. They live in a suburb of Chicago. They have a house that is fully mortgaged. He had some life insurance. I’m guessing around $100,000.
I guess my question is….where does she begin? She can’t afford to make the payments on her own. Does she take the insurance money and Pay off some of the mortgage? I think they owe around $175,000 on the house and now it is not worth that much. Just looking for some advice.
– Mike Q.
First and foremost, I want to express my deep sympathy at your loss. We may never truly understand the Lord’s ways but my prayer is that you and your daughter can find comfort in the knowledge that he is with the Father in heaven.
Your daughter first needs to take some time to grieve. Let the dust settle and finalize the estate issues. While she is mourning her loss she is in no position to make good financial decisions. She needs to wait until the grieving process has settled a little and she is ready to make decisions without so much emotion attached. It’s tough to say when that time is right; only she can tell but we’re talking 3-6 months typically.
Once she is ready there are a few things I would recommend. First, a few questions come to mind. Is she employed? Does she have outstanding debts? Does she want to stay in the house?
Without any specifics, here’s the general plan I would propose (if she’s already past these steps, that’s great!). Let’s start with getting her on a monthly written budget. Then let’s pay off all her debts up to but not including the house. Next, set aside three to six months of expenses in an emergency fund. From there it depends if she wants to stay in the house or not. If she does, I would look at paying down the mortgage with the remaining money and then refinancing the remaining balance to get a lower payment. If she doesn’t want to stay in the house I would hang on to the remaining cash and use it to make the house payments until the house is sold. If the house sells for less than the mortgage balance, she can use the remaining insurance money to pay off the difference.
While life insurance is usually designed to replace the lost income when a loved one dies, it doesn’t sound like she will have enough to replace a significant income stream. I think her best bet is to eliminate as much debt as possible and go from there.
I hope this helps and gives you both a source of strength and inspiration. I am here if she needs some help walking through the financial process. Feel free to call or write back with any more questions.