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46 Comments

  1. MJ

    I really enjoy reading your blog, especially the ones where you try to solve some of our government’s problems. I do the same thing!
    Anyway, I am the oldest child and am the executor of my parents (divorced so two sets of wills), siblings and even agreed to care for some friend’s children if something were to happen to them. When I am asked to do this, I send them a love letter to fill out and return such as this one: http://hammernikassoc.com/wp-content/uploads/2016/04/Love-Letter-To-My-Family.pdf There are many others on the internet and this may be dated, but it is a great tool to fill out for your loved ones if you were gone. Also I made sure to fill this out myself-and update it every few years-for our executor so they know how to handle things when my husband and I are gone. It can be hard to bring this topic up to others, but it gives me peace of mind that I can accurately follow their wishes. Thank you!

    • Mr. Groovy

      Thank you, MJ. Your kind words really mean a lot. And your link isn’t to shabby either. A “love letter” is a great way to make sure your loved ones have an easy time of following your wishes.

  2. Yeah, we’ve got a couple of dust bunnies in our financial life. Real dust bunnies? Hmm, I just got down from a ladder after noting that all of our door heads are thick with it! The funny thing is I’m probably more enthusiastic about cleaning those than making an appointment with a lawyer.

    Unfortunately our wills need updating since baby #1 came along, but now that baby #2 is on the way I’m holding off to revise them since I want to add their name to it as well. Apparently it’s better to list children by name than just stating ‘all future children’ as you never know who might turn up on your doorstep. Well, I’d remember the 5 hours or so of labor, but I can’t speak for my other half. So it’s going to be a tense 4 months waiting to get on top of that one 😉

    I’ve never heard of a Death Instruction Manual and I’m curious about it. One concern that comes to mind though is writing down all your passwords next to account details etc. Do you think that’s a security risk? Is there another way around it? Or is it more aimed at email accounts and the like?

    • Mr. Groovy

      Hey, Eliza. I hear you about making that appointment with a lawyer. Mrs. Groovy and I put it off for five years–and we didn’t have new arrivals complicating the picture. And excellent point about passwords. We have a password manager saved to a thumb drive. All our family would need is the password to that manager and they’d be set. So our death manual will include the thumb drive and the password. Thanks for stopping by, Eliza. I really appreciate it. And best of luck with baby #2.

      P.S. You got a wonderful website. I loved your Money Mindset section.

      • Awww thank you for the kind words! I really appreciate it. A password manager is another of my dust bunnies and I’ve always wondered what would happen with my online life when I’m no longer around, so yours is a very elegant solution. Thank you. Now I just have to get dusting 🙂

    • Mr. Groovy

      Agreed, AT. We talked about doing our Wills for about five years before we actually got it done. To procrastinate is human. Thanks for stopping by, my friend. And good luck with your dusting.

    • Mr. Groovy

      Hey, Amy. Yeah, I got thrown off schedule a little bit. My goal is to continue with one episode a week. At some point, I’d like to bump it up to two. Good luck with the dusting. Just sneak one more item on John’s honey-do list every now and then. Haha. I’m sure he won’t notice.

  3. We’ve got most of that in order, even the death manual. Ours not only covers finance and impersonal stuff like that, but also the sentimental things. For me that would be the dulcimer my grandma had made for my grandpa’s b-day gift, his ’47 Gibson guitar, and a banjo that has sentimentality to me becase of how I got it with my dad. We tried to cover that stuff too since the kids aren’t old enough – or weren’t at the time to know hear any of those stories or remember them or care, lol.

    Just something to think about if you have sentimental things and other people may or may not know about them. In case you don’t want them just trashed or donated. 🙂

    • Mr. Groovy

      Very cool, Mr. SSC. Including sentimental things in one’s death package/manual is a wonderful idea. Mrs. G and I are also kicking around the idea of including a death video or two. Thanks for stopping by, my friend. I love the way your mind works.

  4. Great. Our actual house is a disaster with the five kids and me back to work. But we also need to work on our financial house too?!?

    At least we’ve made some progress on tidying up our finances over the past couple of years. We just need to take one thing at a time and pace ourselves. Thanks for the road map to get us going 🙂

    • Mr. Groovy

      Haha! I think you get a well-deserved dispensation for having five kids. Laundry must be so much fun. But you got the right attitude. “One thing at a time and pace [yourselves],” is the way to go. Thanks for stopping by, Harmony. You’re one of my heroes.

  5. We’ve updated our Will right away with the birth of our second son which I give myself kudos for! However, I still haven’t had those dang things signed yet…yikes. Thanks for the reminder to get on top of things again.

    I love the new Talking Trash episode…best one yet and a much better guest (me…) than your prior one with Fritz from Retirement Manifesto… 🙂

    • Mr. Groovy

      You’re the best, JW. And thank you once again for helping me pick up trash. The only problem I had is that I couldn’t add the final track of our trash talking because YouTube’s video editor wouldn’t allow my combined video to be more than 15 minutes. Meh. I downloaded an open source video editor last night and will get your complete guest picker appearance out this weekend. Sorry for the mishap. Have a great weekend, my friend. And give Lucy my regards. Cheers.

  6. Wow – when we were getting ready to sell our house, it felt like crud was growing everywhere! I’m so glad we sold it and didn’t have to keep it “white glove clean” day after day for showings! We are aligned with you on #1 and 3 (good and bad!) Wills, etc. in order but the receipts/paperwork for this year is stuffed in a box…waiting for a quiet, fall – rainy day. It’ll come so I’m not stressing it – yet! Hoping we get to talk trash with you someday too 🙂

    • Mr. Groovy

      I know the feeling well. It’s amazing how much crud builds up in a house. I was doing a plank the other day in my bedroom, and when I turned my head to the right and peered under my bed, I noticed that all the bottoms of the legs to my bed were covered with dust. It never ends! And when we move next year, I’m sure I’ll run across even more crud. No one ever said homeownership was going to be easy. Thanks for stopping by, Vicki. And, yes, one day, whether in Western New York, Florida, or North Carolina, we will be picking up trash together. I can’t wait. Cheers.

  7. Loved this post. I think the reason our financial nooks and crannies are stuffed with dust bunnies and other random crap is “cognitive tunnelling”. I just read about this concept from Eliza over at Money Meet Mind. After 7 months of procrastination I’ve finally decided to start tidying our life insurance situation only to discover that while I’ve kept every single monthly renewal notice for over a decade, I can’t find the darn policy itself! You know, the only piece of paper that’s actually important. Sigh.

    • Mr. Groovy

      That’s too funny. All receipts and no policy. I’ve been there too, Mrs. ETT. Thank you for sharing. And thank you for the link on “cognitive tunnelling.” I just post Eliza’s post on today’s reading list.

  8. Great post, however as a fellow compulsive perfectionist who then turns procrastinator, I have to note that you said ” vertical surface” when you meant “horizontal” 🙂

    One minor item I never keep track of is the rewards points on cards. I fail to use them and also fail to remember which card to use for what category of purchase to get max points in a given month.

    Cheers,

    Frank from http://www.FiClub.org

    • Mr. Groovy

      I love it, Frank. Great catch on “vertical.” Oddly enough, in the sentence’s original construction, I did have horizontal in there. But that sentence was very clunky, and when Mrs. Groovy and I worked on revising it, somehow horizontal was replaced with vertical. Damn, no one ever said blogging was going to be easy. Thanks for stopping by, Frank. And thanks for reminding me about award points. I’m very lax in that regard as well.

  9. Our Financial House is spidy – somewhere between spotless and tidy.

    Our investments are well-diversified and our allocations are aligned to our risk tolerance, but we’ll probably tweak one last time before we take the leap.

    We have digitized the majority of our important documents; just need to be sure that they’re well-organized.

    We have wills and need to review/update.

    Our one hairball is the Death Instruction Manual. We don’t have one and it’s definitely a great kindness to leave your grieving family with this important information.

    Thanks for the great post – love the house cleaning imagery!

    • Mr. Groovy

      Hey, Mrs. G. I love that description–spidy. Very clever. And I love the idea of digitizing your important documents. Commenter Miguel mentioned that as well. It seems to me that digitized documents would be a lot easier to maintain and transport. I think that’s the route I have to travel. Thanks for stopping by, Mrs. G. It’s always great hearing from people who are just a few small steps away from having a spotless financial house. Cheers.

  10. Wow. 70% bonds is heavy. Is this more of a “because we don’t need any better return than that” decision for you? And/or do you use Monte Carlo or other simulators to determine the best mix for the highest chance of drawdown success?

    Not judging. Genuinely curious.

    We’re going through the exercise ourselves right now. We’ve been 100% stocks for the past 25+ years. But now the sequence-of-returns risk (since we’re early retired) has become more of a concern and lending credibility to a portion of our portfolio in bonds.

    • Mr. Groovy

      Hey, Brad. Good questions. We’re very lucky. I have a mini pension that brings in $20K annually. Our annual expenses are around $36K. And that includes $5-6K for vacations. So if we drawdown a mere $20K from our portfolio, we’re able to live large. To date, even though our portfolio is 35% equities and 65% bonds/cash, our portfolio is up around $80K. Right now we’re not being penalized by being overweighted in bonds. And we know that inflation can ravage a portfolio over time. Our goal then is to gradually increase our equity exposure over time until we get to a 60/40 allocation. We’re thinking about increasing our equity allocation 2% starting next year. But if we come across another 2008-like correction, we’ll bump up our equity exposure right away, either to 50/50 or 60/40. So that’s the game plan. Be overly cautious during the first five years of retirement. Gradually increase our equity exposure. And really take advantage of a major stock market correction if one materializes in the next couple of years. Thanks for stopping by, Brad. I really appreciated your questions. They made me think.

  11. Yep, my financial house (and my actual house) need some tidying. We’re especially delinquent on #2 and #3. We know we need to get them done, but they never seem to make it to the top of the to-do list. Posts like this help to remind us that we can’t postpone them forever.

    • Mr. Groovy

      I hear ya, Gary. Numbers 2 and 3 have been haunting us for a while as well. For me, I think these are chores I have to attack in the morning. Perhaps I’ll add them to my miracle morning. Once the day unfolds, I’m either busy with something else or too mentally fatigued to bother with them. Sigh.

  12. Funny that you mention it, since just this past weekend, Team Waffles was discussing “The Manual” where Mr. Wow has compiled all our information. Alas, he can’t remember where he put it, thus there is significant dust on that. Always important to keep an eye on the nooks and crannies.

    Loved all the trash talk! Keep up the good work!

    • Mr. Groovy

      Haha! Been there and done that. Don’t be too hard on Mr. WOW. Guys are great starters and horrible finishers. For a while, Mrs. Groovy used to call me 90%. Whenever I started something, I get the bulk of it finished in no time. Then it would take me weeks to finally complete it. Meh. Thanks for stopping by, Mrs. WOW. And thank you for your very kind words.

  13. For number 3 (record keeping), I’ve found that the easiest way is to scan everything of any importance and keep it in a cloud folder (I use Dropbox), and an external hard drive for backup. It’s the only way that’s ever been effective for me.

    As to investments, I always hesitate with bond funds because of interest rate risk. My plan so far is to liquidate my stock holdings at some point close to retirement and invest the money in a bond ladder, with tax-free munis from fiscally responsible localities.

    • Mr. Groovy

      Nice, Miguel! I like that idea of scanning everything important. Paper is just too cumbersome. And I hear you about interest rate risk. Our total bond fund is categorized as having an intermediate duration. From what I’ve read, an intermediate bond fund holds up reasonably well in a rising interest rate environment. We’ll see. I’m not very confident on that score. My brother-in-law is into bond ladders as well. I guess I have some homework to do. Thanks for stopping by, my friend. And thank you for the very helpful guidance.

    • Mr. Groovy

      Excellent, FTF. We’re about two-thirds into our home’s nooks and crannies. I was hoping to take care of our record keeping this weekend, but my cousin just invited me to his Mayweather/McGregor fight. Sigh. Thanks for stopping by, my friend.

  14. This stuff is so important, particularly if there is a kid involved in the relationship. I wrote “a letter to my widow” to outline not only these things but also what to do with the insurance money when it comes in. Seeing as I focus more on the finances then she does I thought it would be pertinent.

    We did a living trust through legal zoom. Since we are not that complicated financially it worked well and only cost about $250 to complete.

  15. Yeeeeees. These are the less-fun and less-exciting aspects of personal finance that everybody puts off. I’m proud to say I at least took care of my life insurance, but I’ve yet to set up a will and a death folder. My current excuse is that I’m waiting to do that until we have kids, but I really do need to get my butt in gear. You hope you won’t need a will or insurance, but if/when the time comes, you’ll be glad it’s there.

    • Mr. Groovy

      Haha! What, you don’t find Wills, death folders, and asset allocation sexy? But, hey, at least these things are on your radar. Thanks for stopping by, Mrs. PP. It’s always great hearing from you.

  16. Great post! It is a great reminder of what I’ve been neglecting, particularly getting a Will taken care of. That has been on my yearly goals list for the past couple of years and I somehow find a way to avoid doing it. I gotta start taking care of the nooks and crannies. Thanks for the inspiration!

    • Mr. Groovy

      A Will is the big one. Mrs. Groovy and I put it off for so long. Part of the problem was that no one in our social circle other than our parents had a Will. And my parents’ attorney was out of state. So we had to spend of good chunk of time researching local estate attorneys. Happily, we found a good one. Thanks for stopping by, MSF. And good luck with the nooks and crannies of your financial house.

  17. Hello Mr. Groovy,

    Estate planning is something that seems to be perpetually on my to do it 🙂

    I have never thought about “a death instruction manual” the way you are describing it, it makes perfect sense. I am adding it to my to do list.

    While we are on the subject – do you have the following?

    (a) Living Will
    If you are on the deathbed, a Living Will would declare your desire to be or not to be on any life prolonging measures should there be no hope for recovery. With a Living Will, you choose someone you trust to make certain medical choices on your behalf.

    (b) Healthcare Powers of Attorney
    While the Living Will is limited to deathbed medical decisions, a healthcare power of attorney is meant for all healthcare / medical decisions to be made on your behalf as long as you are unable to make them yourself.

    (c) Financial Powers of Attorney
    Many states have as a form for providing financial power of attorney. Many banks and financial institutions have their own forms for financial power of attorney. You may need to sign before a notary public and also may need witnesses.

    I haven’t done any of these things yet 🙂 Just have them on my to do list. Did the $1200 cover all these things in addition to the Will?

    Now on to investing:
    Typically, a market crash recovers within 18 to 36 months. With that assumption that history will repeat itself, if you have three years worth of cash reserve, you would not put a dent on your investment portfolio.

    My last thought on asset allocation:
    Please see slide 5 – Yale University course on finance: http://oyc.yale.edu/sites/default/files/Lect04DiversifyS.pdf

    The chart plots standard deviation of annual return vs. expected annual return across different asset allocations of stocks / bonds.

    According to this chart, 50/50 stock/bond mix has the same risk (standard deviation) as the 100% bond investment.

    Key thing to note is that 50/50 return is higher than 100% bond return. The risk is the same for both allocations.

    Something to think through.

    –Michael

    • Thanks for all this good information, Michael. We’ll check out the Yale slide tomorrow. And it’s nice seeing you again!

      I believe the lawyer’s bill was closer to $1,000 for both of us which included a meeting and several email exchanges, and a second meeting for signing documents. There’s no Living Will in NC but we each have the following:
      – Will
      – Power of Attorney
      – Healthcare Power of Attorney/Advanced
      Directive
      – Authorization and Disclosure of Protected Health
      Information.
      Each document was notarized at the lawyer’s office.

      Regarding asset allocation, we’re buying into the “Sequence of Risk Return” theory (Wade Pfau has written the best articles on this, as far as I’m concerned). Since we’re in the draw down stage, and no longer making contributions, we’re being extremely conservative in the first five years of retirement. The theory is that if you have substantial losses during those first few years, there’s more risk of running out of money.

    • Mr. Groovy

      Hey, Michael. First, Mrs. Groovy beat me to the punch. We’re guarding against sequence of return risk during our first five years of retirement. Our plan is to gradually increase our equity exposure over time. But if we get a 2008-like correction in the next few years, we’ll bump our allocation up to 50 or 60% right away. Second, WELCOME BACK! It’s so good to hear from you again, my friend.

  18. Put your death instruction manual with your will, and then let your executor know where it is. That’s something my mom did for me, and it made things so much easier when she passed. Jon and I have done that too (and usually put our net worth statement in there every quarter).

    Jon and I need to work on our paperwork, though (and our housework in general.)