Friday, January 09, 2009

Fessing Up to Family Money

Check out World of Wealth, for what I think is a totally unique post in the personal finance blogosphere, at least from what I've seen. MEG's blog is always quite frank and personal, and now she has disclosed something that few people are brave enough (or lucky enough) to admit:

So here it is: my family gives me money. I'm not talking about the garden variety plane ticket home, $100 for "dinner," help with the rent money. I'm talking about estate planning, gift tax avoiding, maximum annual gift exclusion money.

There were lots of comments on the post, mostly congratulating her for obviously being a hard-working, sensible person who hasn't become lazy and spoiled by her family's generosity (it's worth pointing out that she's only in her mid-20s). One commenter wanted to know how much of MEG's net worth came from her own earnings vs. her family's wealth, which she answered in a follow-up post:
Only about $20,000 of my net worth has been saved by me personally, half of which is my 401k at work. Without my family's assistance I may have been motivated to save more - or unable to even save that much due to loans and other obligations. Who knows??

Since her net worth is currently around $317k and was as high as $390k earlier this year, I would guess she must have gotten close to $300k in family gifts, which is pretty amazing. I almost can't imagine what I'd do if I'd been given that kind of money. She's used a lot of it to buy investment properties and max out retirement savings accounts, which is very admirable.

And yes, I'm so jealous I totally want to slap her!
(Only kidding about the slap, MEG!)


Anny said...

I'm also quite jealous. 300k!? Think of what her inheritance will be.

Frank said...

Another aspect of her blog that I really enjoy is her ongoing real estate adventures renting out her two duplexes. Certainly doesn't make me want to be a landlord.

Anonymous said...

I can't say I'm jealous. Money usually comes with some type of strings. I would rather have less and only have myself to answer to and my husband of course : )

MEG said...

Thanks for the references and for your positive comments! It is a unique thing to discuss, but I thought I shouldn't hold back if I'm going to be talking about wealth and money and what I'm doing with mine.

You're about right estimating what I've been given (though actually I spent a lot on private high school and college tuition plus the market tanked this year, so the gifts have probably totaled closer to $450K I would imagine).

@ Anny - I will say that I expect no inheritance above that. When they pass on, I think any funds (after taxes) are to go to charity and to my parents and aunts and uncles - of which there are many to divide between. I don't know if my parents will save enough that very much (after taxes and their deaths) will trickle down to me and my siblings.

Nothing fancy to think of .. said...

Errr .. well you might not like it a lot of people get some sort of estate when people pass. My parents also give my siblings money in an estate planning move. While they have not given us 300k, they have given us near 100k over the last few decades. This was all so that they can get below the estate tax levels if they should die. They figure the gifting could be a "will payment" just a few years in advance.

My sister bought a house, my brother has started his own business, I have bought my land for my retirement in Seattle (along with my money I earned from working for Microsoft). Some people might be jealous, however, it is what you do with it that is important.

I still spend less than I earn. I save about 20% of my money for retirement and investments. This is still a principal instilled in all my siblings and I. We all are not in debt (unreasonably). No credit card debts, no school debts, etc. My brother has his expenses from his company, my sister and her husband don't make much money - but they will once her kids are school age and she can work again.

Again - it is not what you have, but what you choose to do with it. I can and have lived for 1/2 the salary I am making now - and still lived by the same principles. Spend less than you earn and save as much as you can.

Anonymous said...

My parents gave me $40k about 10 years ago. I didn't have much then and it made me very happy. I didn't ask them for money, it was a total surprise. I was tempted to go out and spend it but in the end I decided to save it. Once I had a substantial amount of money in the bank, I liked the feeling of having money, so I started to save. One of the best decisions I've ever made.


The Hopeful Nomad said...

I would love free money myself. However, it is what she did with it -- that is key. Investment real estate continues to be the fuel to wealth. This is why I am working on my next deal, no better time to get property on the cheap.

Anonymous said...

That was an honest post. Well done, Meg. Too few of us consider the realities of upper middle class life. And too many would dismiss your concerns as irrelevant, and not 'real'.

I'm sure you have opened their eyes a bit.