<\/p>\n
Family means everything to Samson and Laura Vaez. And four years ago, it looked like they had it all. They were happily married, owned a lovely home in Winnipeg, and they had three wonderful school-age boys\u2014Sam, Aaron and Jacob. Grandma lived nearby too. Both Samson and Laura had solid jobs: he worked as a dispatcher and manager at a small taxi company, and she worked part-time teaching night school. They were wise with their money, and over the years, the couple managed to save more than $200,000 in their RRSPs. They even paid off most of the mortgage on their $450,000 home. They felt secure and happy, and they had plenty left over to help those less fortunate then themselves, so every year they donated about $10,000 to several church-related charities. <\/p>\n
\nBut over the last three years, everything has changed. Samson, now 49, and Laura, 47, are finding their generous nature is tearing their comfortable life apart. In 2006, after attending some financial workshops, they made what they now realize was a terrible financial mistake, agreeing to put their life savings\u2014more than $200,000\u2014into four limited partnerships that invest in commercial and residential property. All of the partnerships ran into trouble and are now frozen. One is in bankruptcy, and another is being investigated for fraud by the provincial securities commission. \u201cThese investments may be worthless,\u201d says Samson. \u201cI knew they would be fairly illiquid\u2014but we never imagined that we wouldn\u2019t be able to sell them at all. How do you plan for that?\u201d<\/p>\n
\nThen, when they were at their most financially vulnerable, the Vaezes (whose names and other details we\u2019ve changed to protect their privacy) were suddenly faced with a terrible decision. Like many other members of the sandwich generation, they were being squeezed hard by the simultaneous demands of looking after both their parents and their kids. <\/p>\n
\nIn addition to the regular costs of paying the mortgage and buying the groceries, the Vaezes have to take special care of their oldest son, Jacob, 16, who has suffered from an immune disease most of his life. Lately the cost of his weekly therapy treatments had been getting higher and higher. On top of that, the couple is supporting Samson\u2019s 74-year-old mother, Jan, who lives nearby on just $9,000 a year in Canada Pension Plan and Old Age Security payments. The Vaezes pitch in with $3,000 a year to help her make ends meet, and that money also indirectly helps Samson\u2019s older brother Michael, 51, who lives with his mother in the old family home and helps to take care of her. <\/p>\n
\n\u201cWe want to keep her in her own home as long as possible,\u201d says Samson. \u201cMy brother works for a cleaning company and doesn\u2019t make much money. My other two brothers are either in bankruptcy or in debt up to their eyeballs so they can\u2019t help. We feel we have to do what\u2019s right.\u201d<\/p>\n
\nProviding support for so many family members, plus donating $10,000 a year to charity, was already stretching them thin, but the final straw came earlier this year, when Samson\u2019s mother slipped and fell on the stairs. She sustained serious hip and knee injuries that made it impossible for her to get to the second floor of her home, so Samson and Laura had to suddenly spend more than $6,000 to put a new bathroom on the ground floor. \u201cWherever we turn there\u2019s another expense facing us,\u201d says Laura. \u201cAnd these are expenses that will be with us a long time.\u201d<\/p>\n
\nNow Samson and Laura face a heartbreaking decision. They love their three kids dearly and want to set them up for a long, successful and happy life. That means getting them the best education they can afford, and Laura is worried that the $22,000 they have saved up in their RESPs won\u2019t be nearly enough. Jacob, their eldest, is already in a special co-op program training to become a hair stylist. Sam, who\u2019s 12, has his heart set on studying medicine, and Aaron, 14, wants to study aeronautical engineering. Such degrees require special programs, and will mean supporting the boys at out-of-town universities. Laura figures the total cost for schooling all three kids could be as high as $150,000.<\/p>\n
| \n<\/td>\n | <\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Yearly disposable income<\/strong><\/td>\n| <\/td>\n<\/tr>\n | Samson\u2019s income<\/td>\n | $85,000 <\/td>\n<\/tr>\n | Laura\u2019s income<\/td>\n | $18,000 <\/td>\n<\/tr>\n | Minus: taxes and other deductions<\/td>\n | \u2013$30,000<\/td>\n<\/tr>\n | Net disposable income<\/strong><\/td>\n | \n | $73,000<\/strong><\/p>\n<\/td>\n<\/tr>\n $8,400 <\/strong><\/p>\n<\/td>\n<\/tr>\n $20,788<\/strong><\/p>\n<\/td>\n<\/tr>\n $2,920 <\/strong><\/p>\n<\/td>\n<\/tr>\n $43,400 <\/strong><\/p>\n<\/td>\n<\/tr>\n $75,508 <\/strong><\/p>\n<\/td>\n<\/tr>\n Annual income available for investment <\/strong><\/td>\n \u00a0<\/p>\n The Vaezes might possibly be able to pull that off, but if they decide to pour all of their resources into helping their kids, they won\u2019t have a penny left to support Samson\u2019s mother. Her fall made it clear that eventually she\u2019ll have to go into a nursing home, and they\u2019ve heard the cost can be considerable. \u201cRight now, we\u2019re paying $3,000 a year to keep mom in the home she co-owns with my brother-in-law Michael,\u201d says Laura. \u201cBut that amount could skyrocket. And because she owns her home with my brother, we can\u2019t just sell it. My brother wouldn\u2019t be able to afford another home on his own. His lifestyle would really suffer.\u201d<\/p>\n \nThey can\u2019t do it all, and they know it. \u201cWe\u2019re frustrated because we are sandwiched between two generations\u2014our kids and our parents,\u201d says Samson. \u201cBoth need our help but there\u2019s only a limited amount of money to go around.\u201d<\/p>\n Samson knows very well what it\u2019s like to live in a household where there\u2019s never enough money to go around. His dad left home when he was just 13 years old, and his mom raised him and his three siblings on her own. Her only income came from welfare and a little extra money she earned for being a foster parent. \u201cShe got the house in the divorce but never got any child support from dad,\u201d says Samson. \u201cShe never complained though, and we made ends meet.\u201d<\/p>\n \nSamson met Laura when he was 23 and working as a taxi driver. She was 21 and studying accounting at a local Winnipeg college. (Laura had already been married once before, very briefly, and divorced at age 20.) She fell in love with Samson the day she met him. \u201cHe was so generous and giving,\u201d she recalls. \u201cWe hit if off right away.\u201d<\/p>\n \nTheir early years were joyful, exciting years, but they had their share of misfortune too. At age 29, Samson had a nasty car accident. A pick-up truck rammed him from behind, and his car was totalled. It left him unable to drive for long periods of time, so the cab company he was working for moved him to a desk job at head office\u2014a job he still holds today. <\/p>\n \nThe couple lived together for 10 years, then married when Laura was 30, in 1993. They immediately had three sons in a row. \u201cDuring those early years, we saved quite a bit of money in RRSPs,\u201d says Laura, who had worked full-time at an accounting job until her kids were born. \u201cBut once the kids came along, I stayed home to care for them and later, home-school them, working part-time only in the past four years to bring in some extra money.\u201d<\/p>\n \nSamson and Laura bought their current home in 1995 and diligently paid down the mortgage\u2014just $50,000 is still owing today. They found money for RRSPs too, and built up their $200,000 in savings quickly. They invested their money aggressively because Samson had a great pension at work that they could fall back on if they needed to. \u201cHe\u2019ll receive 70% of his net pay if he works right up until he\u2019s 62,\u201d says Laura, \u201cso we never hesitated to take some risks with our RRSP money.\u201d<\/p>\n \nFor a while things were good, and the worries were few. Until four years ago, that is, when they made that disastrous decision to invest in the limited partnership agreements. The worst part is they didn\u2019t just invest the $200,000 they already had, they also borrowed $125,000 on their line of credit, putting a total of $325,000 into four partnerships. They also took out a $50,000 loan that they invested in a segregated fund that won\u2019t pay out for 10 years. (The other $50,000 on their line of credit has gone towards personal expenses.) Apart from the RRSP money invested in limited partnerships, Samson also has $7,000 invested in a couple of dividend-paying stocks that he wants to hold on to.<\/p>\n \nThe biggest worry the Vaezes have now is their growing debt level. The total amount owing on the line of credit and the segregated funds loan is a massive $225,000\u2014not including the $50,000 owing on the mortgage\u2014and the amount they\u2019re in the hole for isn\u2019t shrinking each year, it\u2019s growing. \u201cIt\u2019s scary,\u201d says Samson. \u201cWe have no excess cash at all. We\u2019re living on the edge.\u201d<\/p>\n \nThe Vaezes say all of their dreams are now on the line. At one time they thought they\u2019d be able to retire when Samson reached 55 and maybe spend part of each year in Arizona. But now it doesn\u2019t look like Samson will even be able to retire when he\u2019s 62\u2014the year he\u2019d be eligible to collect his company pension. \u201cI know it won\u2019t be easy because the next decade is going to be very expensive for us,\u201d says Samson. \u201cWe just hope we don\u2019t have to sacrifice our own retirement to do what\u2019s right for our family.\u201d<\/p>\n \u00a0<\/p>\n What the experts say<\/strong> \nAl Feth, a fee-for-service planner in Waterloo, Ont., agrees. \u201cIt\u2019s quite a bad case,\u201d says Feth. \u201cThese are salt-of-the-earth people. They need to step back and make a list of priorities. They can\u2019t afford not to.\u201d<\/p>\n \nFirst, the Vaezes need to plan their finances as though their life savings are gone. \u201cIn a bankruptcy, unsecured creditors usually get next to nothing,\u201d says Garbens. \u201cAnd in the case of securities fraud, there may be some money but it could take years to get any of it back.\u201d The next 10 years will be critical. Here\u2019s what the experts say they should do.<\/p>\n RESPs or charity?<\/strong> \nOur experts say the couple has two choices. The first is to drastically reduce the amount they give to charity. Garbens, for one, would like to see them reduce the amount they give from 10% of their income to 3%, or $3,000. \u201cGiving more is jeopardizing their family\u2019s future,\u201d says Garbens. \u201cDo they want the kids to have a good start in life or not? If they do, then that money has to come from somewhere.\u201d<\/p>\n \nHowever, Feth disagrees. He says that if they feel strongly about their annual $10,000 donation to charity, then they should let the kids pay for their own post-secondary education. \u201cAn education is a good investment,\u201d says Feth. \u201cBut part-time student jobs, scholarships and loans can help the kids pay for university. It will work out fine.\u201d <\/p>\n Refinance their mortgage<\/strong> Apply for GIS<\/strong> Sell grandma\u2019s house<\/strong> Laura should get a full-time job<\/strong> <\/p>\n <\/p>\n<\/div>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Family means everything to Samson and Laura Vaez. And four years ago, it looked like they had it all. They were happily married, owned a lovely home in Winnipeg, and they had three wonderful school-age boys\u2014Sam, Aaron and Jacob. Grandma lived nearby too. Both Samson and Laura had solid jobs: he worked as a dispatcher […]<\/p>\n","protected":false},"author":1,"featured_media":1131,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[18],"tags":[447,558,555],"class_list":{"0":"post-1130","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-seg-fund-investments","8":"tag-choice","9":"tag-impossible","10":"tag-moneysense"},"aioseo_notices":[],"yoast_head":"\n |