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Tuesday, February 09, 2010 11:35 AM

How To Keep The Money "All In The Family"

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Here is an interesting idea in response to Seniors Need Yield But Nowhere Good To Go; FDIC Moral Hazard Yet Again.

"Doug H" Writes:

Hi Mish

My Dad, now 88 years old, sold out of everything, bonds, mutual funds and even his house a few years ago, right before the crash and has kept it all in laddered CDs. Thank-you for helping to inform our decision there, it helped preserve $150k or more.

Interest payments covered most of his expenses while he was getting 4-5%, but that isn’t happening now and, at 88, he certainly is in no position to go chasing yield elsewhere.

We have hit on what we think is a good alternative. I have seven years left on my mortgage at 6%. Better he should get it than Midland Mortgage Co. so Dad will soon be my new mortgage holder. He gets a monthly check, I get a little break on the rate (5%) and we keep the money in the family.
This sounds like a winning solution to me.

The only caveat I can think of is charging too little interest. Please Beware of imputed interest rules. This does not constitute tax advice, but 5% seems reasonable.

Mike "Mish" Shedlock
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