Wednesday, September 20, 2006
HOW TO SAVE MONEY ON A FUNERAL
Remember the 5 year rule? This post can go in the category of things you won't really need to know for years. But knowledge is power. Several times in your life you will make a purchase involving thousands of dollars. When you buy a car, a house, or go to college, those decisions will affect your wallet big time. If you have a few pieces of useful knowledge going in to each of these situations you will get ahead financially. Today I will show you how to save thousands of dollars when paying for a funeral.
We do a lot of things in society because we take the advice of experts who may or may not have our best interests at heart. This is definitely illustrated by our American funeral customs, which have been largely put together by people who need to make a living doing these particular jobs (morticians). Putting together your loved one’s funeral arrangements will be an emotionally-charged, difficult process, but for the funeral director it is literally "just business." Because it is such an emotionally charged time, people make emotionally based decisions that can cost a lot of money. According to this website, the average funeral costs between $6000 - $8000. Why so much?
To illustrate lets look at the single most expensive line item in the cost of a funeral - the casket. If you take a look at the different caskets with different price points you will notice that the less costly caskets are designed to look cheap. The interior cloth looks cheap, the paint looks cheap, notice the caskets have fixed handles that are so close to the side of the casket that the casket becomes difficult to carry. The cheap looking casket cost the mortician $400 and he sells it for $1200-$2000. But most people take one look at it and say to themselves - I don't want the brown casket; that casket looks cheap. Again, the less expensive caskets are designed to look cheap and ugly.
Well, the more expensive casket does look better. It has nicer paint, probably with a layer of clear coat. It might be thicker metal. The cloth isn't a cheap paper-mache, but an actual fabric, or even maybe a velvety cloth. The handles are swing style, so they are easier to pick up by the pall bearers. The "upgrades” cost the manufacturer another $150; the funeral director maybe pays $750 for the casket, and you pay $3850-$4500. But the only thing the consumer thinks of is: "I want the blue casket; Uncle Fred will look nicer in that one."
But if you ask 100 people, 90 of them won't be able to tell you what color the casket was at the last funeral they attended. Seriously, ask yourself that question. Do you remember what color the casket was at the last funeral you attended?
So people pay an extra $2000 for what? It’s an emotional decision. “I want the blue casket.”
Similar price hikes are built into every emotional decision made when arranging funerals. To avoid sunken graves, the cemetery requires something to protect the casket.
Grave Vault ($450) that will completely surround the casket, but water might get in so they buy the Sealed Grave Vault ($750) but it looks so ugly I will upgrade to the stainless steel lined sealed grave vault ($1250), or the bronze sealed grave vault ($1950).
Who has been to a funeral and thought to themselves, "I wonder what kind of vault the person bought?" That would be tacky and tasteless, but sometimes people are sold the sealed grave vault for $750, or the copper lined sealed grave vault for $1950 as if it would be tacky and tasteless to NOT buy something nice for a deceased person whom we love. Where is the value here? The difference in value between the $200 grave liner, and the $1950 bronze vault resides entirely in the mind of the consumer. Both items do the exact same job (keep the dirt from crushing the casket) but one costs $1750 more. Wouldn’t you rather fund a Roth IRA with that money?
Speaking of grave vaults, some people are genuinely grossed out by the thought of water getting into their loved one's casket. This has led to a windfall of revenue for the funeral industry thanks to sealed "protective" caskets. Getting the gasket added to a casket will generally increase the cost of the casket by $800. Most consumers go for it. Casket manufacturers add in guarantees of just how protective the casket is. But wood caskets are inherently non-protective (for the record, wood caskets cost the funeral home $850-$1400, and sell for $4000-$9000) so if you buy a wood casket, chances are you'll be offered a protective "sealed" vault. The seal on the vault is much stronger than the seal on the casket and only costs an extra $300 usually. So if you get grossed out by the thought of water or bugs getting into the grave, the protective vault is the way to go; get a casket without a seal on it and save yourself the $500.
Basic services fee. Every funeral home charges a basic services fee, which is basically a signing bonus the funeral home gets when you do business with them. Everything else you buy has a cost next to it that you actually get something for. The basic services fee is a charge for nothing. But there is a huge disparity from mortuary to mortuary on how much is charged for this basic services fee. I've seen them as low as $400 and as high as $4000. Who has the time or the inclination to compare prices between funeral homes? Not very many people compare prices between funeral homes, but the ones that do can save $3500. How many hours would it take flipping burgers to come up with an extra $3500?
The bottom line is that your mortician, no matter how nice, has every incentive to increase the services he provides so that he or she makes more money. The mortician is NOT on your side. Repeat, the mortician is not on your side. During the particularly emotional time after a family member dies, even the most thrifty consumer who clips coupons, and drives an extra two miles to save a nickel per gallon of gas, will make emotional, expensive decisions in a few moments that will cost hundreds or thousands of dollars extra. It's as simple as saying "I want the blue casket."
What can be done about this? I will walk you through a scenario that I would consider.
My loved one is nearing death.
1. Buy a burial plot at the chosen cemetery. $800 (Might have to shop around some)
2. Discuss with my loved one how they want to be remembered by the living (incidentally, this is not a bad idea for family night every year in January. Go around and ask everyone in the family how they want everyone to remember them when they're gone - not a bad way to help a teenager see life with a longer perspective.)
3. Look around unhurriedly for a funeral home with a low basic services fee. Funeral homes are required by law to give out a copy of their itemized prices to anyone who asks.
4. Set aside $6000 - $8000 in a savings account like ING direct. No need to pre-arrange and let the mortician keep all the interest on YOUR money.
5. When the death occurs, call the funeral home, arrange for an immediate direct burial in the least costly casket, and the least costly burial vault or grave liner. No need for embalming, no need for a fancy song and dance in choosing the casket, or agonizing on what kind of flower arrangement Uncle Fred would have liked best. No need for limousines or a police escort etc... Direct burial is an absolutely no-frills burial service.
6. Before burial (which is going to happen almost immediately) close family members or friends will help dress the body in final resting clothes. Everyone I know who has done this considers it an almost sacred act of service for a loved one, compared to what is easy to imagine as a gross, creepy experience before actually doing it.
7. A week, two weeks, or a month later, after unhurriedly gathering family and friends together, after gathering the important artifacts of this person's life together, like the pictures, or videos or whatever. Everyone meets at the church, or some other gathering place, and we have a tribute to our loved one's life, their victories and defeats. For people we love, it takes a long time to really go through the grieving process, and putting together a true life tribute is extremely cathartic and healing. In my opinion it is unbelievably superior to the hurried, franchised way we traditionally do funerals in this country.
There is no need for limousines. No need to pay a mortician hundreds of dollars to wheel the casket in and out of the building. No need to use the funeral home's facilities. There is no need at any point in this process for anyone to feel any shame for not choosing the casket Aunt Janet ‘would have liked best’. All of those trappings are put there, for a handsome fee, by the funeral industry to increase their profits, rather than facilitate the grieving, healing process after losing a loved one.
8. At some point in the future a grave marker (or headstone) should be purchased. You want this to look good. If there is any place in this process to splurge monetarily, in my opinion this is it. Because we will go back to see this piece of ground, the headstone should look nice.
How much will all of this cost?
$800 for the cemetery lot
$1500 for the funeral
$1500 for the headstone
$3800 for everything
What to do with the remaining thousands of dollars in saved funeral costs? Deploy it somehow in a way that my loved one would care about. Loan it out at Kiva.org, give it to your church, or some other cause you care about. Divide it equally among the surviving family with explicit instructions to accelerate debt payments. It really doesn't matter because most everyone would agree that anything is preferable to literally throwing our dollars in the ground. That’s what most people currently do. But now you know.
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