Family Members in Debt

[BudgetHowTo]

What should they do?

My parents' ability to spend money is only exceeded by Barack Obama's. I am one of six children they have. We are all out of the house and financially independent of them. Despite the fact that they make more money than ever and have no dependents, they still manage to put themselves in a huge financial hole.

My parents are impulsive buyers and have no financial sense. My mother is clinically depressed and her newest way to console herself is internet shopping. She also plays the lottery and spends at least $100 per week on it. My father's latest financial blunder was borrowing $3,800 from his 401k to buy a 1950 Oldsmobile for a project car. Their checking account is their only bank account and it has about $200 in it.

My father is near retirement age, is the primary source of income, has no savings, a tiny 401k, about $25,000 in credit card debt, $90,000 remaining on a mortgage. Their combined income is about $40,000 per year.

Please respond with your advice. Any help will do.

[buildmybudget]

Do they have a budget and cash flow projection? In tough situations like this, the best solution is a cash forecast that shows them exactly where they are headed...so they can see whether their goals are plausible and if they will run into any trouble spots along the way. Create a budget that shows you this and they'll be empowered to make better decisions about how to use each one of their hard earned dollars.

[PetMom]

This might be happening more and have more consequences that really can be stressful for the child of financially careless parents.

Speaking from personal experience - be very careful how you help them out in any way. You probably will help in any way and quickly realize how they come to depend on that - and they don't change their ways. Things and the relationship can start to go downhill.

No matter how much you plead, threaten, cajole - they are going to spend and spend and once they retire there is not any capacity to get out there and work extra to make more money.

They are not able to do home repairs, mow the lawn and decide not to pay taxes or insurance on fully owned properties for a few years. You find out that these were not paid and liens are put on properties. They file for bankruptcy - even though they had all their retirement needs met.

If you can do anything encourage them to NOT pay off their home/other home. We thought this was a great security for a parent and it ended up just being a way for them to not pay the expenses of a paid for home.

In mortgages you are almost always required to have home insurance and paid up property taxes.

[minnie1928]

My parents were in the same situation...and to some degree, still are. I took over their finances (I offered, they agreed) and also got POA over both of them. I also explained to them that I could not/would not bail them out financially.

Fast forward about 5 years....mom has her own checkbook that she by and large runs herself (I balance it about every 2 months). Any large purchases are run past me. She has applied for 2 credit cards in 5 years and mis-managed them within months of getting them...so they are currently sitting in my home office. She no longer has the cards or the account numbers/expir dates/etc. I've basically become my mom's financial babysitter.

I help mom complete all her/dad's necessary social security paperwork. I do their taxes each year.

So, what advice do I have for you....don't lend them money. It will not help the situation, it will just enable them. You have 5 other brothers & sisters, make sure that you are all on the same page. If necessary, hold an "intervention" with your parents so that they understand where they are headed. Offer support and advice to help them turn it around.

This is a tricky situation...I know. Be prepared, it may dramatically change the relationship that you have with your parents. I know it did for me (and not for the better).

[disneysteve]

Originally Posted by minnie1928

I also explained to them that I could not/would not bail them out financially.

I think it is very important for you and your siblings to make this clear to your parents.

You say your father is close to retirement but has no savings and debt totaling about 3 times his annual income. Obviously, he won't be retiring any time soon - probably never.

Your mother needs medical attention for her depression. As much as you may want to help, that really isn't something you can take care of. She needs therapy and possibly medication. She has a significant gambling problem spending at least 13% of income on lottery tickets. If she doesn't see that as a problem, you and your sibs need to stage an intervention.

I think you need to get together with your sibs and discuss how to attack this. The most important thing is what I quoted above. Let your parents know that they need to clean up this mess. You all will help support and guide them but none of you will be writing a check to settle things.

[creditcardfree]

Originally Posted by disneysteve

Your mother needs medical attention for her depression. As much as you may want to help, that really isn't something you can take care of. She needs therapy and possibly medication. She has a significant gambling problem spending at least 13% of income on lottery tickets. If she doesn't see that as a problem, you and your sibs need to stage an intervention.

I think this should be one of the first steps. Exercise can also do wonders to change the way the brain is operating. Maybe start getting her out of the house for a walk daily. The walk alone can give you an opportunity to talk and connect. I'm not implying this is a cure all, but it does make an impact on the depressed brain.

[LivingAlmostLarge]

Definitely tell them you can't bail them out . But be prepared to pay for their funeral expenses. That's what happened to my grandpa. He gambled away all money and was alway sin debt, but my mom them set aside money for his funeral.

[wincrasher]

I think that you should stay out of thier business until they ask for your help. They are your parents and you have to afford them their dignity.

Just as they took care of you as a child, you and your siblings may have to take care of them in retirement. You are lucky you have so many siblings that the burden can be spread among so many. The day may come when you get together to decide how much you can each help. But that is different than conspiring to take over their affairs and dictate how they will live. An "intervention" is a drastic step that puts all your family relationships at risk. I can't imagine doing that unless lives were in jeopardy.

My folks are not very well off financially. If they ask for help, I'll give it unconditionally. Until then, what they do is none of my business.

[TermMonster]

I think it's very important that any intervention be done together with all your siblings. You don't want to take the heat alone on this one!
I've been through a similar event with a loved one and because I took the initiative, I became the "bad guy." I got a lot of "mind your own business" and "it's not your money" from my siblings - right up until bankruptcy was declared.
It's important you do something - first step is total alignment with your siblings.
Good luck!

[Greer]

I would say that financial counseling and support from family is a big one here. They have years of spending habits to change so it won't be an easy task.

[TurnDebtIntoDebt]

They need to cut out their extra spending and start paying off debt. They are not in a good position right now financially. They need to be building their 401K and savings. This is where the majority of their money should have been going. But now, they will have to spend what they get on paying off debt. They need more income to make this happen and definitely need to learn how to budget and save. Adopting a frugal lifestyle would do them some good.

[cicy33]

Originally Posted by wincrasher

I think that you should stay out of thier business until they ask for your help. They are your parents and you have to afford them their dignity.

Just as they took care of you as a child, you and your siblings may have to take care of them in retirement. You are lucky you have so many siblings that the burden can be spread among so many. The day may come when you get together to decide how much you can each help. But that is different than conspiring to take over their affairs and dictate how they will live. An "intervention" is a drastic step that puts all your family relationships at risk. I can't imagine doing that unless lives were in jeopardy.

My folks are not very well off financially. If they ask for help, I'll give it unconditionally. Until then, what they do is none of my business.

I'm sorry, but I am with Wincrasher here. unless they are willing to let you help there is nothing you can do. they have to want to change and like it or not they are adults and can do what they want. Just like you wouldn't like them telling you what to do if they disagreed with your life. I am not saying their isn't a problem just that you can't do anything unless they want you too. I would try talking to them but they might take offense.

[GrimJack]

Originally Posted by BudgetHowTo

What should they do?

My parents' ability to spend money is only exceeded by Barack Obama's. I am one of six children they have.

Sorry about your problems, your families problems and your inability to keep sucky politics out of your whine.

Happy Xmas

[cptacek]

Originally Posted by GrimJack

Sorry about your problems, your families problems and your inability to keep sucky politics out of your whine.

Happy Xmas

lol. You think Barack Obama spending money at an unprecedented rate never before attempted by any president is sucky politics? For once we agree

[GrimJack]

Originally Posted by cptacek

lol. You think Barack Obama spending money at an unprecedented rate never before attempted by any president is sucky politics? For once we agree

I remember you - your the one who thinks the president who sold missiles to Iran is a hero. Then he turned around and supported terrorists, sigh - I don't much agree with you :-)

[snafu]

I suggest you give your siblings a 'heads-up' on your parents financial situation so no is surprised. Perhaps ask their views on bail-out, enabling, mom's need of medical help, how to help, when to help.

It would be great if you could all be on the same page.

[cptacek]

Wow, GrimJack, I'm glad you have the internet upon which to spew your unhappiness. If you kept that in, you'd probably develop a bad case of indigestion.

That was a new poster. He only has 11 posts. He has a real problem, asked for our help, and didn't deserve your invectiveness.