Advice for Friend

[watsoninc]

I have a friend who wants to do a good deed. The problem is she doesn't have the resources yet and says she needs to make a purchase soon. Her mom wrecked her car but cannot afford another one. The value of her car is $2000, and she has full coverage. The daughter feels obligated to help her mom get aonther car.

Daughter's Background: She's in her mid-twenties and lives at home with her parents and pays no rent. Family members pay her $500 monthly car note, and she works full time with an income around $50K and goes to graduate school. She has student loan debt and CC debt, but I don't know the amounts (not small). She has $8K in savings.

Mom's background: I could obtain no details about why the mom cannot afford to get another car although I do know that she works and needs the car on a daily basis.

My friend wants to 1) give the mom $2K towards the car and pay a car note monthly, 2) borrow the money for the car on a credit card, 3) give the mom $5K towards to car and take out a car note for the difference.

I told my friend that I didn't like any of these options and told her to avoid debt altogether. I told her a sickness or loss job, or number of other things could change her financial situation significantly over the course of a 5 year car note. I told her that she could help her mom without getting into debt. I told her that since she feels led to fix this situation that she to put the $2,000K that her mom's insurance will supply with $3-4K of her own money and help her mom get a $5-6K good used car. I told her to have the car checked out by a mechanic to make sure that she doesn't get a lemon. However, this is not the time to move up in car since everyone is broke. She thought that this was pretty "conservative" advice to say the least. She wants to put her mom in at least an $11K car. I think that this is a luxury that she cannot yet afford. What do you think????

[disneysteve]

I think you are absolutely right. Your friend is living rent free so I have no problem with her feeling some obligation to help out here but she already has more than enough debt. Why she has CC debt and 8K in savings makes no sense anyway.

Let mom take the 2K from insurance and if your friend wants to kick in some of her own money to get a nicer car, that's fine but absolutely nothing should be borrowed here. I'd put a cap of 5K max for the "new" car. There is absolutely no reason why anybody can't get a very nice car for 5K or less.

Honestly, I don't even like that idea given your friend's debt situation but at least that is a somewhat reasonable way to go.

[wincrasher]

As nice as it sounds, such a gift is a luxury she can't afford.

Often people do things detrimental to themselves out of a sense of obligation to family. Even worse, loving family members let you do it or encourage/pressure you do do it.

[disneysteve]

Originally Posted by wincrasher

As nice as it sounds, such a gift is a luxury she can't afford.

Often people do things detrimental to themselves out of a sense of obligation to family. Even worse, loving family members let you do it or encourage/pressure you do do it.

Suze Orman always says that women need to learn to say No out of love instead of Yes out of guilt.

[Alex_Adviser]

I agree with you watson here. At this time of unstable economic situation its always advisable to be debt free. And the opinion of the used car is the best at looking into the current situation. She could probably get a very bargain for a good car at around 5k. And so it would be definitely useless to invest in a car worth 11k when the things can be manged with a car worth 5k.

[Seeker]

Originally Posted by watsoninc

I have a friend who wants to do a good deed. The problem is she doesn't have the resources yet and says she needs to make a purchase soon. Her mom wrecked her car but cannot afford another one. The value of her car is $2000, and she has full coverage. The daughter feels obligated to help her mom get aonther car.

Daughter's Background: She's in her mid-twenties and lives at home with her parents and pays no rent. Family members pay her $500 monthly car note, and she works full time with an income around $50K and goes to graduate school. She has student loan debt and CC debt, but I don't know the amounts (not small). She has $8K in savings.

Mom's background: I could obtain no details about why the mom cannot afford to get another car although I do know that she works and needs the car on a daily basis.

My friend wants to 1) give the mom $2K towards the car and pay a car note monthly, 2) borrow the money for the car on a credit card, 3) give the mom $5K towards to car and take out a car note for the difference.

What do you think????

I think I'm confused.

Who's car was lost... Mother or daughter?

Daughter section:

Family members pay her $500 monthly car note, and she works full time with an income around $50K and goes to graduate school.

Or are we talking about two cars here?

Who was paying the note on the "lost" car... Mother or daughter?

Who's fault was the accident... Mother or unknown other?

I guess there's too many "hers" in the sentences for me to determine what's going on. And the answers to those questions would be rather important in determining what I'd suggest.

[snafu]

Another missing bit of info is why mom can't work out financing for another used car. Does mom owe more on the car than the insurance pay-out? It's 'smart' not conservative to avoid big credit purchases in this economic mess. The unemployment figures are still higher than expected. If daughter feels obligated...perhaps she could start paying rent which mom could use towards a car or whatever she deems important.

[watsoninc]

Seeker, we are talking about two cars. The daughter has a car, but it was the mother's car that was in an accident. I only mentioned to daughter's car note for financial context: she's not in a great place financially. I don't know if there was a car note on the mother's car. I do not know who caused the the accident.

Snaufu, although I was told that the mom absolutely cannot work out financing for another car herself, the daughter would not give me the details. The daughter was relatively forthright with her own financial situation but not forthright with her mother's. All she would say was, if "I cannot do supply a car for my mother, she won't have one." Snafu, I suggested that the daughter could start paying rent, which the mom could apply towards paying for a car too, but the daughter shot me down saying that this decision needed to be made this week not a few months in the future and that the mom could not take out financing herself.

For the sake of my question though, let's assume that the mom was not upside down in the car but is over-extended debt-wise and would no longer qualify for traditional financing.

Thanks to everyone for the support in offering your opinions. At the end of the conversation, the daughter referred to me as her sobering, bubble-bursting friend. Although I always want to be truthful, I thought this was somewhat of a "complidiss." Oh well, I guess that's what friends are for: the truth.

[lovcom]

It sounds like the family the original poster writes of has no boudries. Everyone is in every else's business, and the obligation runs so high and across boundries. What a mess?

A parent must almost NEVER expect their grown children to chip in when they're in trouble. We parents must not take from our kids! And a child must never be placed in that position (in most circumstances).

Hey, mom had her day in the sun, and now it's her offsprings time, so why jeopardize that? Why sabotaze our children's future? You call it Love? No that is not Love, that is need and taking advantage.

The thing we all must do is live our lives so that we're not a burdon to society, and especially our family.

I would advise the daughter to NOT give mom a cent and yes, I know she lives under mom's roof scott free, but so what? We parents are to give to our children and get them launched into their own lives so that they can stand on your own too feet, so parents giving does have an end.

Personally, I'd rather live out of my car homeless then burdon my children with sheltering and feeding me, especially if doing so means they get hammered financially now and years into the future.

Families are too full of entitlements, and that is why we have more bleeding hearts then neo-cons in our society :-(

We all should carry our own weight... the only ones entitled are the sick, the mentally challanged, true victims...MOM, figure it out yourself and stop being a burden to your children!!!

[terces]

I don't agree with your point, lovcom. I would help my parents if they were in need same as they would help me. Of course only within what I can truly give. I would never want to see my parents homeless... or my children for that matter.

To me a burden is someone who does nothing to help themselves.

[lovcom]

Originally Posted by terces

I don't agree with your point, lovcom. I would help my parents if they were in need same as they would help me. Of course only within what I can truly give. I would never want to see my parents homeless... or my children for that matter.

To me a burden is someone who does nothing to help themselves.

I understand. I would not want to see my own parents homeless. But what I'm really speaking to is this sense of entitlement that parents have of their children. "I gave you life, so you own me" mentality; as if we had a choice to be born or not.

If I were homeless, I would not oblige my children to help me, or feel entitled to their help. However, if they, and on their own offered AND it would not damage them financially, then yes I would take their help.

We parents must have a sense of keeping future generations as financially unencombered as much as possible.

I think that if a parent receives help from their children knowing full well it will cause years of setbacks of damage to their children's financial futures, or their children's own family units, that is immoral and very wrong.

[disneysteve]

Originally Posted by lovcom

I would advise the daughter to NOT give mom a cent and yes, I know she lives under mom's roof scott free, but so what? We parents are to give to our children and get them launched into their own lives so that they can stand on your own too feet, so parents giving does have an end.

I think a big problem today is that the kids aren't standing on their own. They are living off of mom and dad for way too long. Look at this case. This girl is in her mid-twenties and earns $50,000/year which is a perfectly good income. Why is she still living at home rent-free? What is she doing with her $50,000 income and why isn't some of it being used to contribute to her room and board?

[lovcom]

Originally Posted by disneysteve

I think a big problem today is that the kids aren't standing on their own. They are living off of mom and dad for way too long. Look at this case. This girl is in her mid-twenties and earns $50,000/year which is a perfectly good income. Why is she still living at home rent-free? What is she doing with her $50,000 income and why isn't some of it being used to contribute to her room and board?

I agree that for this particular daughter who earns $50k, and is post college, her parents should not be providing for her in any way. I just wanted to make the point that the daughter should not be providing for her parent/s either.

[Seeker]

I guess I feel a little differently than you all.

I don't get the impression that Mom is asking daughter for an auto, but that daughter feels obligated. As indeed, daughter should feel obligated. It sounds as if the daughter has not only been living scott free under her families' roof, but also that the daughter's car note has been paid for also by the family.... not the daughter?

If this is so, then this is my suggestion:

1) Daughter should immediately start paying at the very minimum her own monthly car expense (the note on her car) of $500/month.

2) Mother should use the insurance proceeds to get herself another drivable car... used, not new; if mother cannot afford new (who knows, maybe if Mom was not paying 500/month toward daughter's transportation, maybe Mom could afford it).

50k a year is a very livable salary. I'd be curious as to what daughter's budget looks like here. Where is all the money going?

[Seeker]

Also if daughter cannot pay $500/month for her own transportation, she should sell her car and buy other reliable transportation. Especially if this $500/month is to continue forward for more than a year or two.

$500/month represents a good amount of dollars for Mom's monthly car expense... does daughter really expect to be paying a note on Mom's car while Mom&family pays the note on daughter's car?

OP, your friend is not totally forthcoming with everything from her side nor her Mom's.

Without daughter paying rent, food, car, etc. she should have somewhere around 2k minimum per month... cash, net. I realize that some grad schools are more expensive than others, but school loans should be in deferment at the moment if she's still attending school. If she's paying as she goes, what's with the CC debts?

So again, in order for any one to truely be able to advise them in this situation, we'd need to know where the daughter's income is going.

[watsoninc]

My friend has always found it challenging to manage her finances. Fortunately, she has a financial advisor although my belief is that the best financial advisor is yourself. Still, having a planner is definitely better than not doing anything. I could ask my friend for specifics so we can dig around in her finances, but the truth of the matter is that she has what I assume to be tens of thousands in debt, a decent income, a little savings, and very limited expenses outside of her debt. I do not know how much school is yet, and she does like to shop a lot. My friend says that her "family helps" pay for the car note, but 1) my friend's car is not her name and 2) she is "definitely not paying for it all on her own." No, she is not completely forthcoming, but I never pressed her for all the specifics because I didn't want to make her any more uncomfortable than she already was, and I got the impression that I was crossing boundaries that she didn't want cross. Personally, I felt that until she cleans up her own mess, she is in no position to be of much assistance anyway and that her expectations for moving her mother into an $11K car were unrealistic given the available money.

Interestingly, she wants to move out but feels restricted by her debt and limited savings. She knows she needs a change and regrets much of her previous spending decisions. She has a general awareness of her situation but is still in danger of making future mistakes.

Also, the mother is absolutely not pressuring the daughter at all. It is 100% the daughter's sense of obligation that gave her this idea, as guessed.

[KellyJef]

Originally Posted by disneysteve

I think a big problem today is that the kids aren't standing on their own. They are living off of mom and dad for way too long.

I totally agree.

There is actually a new tv show called "The Bank of Mom and Dad" that is about this very subject.

The mom and dad actually move into their grown child's house (they're in their 20s and 30s so they should be more financially stable!) for a week to help get them "straightened out" with the help of a financial advisor

[disneysteve]

Originally Posted by KellyJef

I totally agree.

There is actually a new tv show called "The Bank of Mom and Dad" that is about this very subject.

The mom and dad actually move into their grown child's house (they're in their 20s and 30s so they should be more financially stable!) for a week to help get them "straightened out" with the help of a financial advisor

That really isn't what that show is about. I saw the first episode (we discussed it in another thread). It was a 20-something girl who does live on her own but her finances were a mess - lots of debt, living way beyond her means. Her parents moved in and the advisor came to help teach her how to live below her means and get her debt paid off.

I'm talking about 20-somethings and 30-somethings who are still living in mom's basement or their old bedroom, paying little to nothing in rent and simply not moving ahead with their lives as adults.

[Joan.of.the.Arch]

I guess it doesn't make much difference, but I think the woman in that first Bank of Mom and Dad episode was 30 years old.

PS Looked it up--she is 33.

[snafu]

Do cultural differences need to be added to the mix here? having dinner with colleagues here in China, we learn that many are paying a monthly stipend to mom & dad whether needed or not as that is the norm here.

This goes back to rural days when mom & dad were no longer physically able to work on the farm and whose gov't pension was too small to pay for food. That family history caused today's urban parents to save for old age. Most now get a pension from employer along with that teeny tiny gov't pension. None-the-less the practice of having children 'pay-back' parents care and support is incredibly strong [much to our surprise]