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conversations with parents

Is It Ever Okay to Help Your Parents Get Out of Debt?

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help your parents get out of debt

Many of us adults are caught in a big juggling act. Obviously, we’re taking care of our own finances. However, we’re also faced with teen or young adult children who might still need our financial help. Moreover, our parents might need assistance as well. It’s hard to know what the right boundaries are in any family. For example, what if your parents have debt? Should you help your parents get out of debt? Or should you wash your hands of it all? Or is there some in-between option?

Every Family Is Different

Every family handles their finances differently. Some families talk very openly about money whereas others never discuss the topic. In some families, parents tend to feel responsible for their children’s finances no matter how old the “kids” are. In contrast, some families feel that adult children should help their parents. This is cultural, social, and individual. So, ultimately, you’re going to have to take your own family’s issues, preferences, and beliefs into consideration when deciding if and how to help your parents get out of debt.

Your Parents Are In Debt: 2 Possible Scenarios

There are two different scenarios that might bring about the question of whether and how to help your parents get out of debt:

  1. Your parents have requested your assistance.
  2. Aware of your parents’ debt and concerned about their future, you want to offer to help your parents get out of debt.

There’s another scenario that’s unfortunately common as well. You and your parents are both aware that there’s a problem, however you haven’t discussed it outright. Your parents might complain about debt, for example, but neither of you have discussed the depth and breadth of the issue.

Step One: Talk About How to Help Your Parents Get Out of Debt

Regardless of the situation, it’s time to have a conversation. Talking about money often poses challenges. Many families find themselves arguing, bringing up old issues, and generally feeling discomfort when talking about money. However, the only way to deal with the situation well is to deal with it head-on. (Note an important exception: if your parents are in late stages of memory loss, you may decide to take over their finances. This is an entirely different situation that must be handled in its own unique ways, including through legal means.)

If your parents have asked for your help, then the door is already open for this conversation. Otherwise, you’ll have to bring it up. Broach it firmly, kindly, and respectfully. Let your parents know that you want to discuss debt and ask about a good time to do so. Bring up your own concerns about their debt. Ask about their concerns and thoughts. As best as possible, you’ll all work together to figure out a plan that works for everyone.

If your family is unable to have these types of financial discussions, then you might want to consider family therapy together. There are therapists who specialize in discussing finances. As a result, they can help you navigate the tricky parts of this big issue. Moreover, they can help each of you figure out your wants, needs, abilities, and boundaries. This is a key part of figuring out if and how to help your parents get out of debt.

So, Should You Help Your Parents Get Out of Debt?

Obviously, you need to consider a lot of factors in this conversation about how to help your parents get out of debt. Whether or not you decide to assist them depends on a huge variety of factors. Ultimately, it’s up to you. However, there are some key things to consider that can assist you in making your decision.

Benefits of Helping Your Parents Get Out of Debt

Here are some of the reasons you might want to help your parents get out of debt:

  • You’re able to do so while they are not. If you’re in the financial position to help and you genuinely want to then there’s no reason not to move forward.
  • Socially, culturally, and personally you believe that children should take care of their parents. They raised you and now it’s your turn to help.
  • You want your parents to have a high quality of life moving forward. If they get out of debt, that increases the likelihood. After all, debt is stressful!
  • It’s important to you that your parents’ long-term care plans are in place. If they’re drowning in debt, then they might not have a plan for the future.
  • Your parents might be able to help you out in exchange. For example, you might ask them to provide childcare. Everyone contributes and everyone wins.

Drawbacks of Helping Your Parents Get Out of Debt

Here are some of the things to consider before you take on your parents’ debt problems:

  • It’s a financial burden. Taking on anyone’s debt is hard. Make sure that you’re in a financial position to help before you offer to do so. After all, if you go into debt to pay off their debt then you might end up struggling.
  • You might feel resentful. If dealing with their debt might put a strain on your relationship with your parents then you have to think carefully about whether or not it’s worth it.
  • Your spouse might not be on board. Dealing with in-laws together is hard. You want to get on the same page before moving forward with paying off parents’ debt.
  • They might go back into debt. If your parents aren’t financially responsible, then paying off their debt may not help them out. They may revert to old habits and end up in the same position again.

Middle Ground Options

On one hand, you could pay off all of your parents’ debt. On the other hand, you could tell them to deal with it themselves. However, you don’t have to go to either of these extremes. Discuss middle ground options with your parents. Some of these options include:

  • Lend them the money to pay off their debt. They can pay you back without interest. As a result, their payments might feel more manageable.
  • Assist them in better money management. If they’re open to it then they might just need help figuring out how to handle their debt.
  • Offer them a job. As aforementioned, you might have them do childcare. Or a variety of other things that assist you. In effect, you’re “paying” them for their work by putting that money towards their debt repayment.
  • Pay off a portion of their debt. You might pay off the debt with the highest interest rate or highest balance, for example. Then they can take over from there.
  • Make a plan with your siblings. Getting the whole family involved might ease the burden a bit.

All in all, you want to consider your options carefully. There are certainly pros and cons to assisting your parents with paying off debt. It’s a very personal decision.

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Conversations to Have with Your Parents

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conversations to have with parents

My parents are getting older. Dad will be 83 in a few months. Mom will be 72. Dad suffered a fall a couple of months ago and, although he has recovered, a full recovery was in doubt for quite a while. He is also close to being deaf and can hear only with the help of a hearing aid. Even then, he does not hear much unless the speaker is looking directly at him.

Fortunately, my parents are both generally strong and mentally alert. I think they have a few good years left in them. At the same time, their home is rather large for just the two of them and they live very far out of the way in a rural area of Florida. They certainly do not live close to any urgent care facilities. Even though they are happy where they are living, it does give me pause each time I visit them which, I know, is not nearly often enough.

My parents have talked about moving to a smaller home at some point but each year, that point is pushed farther off. With the economy and the housing market in such a sorry state, that may be just as well. At the same time, their future does weigh on my mind. My Dad has always made it clear that he has more than enough to provide for my Mom after he passes away, but money is not everything that needs to be considered.

The other day, my mother called to ask me if I wanted a garlic roaster. That seemed like an odd inquiry so I asked her why she was offering up a random kitchen item. She explained that she was going through her cupboards and getting ready to make a donation to Goodwill because she knows that at some point she will have to downsize and she does not want to have to deal with getting rid of everything in a hurry later on.

I thought that was a good first step for my parents. While I do not want to emphasize to them that they are getting old — not older, but old — I do want them to pay attention to proper planning. I used the Goodwill discussion as an opportunity to ask my mother if she would like me to have her stamp collection appraised. That way she could sell the stamps and use the money for something she and Dad might enjoy. She told me that she would rather leave the stamps to my son and I respected that. She is thinking about her legacy and how she will be remembered and that is every bit as important as seeing her enjoy the value of the things that she has collected over the years.

There are a lot of conversations that I need to have with my parents when the time is right, probably sooner rather than later. Here are some you might want to consider if you have an older parent.

Wills

Everyone should have a will. Everyone should consult with a lawyer who specializes in trusts and estates in order to have the will prepared. Everyone should review their will at least every five years or whenever a major life event occurs. If your parents have not been doing this, they should do so soon! One of the most important decisions they will make is the identification of which child or other person will be executor of the will. Make sure the executor will not act in any self-interested ways.

Hopes

A will can tell grieving survivors a lot, but children should really talk to their parents to find out what the parents want to see happen after they have passed on. If Mom and Dad really want certain items to go to specific people, they should really consider making the gifts while they are still alive and can control the dispersal of their things.

Living Wills

Do your parents want to be kept alive on life support even if there is no hope? Each should have a living will to indicate their wishes.

Downsizing

Do your parents have a house that is too big for them at this point? If one passes away will the other be able to handle living in the home by himself or herself? It may be easier for them to downsize while both are still alive than to wait until one passes away or has to be placed in a nursing care facility.

Location

If your parents live far from their children, do they have friends who can be supportive if one of them passes away? If a surviving parent is going to be left alone, who will be there to offer support? If there is no one, the parents might want to consider moving closer to a family support network.

Forgiveness

If you have been in an argument with one or both of your parents, or your siblings, make amends now. You do not want to attend a funeral of a loved one and have to confront both the loss and the guilt of not having made amends.

Documents

You should know where your parents keep their important documents. When a parent passes away, the other parent should know where everything can be found. When a second parent passes away, the children should know where to find the will, and the documents that they will need to keep the parents’ home functioning until it is sold or otherwise passes to an heir.

Burial

As difficult as this may be to discuss, know how your parents would like their bodies to be handled after passing away. Where should they be interred? What kind of service and ceremony would they want? Should be advised of their passing? This is a horrible conversation but one that needs to happen.

Have you ever had to deal with the passing of a parent? What questions do you wish you had asked before they passed away? What conversations did you have with them?

(Photo courtesy of Marcel Oosterwijk)