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$2,484 in OVERDRAFTS!!!

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    $2,484 in OVERDRAFTS!!!

    Over the Memorial holiday my thoughts were focused on taking a day to spend time with our children and grandchildren, enjoying a meal together and reflecting on how blessed we've been over the last month. Then, my daughter and her husband revealed to us that that were completely broke and had been using a payday loan company,(Check N' Go) for the last several months just to try getting by from month to month.

    But, before we committed to giving them any financial help,(since we don't have much ourselves) I asked to see their online bank statement. That's when it could be readily seen that there was a much more serious problem than what we had ever imagined.

    After setting the query of the results to the maximum days, we counted 68 overdrafts since the beginning of this year!! All my sweet wife could do was cry. I think it was the combination of them loosing their home earlier this year due to foreclosure and this together.

    We thought that maybe the problem was that they were using debit cards but, my wife and I have a debit card and we have never had an overdraft. Currently, my wife and I don't use auto drafts either so we weren't really sure how we could help them.

    The only help we could offer was for them to attend a Financial Peace University course at one of the local community centers. Other than that we gave them some money to buy groceries, etc.

    Any advice would be greatly appreciated!

    #2
    I'm sure someone is going to have better advice than me, but if it was me, I would ask them if they wanted help. If they do and they are both willing to live by your "rules" for a while I would try being like a consumer credit agency type of thing. Take all credit cards, debit cards, etc.

    Open an account that takes two to sign and sit down and work out a budget and give them cash for groceries, gas, things for the kids, etc. Meet every payday, pay the bills with both signing the checks, dole out the cash for daily living stuff and go from there.

    I'm sure people will think I am nuts, but if my kids were in that much trouble that is what I would offer and if I could, maybe help them out by paying something off for them or get them caught up, but insist they make a payment each month back with interest to you.

    I also think Financial Peace University is a good start too.

    Comment


      #3
      believe it or not i've seen the "give control to someone else" suggestion from a few professionals when the case is extremely serious. having a trusted family member who is adept with money and willing to help out makes all the difference.

      simple fact is that for some people, creating the habit is the hard part and they react better to having an outside influence control the habit creation in the beginning.

      Comment


        #4
        I don't think Homebody's advice was crazy at all.

        They are in an extreme situation, and it calls for extreme measures.

        They need to be accountable to someone for every penny they spend (you and your wife if you are willing to take on the job) and they need to be paying for absolutely everything in cash from now on.

        Then they need to learn how to manage their money starting at the "Kindergarten" level, which means tracking their spending, learning how to balance the checkbook, realizing that they can't spend more than they make, making a budget and cutting it down to the bare bones, and coming up with a plan to pay off what they owe.

        Please, please, please do everything you can to convince them to stop using the payday loan service immediately! If they don't, they will just end up spiraling downward farther and farther.

        Oh I do wish all of you the best!

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          #5
          Do they only have one checking account? If so, part of the problem may be that that one deposits the money into the account and then they both spend it. If each one were to have their own account then they could know for sure how much is the account without relying on the other. Just a suggestion. Good luck!

          Comment


            #6
            yikes! I was doing overdrafts... usually by a few dollars... my worse week, this cost me $105... I was so mad at myself...

            since starting dave ramseys plan and FPU, i'm doing better...

            those darn $34 bank overdraft fees get expensive.

            Comment


              #7
              It's hard to know what advice to give you without diagnosing the problem.

              Simply put, your children either fail to bring enough money in (a relative statement) or put too much money out (a relative statemetn also) resulting in a negative cashflow. They have to get to at least a neutral cash flow (preferrably positive so they can save).

              Bankruptcy may be an option here to get them to start over - just because there was a foreclosure doesn't mean that they declared bankruptcy.

              Was it a sub-prime mortgage that got them in original trouble? What kind of house did they own?

              I think some books on budgeting may be a good start and have them pay you a small amount of rent if they are living with you to get the model of budgeting for fixed monthly expenses to get them on their feet. Quash any ideas of a new 3bdr house on an acre lot and have sequential goals - a mobile home perhaps, then a starter townhouse, then a single family home.

              Again, I feel like I am shooting in the dark and I am sorry for your family's problem.

              Comment


                #8
                I think homebody had some good ideas. If that was my children, I would offer to take over their finances and put them on a budget.

                Comment


                  #9
                  Thank you all for your advice. My wife and I are suppose to sit with them this evening and we will be discussing with them some of these suggestions.

                  Thanks again.

                  Comment


                    #10
                    JW
                    Please let us know how it went. Talking financial matters over with relatives is never easy.

                    Comment


                      #11
                      There are three steps necessary for financial success:

                      1. An honest and accurate view of the current situation. (Typical breakdown: denial.)

                      2. Financial goals and sufficient knowledge and/or counsel to create effective plans to achieve these goals. (Typical breakdown: poor judgement.)

                      3. The fortitude to carry out your plans. (Typical breakdown: the need for immediate gratification.)

                      When you tally the income, the debt and the expenses, it is usually pretty obvious what needs to be done (at least, to everyone but the victim). Though this is a wonderful, prosperous country, there are those who fail to prosper due to factors beyond their control. But the hard fact is that most of the failure is due to foolishness. I speak as one who was formerly more foolish than most.

                      Comment


                        #12
                        Yesterday we all met with our daughter and son-in-law to discuss helping them with their financial problems, specifically about the $2400+ in overdrafts. My wife and I have reviewed all of the emails and comments for advice and we agreed not to give them cash, only food and necessities like, ( toilet paper, etc.). Additionally, based upon one email we bought the book by Dr. Henry Cloud called "Boundaries". It was also very helpful.

                        We started off by explaining to them that we loved them very much and that we will help them the best we can but,".. we don't want to give a drunk a drink". We don't want to be enablers. So, we would agree to pay for the FPU materials and buy them groceries, toiletries, etc. and one full tank of gas. But, we would not give them any cash! They would also have to promise to do the following:

                        * cut up their debit cards and use cash only.
                        * live on a zero based monthly budget and review it with us once per month.
                        * sell all of their unnecessary items (i.e. Projection TV, dirt bike, camcorder, etc.)
                        * attend each FPU class together until finish
                        * balance your checkbook regularly

                        After thanking us and promising that they would cut up their debit cards and use cash Our daughter proceeded to confronted us and blamed her financial problems on us for not teaching her how to balance a checkbook, budget, etc. We admit that we didn't teach the kids a lot of these basics and in hindsight its probably better that we didn't, (..when the blind lead the blind they all end up in a ditch). So, I guess she has a point. But, it is our hope that going forward this will remedy some of the problems.

                        We were also glad to hear that our son-in-law has been working very hard to resolve his issues with pornography and gambling thanks to the counseling at church.

                        Thanks again for all those posted comments and sent us emails with advice, we really appreciate it.

                        Comment


                          #13
                          I don't know if you have cable TV, but you should check out the show "Big Spender" on A&E, which is every Saturday at 11.30amET. Better yet, invite your daughter and son-in-law over so you can watch it together, and then discuss the progress that they're making with your plan. It might help them (and you) to know that there are a lot of other people going through the same thing, and to see it from someone else's objective perspective.

                          The plan you set forth for them sounds very good and structured, which sounds like is exactly what they need. The only thing I would suggest changing is reviewing their budget with you more than once a month. I know it's a "monthly budget" but that doesn't mean they'll STICK to it for the entire month. Honestly, I didn't even know it was possible to have more than a couple of hundred dollars in overdraft fees, and they've got over 10x that. If your daugher is blaming you for the predicament they're in, then that is evidence that she is in serious denial and needs to be kept in check. They're going to need constant supervision. They might resent that, but it's better than having no help or support at all.

                          Good for you for not giving them any cash, btw. You have a lot more patience than most people have, I think. Your daughter is very lucky to have parents who are so understanding and supportive. Keep us posted on their progress.

                          ~ Jenney

                          Comment


                            #14
                            Wow...first they have got to stop using the pay day loan companies (these guys are really loan sharks if you ask me) Also who is paying for them to take the D.Ramsey course? If they are, then I suggest this money be used towards debt . If you are then I would still use the money towards my debt. Dave's books are at the library at no cost and you can create all the forms on Excel or copy the pages which is far less than taking the course. Also you can listen to him (dave) online Moving them in and taking over the finances sounds like a plan to me
                            good luck

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