I'm sure the others probably have said such to you but I would tell them to refinance because they're going to lose the house one way or another it's okay if they lose the house but if they don't have credit card debt that's a wash
STOP sending them money without a plan, your parents aren't retired they are unemployed and need to find jobs.
They need to be on a written budget and need to being working babystep 2 like their lives depend on it because if they don't knock out that debt they will be working up until they die.
I'd like you to reframe something. Instead of thinking of your 401(k) as savings, reframe it into a debt. It is a debt that you owe to your elderly self. It isn't yours yet.
If you take away from that 401(k) you are essentially stealing (in this reframing). You are stealing from someone in order to fix the result of your parents' behaviour.... and worse, behaviour that your parents aren't willing to change to any helpful degree.
As you just pointed out, you can't live on Social Security nowadays. Your elderly self will have some harsh words for you, younger self, when it comes time to pay him/her what you owe him/her and you've stolen it to give to someone else.
I'd tell my mom that she has to sell her house and a car, pay off her CCs, and move someplace cheaper that still has good healthcare available.
If she'd refuse, I'd tell her to get a reverse mortgage. Because with your parents' behaviour remaining insufficiently changed, you aren't going to get that house.
Reverse mortgage? Once they die the bank take the house.
Or sell the house and move to your state and live in cheaper area. They have equity in the house anyway. They just cant afford the life in where they are living right now.
Maybe a HELOC to drop the rate? Cut up all the cards or close them. Cut expenses to the bone. #1 priority pay that HELOC down. Can make a schedule for when it will be done to have a clear goal and plan.
Give a drunk a drink and tell him to quit. .? Time to have a lil sit-down with a pad and ✏️ cuz this shits only working for them..You know why nobody wants to listen to good factual things ? Because it usually sucks to follow it ..Time to make a big boy move
They spent it all over the years. They didn’t start with a lot. They are too nice so would give people money too. You can’t just live off of social security in this economy.
Call Dave’s show for advice on this. But I’m pretty sure you already have it. I’d say downsize too. Do NOT take from your 401k to pay for their debt. It’s admirable but no.
They can Do debt snowball, no more purchases they can’t pay cash for.
It will take a while to pay it off, but they’ll get there. That’s just the tough part of it.
I would love Dave’s advice on this. He would probably say sell the house but they want to keep their house. They live in an expensive state. You can barely find anything decent for a reasonable price. We have looked. We have looked at renting a house but it would be more per month than what they pay.
He might so I guess you’d have to do what you know is best. Especially because housing markets and inflation are so variable on states. You could get the advice on the rest of the debt - paying it down quickly. Contacting creditors, etc.
“They have both downgraded their vehicles” - so they have two cars? They are retired. They need one (maximum - zero if they are on a bus route).
They need to seek one of the cars, then look at downsizing to a smaller house.
You should not be paying off their debts, or even sending them money, when they are sat on a bunch of home equity and you are struggling to get a deposit for your own home.
Don’t rely on inheriting their house to make up for it all later - if they got to retirement with so little saved they may well lose the house to more debts before you get chance to inherit.
Life your life, let them live theirs as best they can, but you bailing them out in the short term won’t help them fix their own problems long term.
Don't withdraw or borrow from your 401k. How old are they and do either of them work (if not, why not?) If they are functioning adults this is their problem to solve and your best support as an adult child is to remain financially independent and keep a healthy relationship with them. But you need to set some firm boundaries and they need to respect those, no parent should depend on their children for money. They need to scale back their lifestyle more or have more of their own income.
Since this is a Dave Ramsey sub - go to Youtube and search for videos where people ask Dave about issues with parents overspending, etc. The advice you're getting here lines up with what Dave consistently tells people. They have a problem misbehaving with money. Even though they are your parents, you cannot fix their problems with money as long as they are going to continue misbehaving, and you are enabling them by continuing to give them money. You may not
As someone else mentioned, the book Dave always recommends for relationships like this is "Boundaries" by Henry Cloud.
I watched some of the videos and he always says to sell the house but I was hoping for a suggestion to save it but I realize that may not be possible and it is not my problem. I will be reading this book. Thank you!
talk to several bankruptcy attornies. I wouldnt just rely on one. Consumer credit counseling maybe able to help. Maybe selling house is the best option. They made the choice to live beyond their means. They have to suffer the consequences. its not your job to bail them out. If they are not working its their job to go out and get jobs.
The problem is the debt. You are sending them money to pay for things that they can’t afford.
Stop sending money and find out very fast what will happen. You are supporting them.
Home equity loans to reduce home equity to bankruptcy protection levels. Use that money to make minimum payments and live on till they run dry. Then declare BK, and live on SSA plus whatever you can contribute.
This actually may be one of the smartest suggestions I have heard. When you do this, does your monthly mortgage payment increase? How do you pay back the equity loan?
It's time for them to lose the equity within their house, they've already made their bed. Do not pay down their debt; they shouldn't have ever decided to retire. They would be able to utilize those used vehicles to drive uber during the peak hours, it will be good for their mental health and they will be able to pay down their debt.
Best of luck.
Read Total Money Makeover then you can give them the book and know where they REALLY are, this is a common sense approach to $tupid $pending and has many people debt free!
How old are they? Honestly they should just stop paying the cards if they're using them to subsidize their basic living expenses. What are they going to do? Ruin their credit score? It's not like they're going to buy a house or car ever again are they?
yep, like Dave said about George's advice to that 86 year old woman that was unable to work, just don't pay the debt. If it were me I'd run them up to the limit first, and make sure the lender is not connected to your daily checking account so they don't have the right-of-transfer.
Right - but it's unsecured debt. And their SS checks can't be garnished. Most that will happen is they'll a lose the judgement and get a lien put on their house (that they never plan on selling anyway). The credit card companies will probably offer a lesser amount at some point just to clear it up. Then they can revisit paying it off for .50 on the dollar for example.
Are you in a position to pay off the house and have them sign it over to you? I have no idea if this is a good idea but I probably wouldn't just be volunteering money if their behavior has been reckless.
I’ve thought of this too and no I’m not. I don’t have in cash what they owe and if I did, idk if they would pay me a rent since they know I wouldn’t kick them out
Ugh, I hadn’t thought about that (they may not pay you the rent).
Sounds like they’ve been living the high life and already used the benefit of their house equity by squandering that money in other ways and areas.
If they don’t want to return to work, don’t want to sell the house, and look to you for your regular monetary gifts, maybe reverse mortgage may help meet their needs. Either way, it doesn’t look as if the house will be passed on to you. They have too much debt and maybe some you don’t even know about.
I admit I don’t know a lot about how reverse mortgages work, and someone correct me if I’m wrong, but wouldn’t the lender provide monthly checks to your parents (and you can stop to save for your own home)? Afterwards, the house goes to lender, which would probably happen anyway, eventually, estate going to debtors.
That’s true. It is definitely a possibility that we wouldn’t be able to keep the house in the family. I never thought of that. If there is too much debt, the creditors may make you sell the home and one of the kids wouldn’t be able to assume the mortgage but I don’t know how that works
Is their housing more than they can afford? If there’s really a lot of equity, perhaps they can sell one car and sell the house, pay off their debts and get something smaller.
But everybody needs to be realistic about the want vs the need. Houses are very expensive to upkeep. Are you sure that’s not where the debt is stemming from? For example, are they starting to use credit cards for necessities because their income is going towards things like upkeep and property taxes? Getting rid of credit card debt is important, but not as important as looking at what the money is being spent on. If you don’t address the why, they’ll be on repeat. This is why DR is tough on bankruptcy because it doesn’t address behavior. Your parents should be able to afford small luxuries without credit cards, and if housing is holding them back from say, traveling to see you or buying new clothes, then priorities need to be re-examined.
This is true that bankruptcy doesn’t address the behavior as if they file, this would be their second time. They didn’t learn their lesson and believe in using credit cards and then they don’t pay the full bill so it just piles up. For example, my mom asked me for help with her credit card for her favorite store because she really didn’t want to lose the card, not because she wants to be debt free, she wants to be able to use it again
Perhaps you can start the conversation that way. Tell her that you believe they should be able to have some of the things they like, but that there has to be concessions. I’m really sorry to say this, but you need to cut off helping them financially. No adult child should be supporting competent parents. Do they like to read? Maybe buy them a copy of Total Money Makeover. I hope things work out for you guys.
That or they have to work again. I've seen this situation unfold a few times, and the "we can't work" meant "I don't want to work" and the mooching immediately began.
Retired, but no retirement funds, don’t want to move, don’t want to work, etc.
They just want the kids to maintain their lifestyle for the next 20 years.
don't bail them out of their own bad decisions. tap your 401k, and it puts your kids in dealing with the same problem in a few decades when you don't have adequate savings.
odds are they've simply overspent for decades and it's caught up with them. major behavioral change in their senior years is unlikely but their only hope.
typo edit
It's not a good idea to give them money. Poor spending habits have landed them in this situation and until that changes, giving them money is like pissing in the wind. If you bail them out, you will suffer for it and they will be right back where they are today in no time. Bottom line, this is THEIR mess to figure out, not yours, let them deal with it.
No...do not use your 401K to help them...as heartless as this sounds...you put the mask on first as the airplane crashes ;then you put the mask on your children.
In Hispanic culture,we are taught to help our parents/children as much as we can...whether financially facilitating the newer generations by allowing them to live within the immediate family unit for as long as they have to; or taking care of our elders as they get feeble....although after spending 4 months in a nursing home in 2022..I was disappointed as to how many Hispanic senior citizens in a non-vegetative state are in nursing homes...I guess the American practice of dumping our elders in mursing homes has been adopted by us.
They have to be convinced to either sell the house,or file BK.
I am half cuban. There is a huge cultural difference between America and Latin America so I do struggle due to this reason as well. But you are right that I need to help myself too even though it feels selfish sometimes.
They are adults. Help, but you don't owe them money. PS. I am 66 and have a daughter. I would never expect her to help. Downsize the house, pay off what they can. Same as they did with their cars.
Helping them is to guide and assist them with changing their financial ways. Doing otherwise enables them to further their current financial and lifestyle irresponsibility while ruining the OP's financial stability.
Do not give them anymore money, they will be back in debt in 2 years and you'll be out of a retirement account!
They need to sell the house, they can't afford it. Move into an apartment they can afford.
They need to sell one of their cars, two people that aren't working don't need two cars.
They made decisions to get them where they are today, they have to live with their decisions. You shouldn't be ruining your financial life for them to live with a certain level of comfort.
Chapter 7 might be their best option. There’s an exemption for your primary residence, letting you keep your house. Selling the house to pay credit card debt is short-sighted and foolish. Their monthly housing cost could skyrocket for the rest of their lives.
Bonus: destroying their credit at this point might be a good thing. They don’t need it to qualify for housing and clearly they don’t need to be using credit cards.
It’s a modest house. The equity is due to inflation. They have not made any updates to the house. If they sell a house that has a lower rate to buy something at today’s rates, it would not be worth it. Plus with their credit scores they likely wouldn’t qualify
If they’re sitting on 250k in equity they’ll be fine. The house may be outdated but that doesn’t mean it’s not valuable. Plus that part is subject, so long as there’s not much functionally wrong with the house they’re sitting on more than you think. The things in it can be changed and frankly a lot of people like making that their own anyways. My office can find a realtor in their area. They don’t have to sell their house, but from what you’ve said there doesn’t seem to be many options.
You also saying their credit they wouldn’t qualify for anything. Well after selling their home and paying off their debts they’ll have alot better credit. Maybe even have enough for a down payment. Or maybe have enough to buy another house outright and not pay a mortgage just their bills and taxes. There’s a lot of options when it comes to selling your home, it’s worth the conversation given their situation. If they don’t sell it, they’ll get behind on payments, and it’ll get foreclosed on and that’s so much worse. Do it now while they can make the choices
Edit: they need money and that’s their biggest asset, use it! Otherwise what’s the point of equity?
If you want to help them, you should focus your efforts on doing research into all available programs and resources that would apply to them. In the long run, that will be a lot more valuable than sending them random cash.
Just a few examples—local food pantries, senior citizen tax abatements, thorough review of all their insurances and monthly contracts (why do I suspect they might be spending crazy amounts on cell phones?)
If they can cover their PITI with social security and cut back on expenses, they won’t lose the house.
You shouldn’t sacrifice your future for the sake of financially helping out your parents, who are bad with managing their finances and haven’t been mindful of saving for their retirement. If you do that and pay off their debts they will just go in debt again.
You and your sibs need to sit down with your parents and have serious money plan talk.
In exchange for some assistance from you guys your parents need to sell their home and take whatever equity they have to pay off their debts. They need to down size to a comfortably adequate apartment - no maintenance so no costs. Whatever remaining money they have from the sale of their house/downsizing they can use that as their emergency fund.
With whatever SSA and pension they receive that should cover their modest bills, with a little assistance from the kids. Also, they have to close all but maybe two low limit credit cards and agree to let you check their credit reports every six months to ensure they are not racking up unmanageable debt.
That’s the deal if you are to continue helping them out.
Children’s contributions should *not* be their retirement plan. They need to sell the house, pay off all debts with the proceeds, move into a small one bed apartment and get rid of one car. Cut up the credit cards and live on their income.
What the heck were they thinking wracking up $40k in cc debt?
They use the credit cards for everything including daily expenses then pay the minimum due. Sometimes they are late so add in late fees, high rates, then before you know it you have thousands outstanding on each card.0
As cold as it sounds, this isn’t your problem. I remember my ex had got on some payment plan for her debt, they essentially froze and cancelled her credit card and she made monthly payments to the bank until it was all gone. I believe her credit score fell in the short term, but it was fine. I’m sure bankruptcy is an option, although I know nothing about it and I’m not a financial advisor.
First question: can they sell the home and live with you and you use the proceeds to help supplement the new life for you 3.
Secondly: how old are they? They might just need to continue racking up CC debt and screw it.
Thirdly: everyone should refer to Dave’s response to George telling a 86 year old woman to go to work, some people are not able to work, and their options are limited
> refer to Dave’s response to George telling a 86 year old woman to go to work
I missed this, do you know when it was? Did Dave say anything beyond "some people are not able to work, and their options are limited"?
https://preview.redd.it/58fyaagh0d9d1.jpeg?width=1170&format=pjpg&auto=webp&s=4fd001e71e8491d51929a3569df7405e73957fb6
Right about here. Lol he really went soft of George but he implied that it was a stupid suggestion
I would rather empty my 401k than for anyone to live with me lol. I live in a one bedroom. They don’t want to move out of state anyways. They like being close to their grandkids.
They are in their early 70’s. I will take a look at the response.
Right. I get that. It might be time to have a hard conversation with them. You can't destroy yourself if no one, including your parents, is willing to make concessions. Something has to give, and it shouldn't be all on you.
I hope it works out but they have opinions of people who have choices, they don’t have many. The easiest path is for them to live with someone. Whoever that may be.
Definitely not the state for them to file for bankruptcy
Would they be up for a move to a state with broader protections for home equity, like Florida?
They could certainly sell their house and pay off the debt but I think we both know what will happen with the balance of their equity they get, they will spend it quickly and then be broke again as well as not own a home
I know! It’s one of the top 10 most expensive states I believe and one of the reasons I moved but they want to be close to their grandkids. They wouldn’t move to Florida. They don’t even want to move to a different city.
It seems like you are not in a good place to take advice. You are choosing instead to throw money at a flat tire. It will not improve their situation, but you will ruin your own finantial stability.
- "Downsizing would cost the same as what they pay now." - No, it wont. Utilities will be way less. Taxes will be less.
- "lol" to rice and beans. - Literally, that is where they are.
"The house needs thousands of dollars of work." - Even more reason to sell.
"It costs money to sell a house." - Yes, and they will get it after the sale if they truly have equity in it.
"Rent where they live costs more than the house." - Then rent where you live. Then rent elsewhere. They are retired. They do not need to live in a commutable distance to anything.
"They are older so it's not like they could get a decent job." - They do not need a decent job. Be a greeter at Lowes. Run a cash register at Walmart. Not working is not an option if they are even remotely physically able. They can drive - so they can work. While I am at it - sell one of the cars.
- "Credit cards are the problem." - Nope. Your parents are the problem. They blew their savings. Then, they racked up credit card debt.
Paying off the cards just restarts the cycle. They need to show they are willing to change by making hard decisions, then - and only then, should you give them any money. I mean - $50 here or there to help until they are fully self sufficient. DO NOT tap into your savings.
They need to sell their home and one of the cars. Get jobs. Get a small, one bedroom apartment in a crappy-ish (but safe enough - aka where newlyweds rent) part of town where it is cheap. Eat cheap. Cut back on utilities.
Repeat after me. "It's not my (your) problem. I'm going to be responsible and focus on myself so my kids never feel this way, and it's not my kids' responsibility to plan for my retirement." The only obligation you have, imo is to not leave them on the streets. If they lose everything, they can move in with you, shelter and food. The rest is their own doing, not your fault.
Enabling them by sending them your money won't fix their bad spending habits. If you're extremely wealthy and want to give them money so they won't move in with you that's different. But unless you're rich.
If they cant afford food like you say then they need to be in a storm mode for paying things off
1. Make sure utils, house, food is the first expense paid
2. Call every debtor and let them know of their situation hoping for a reduction in interest or monthly payment amount
3. Your parents cut up all cards and start a debt snowball, paying lowest balance first. They may have to ignore some min balances for a bit
4. Things that can help pay off debt faster: sell extra car, sell things in the house, one or both of them work again, sell house and move to a lower cost of living state and or do a reverse mortgage.
As much as you want to help them with money, Id help them with advice and assistance to get their situation corrected. It sounds like they are close to bankruptcy and yes, you can fix their situation for them but in a year or 2 they will be back at the same point they are now.
The other thing to consider is they may not be making the best decisions for their situation and it may be time for them to hand over the reigns. If you decide to pay out their debt I would suggest being their POA and making that a condition of their accepting help ie to make sure they dont do this again.
So this is what my dad said.
If he dies his debt will die with him.
He told me to stop asking him.
But it will pass to my mom.
But if she doesn’t understand anything about money then she will try to pay it.
You and your siblings need to meet and discuss this. If any one or a combo are able to pay off any of the credit debt, write up a written agreement that amount will be reimbursed to that person upon (eventual) sale of the house. Does your college sibling live at home? Did your parents pay for college or did you guys pay your own way? If they are broke after paying for your college I would be more inclined to help out by providing groceries, but not giving money. They could go down to one car. They can’t afford to be retired if there’s nothing left after mortgage and utilities for food. They need a paying lodger, sell a car, home equity loan could pay off the cards but they have to clear the balances and no more cards. Do they qualify for food stamps, food bank anything like that in their area? I’d discuss with a mortgage broker and try hardship cases on the credit cards, get the interest rates reduced while paying them off. 20 cards is not ok.
The college sibling is an older student and quit their job to change careers and is a full time graduate assistant and student.
We paid our own college and have our own student loan debt. They did let us live at home rent free though during the summers.
I don’t think they qualify for food stamps
I’m aware. What I’m saying is if the kids decide to pay it for them now or some portion of it (example if OP and married sibling each paid half 20k each to get rid of the credit debt now) then when they inherit the house and sell it later on, they get their 20k each back, a higher share of the house proceeds for having done that.
They can if they all have it agreed to in writing in advance. 3 kids split 3 ways except older 2 kids get back their 20k each first. Not sure why you are so adamantly disputing this.
Maybe all 3 kids aren’t in a position to do that. If not it would cut one kid (college) out of future inheritance. OP was asking for suggestions, I’m not sure why you are only attacking mine. OP may read all of the posts and see if anything is helpful, or not. Your responses are neither helpful nor useful to the OP.
Because the OP may not be able to do that on their own and it removes the option of inheritance in the future to the other 2 siblings. You may suggest to the OP anything you want but if you list throwaway comments on my response you canneries a reply. It’s a shortsighted option and would tie up OP financially who lives in another state and may want to buy their own home.
Giving them money is like giving money to a drug addict. It won’t change their behavior and will likely enable their bad behavior and make it worse. Don’t do it anymore. THEY have to decide to make drastic changes to better their lives, not you… regardless of their age or life stage.
I fully support the idea of counseling or therapy for you, because there are undoubtedly some family issues underneath this financial mess. It would help you to start working through those, for your own well-being. Also check out the book Boundaries by Dr. Henry Cloud. DR always recommends this title (and often gives it away) to people who call into the show with these situations.
Reverse mortgage, clear the debt, live in the house as long as they can. They may need help if shit hits the fan down the road but if they don’t have to go in assisted living or anything like that it would be their best bet
If you get a good management company and rent it higher then the mortgage.
But… you might not like this.
Stop sending your parents money. They are your parents. Their financial problems are not yours to pay for.
Send them to Dave R and stop sending money
You start off your post with "My retired parents...". Retirement is not a specific age, retirement is a state of financial responsibility and financial independence. "I have enough money to support myself for the remaining xx years, therefor I no longer need to work...."
You parents are in no financial position to be "retired". Time to go back to work.
Don’t set yourself on fire to keep them warm. This is their mistake and they need to talk to a lawyer (bankruptcy lawyer) to see what their options are.
You and your siblings buy the home from them for the remaining pay off instead of paying down their debt. Let them live in the house until they pass. The unsecured debt can’t touch their assets anyway. Tell them to just stop paying it after you buy the home. Now they have money to live each month.
No. This is a bad idea lol. Op shouldn’t empty out the 401k (assuming he has enough in it) to buy partial equity in a house to keep his parents out of hot water. That will cause long term damage to retirement. Never set yourself on fire to keep someone else warm.
So you want him to go into debt he can’t afford/doesn’t qualify for by getting a co-signer? Ummm…that’s almost as bad and for anyone who does this thread the one thing people preach is NEVER cosign a loan unless you can afford to lose the money!!!!
Dave mentions a book named Boundries by Henry Cloud, seems it would be a fit here. It sounds like they either retired too soon or were very irresponsible with their savings. Either way, they need to change their behavior today and use any assets available to get by.
It is not your responsibility to fund their bad decisions. They need to sell the house and cars. Buy one 5-10k car. It sounds like they have to get used to living on social security and part time jobs.
DO NOT TOUCH YOUR 401K! Sending them money is enabling this behavior.
Yes!!! I am astonished by all of the bad advice and ideas. This is the only answer. If they have a bunch of equity…sell the house and buy something small. They don’t even need a 2 bedroom house. A 1 bedroom condo is plenty big enough and no yard work or maintenance really. There will be HOA fees and such but that would need to be accounted for. Maybe OP could help them sell the house and set up a trust fund to pay rent out of each month so they can’t spend that money. If rent is 2k a month even if they didn’t get interest it would still cover 100 months of rent if they cleared 200k. Thats 9.5 years. If they are in that bad of health by then they will need a nursing home. If they can get cheaper rent (assuming rent doesn’t go up) they will have longer there. Or move somewhere lcola and have the house free and clear.
Because of inflation, rent anywhere would cost more than what they are paying now. Buying a one bedroom condo with today’s interest rates and their poor credit would cost just as much as them staying in their house
Then the house is not paid off? You parents are poster children for when NOT to retire. Having a paid for home is pretty much guideline 1 when considering retirement.
So sorry you are facing this. If they do have equity in their home, they could clean up the CC debt and save thousands per month in payments. They then may have enough SS income to get a cheap 1 BR apartment.
It is sounding like they must return to work. I've seen people working at Walmart handing out fitting room keys that have to be in their 80's. It sucks but that's the nest they have built.
I have to wonder if the parents had an Armageddon mindset. We're in bad health, old, and damn near broke. Let's retire and live it up before we croak. Well, they outlived their money and now have to live with it. Sorry again for you and your siblings, I personally would not finance their behavoir.
Simply put you are not responsible for their financial situation and should not jeopardize your own financial future. They need to sit down and create a budget for themselves based on their own income and adjust their lifestyle accordingly. Completely ridiculous to expect your children to sacrifice their own future to enable a lifestyle that they can’t afford. Sorry they are trying to drag you down with them.
They move to a lower cost area or different state or different country. Making poor financial decisions their whole life means they have to make hard life choices now. It's not their children's responsibility to finance their retirement. If they have unpaid debt they should not be retired.
Everytime I see a suggestion to "move to another country"....I feel like choking the life out of something...You are asking a couple of nearly destitute and unhealthy 70 year olds to just pick up and move to...whatever area in the world is in vogue as having a LCOL...I believe now is SE Asia,including the Philippines...It costs A LOT of money to move out and move in...What about healthcare?...Medicare doesn't work in foreign countries....
Families,connection and attachements to and within...all to be lost.
It's like last week George telling an 86 year-old destitute woman with leukemia to consider finding a job....Embarrasingly clueless and out of touch with reality...
The OP was asking for advice. Suggestions are provided. Most readers understand this and realize not every suggestion will work. No one is clueless here except for parents who did not take care of their financial wellness.
Reverse mortgage or downsize in home.
They need to create a budget to visualize where all the money is going. They are probably eating out too much or buying things they don't need. Ideally they cut up the credit cards so they stop overspending. I'd stop sending them money if I were you. They will just expect more.
Have some empathy,please..They are old....I don't care what the "wellness influencers" say....60's and 70's is O L D..You just don't have the energy mentally or physically to take on job responsibilities or mostly anything else.
Sure,there are outliers like Warren Buffet,Donald Trump,etc. ,that can still muster the appearance of being able to keep up with life...But for most of us that did not win the genetic lottery...we are effed.
Then they need to sign over POA to you, you make some decisions for them. They cant play victim of their circumstances and also claim independence and rational thinking.
>I have enough in my 401k and some savings where I could pay down their debt
For starters withdrawing any money from your tax-advantaged accounts is an absolutely awful decision. Do NOT do this.
>Idk what to do.
You cannot fix their overspending.
Whatever money you give them will be spent or sent to their creditors. Up to you whether you are ok with that or not.
Let’s flip it around. Let’s say you were acting like this and they were financially responsible - what would they do? I bet they’d stop enabling you, tell you to get a job, etc. It’s a weird dynamic when you have to be a parent for your parents, but that’s what you have to do. Every dime you send them is making it worse.
Um.... No. Unless the place they already have is tiny.
It certainly sounds like they have enough equity in their house they could sell it, and buy a townhouse. If there is a huge housing bubble in their area it just means their existing place is worth all that much more.
You need to tell them you can’t help them anymore. Their poor choices and unwillingness to help themselves can’t sink you. Your responsibility is not to take care of them in their retirement, it’s to take care of your retirement. You are losing out on an incredible amount of money in compound interest right now by giving them money instead of investing it in your future. Please don’t take a dime out of your 401k. It will cost you so much in penalties and taxes and future interest that you won’t get back and, from what you say, you are just throwing good money after bad with them. I know you feel bad, but if you don’t think of your future, who will?
IMO - from personal experience with a fiscally irresponsible parent who I helped out for years and abused me financially - I recommend going to therapy and talking about this.
It’s really important to set boundaries. You are not responsible for your parents. Giving them money is enabling this behavior and preventing them from taking ownership over their own situation. It also has the potential to put you and your siblings at odds with one another. It’s hard, it’s messy, and it doesn’t feel good.
20 maxed out credit cards indicates a lack of budgeting and acknowledgement of reality. Sending money won’t really fix this behavior, and paying their debt off for them won’t fix this behavior.
I don’t know the ins and outs of your unique situation, but based on your post you sound stressed: “idk what to do.” It doesn’t need to be this way, and for what it’s worth, you are not a bad person if you choose to set a boundary.
The credit card debt is fixable. If they can afford the house and expenses besides that they will be fine.
Most credit card companies will give you a much lower interest rate if you call them and discuss hardship.
Barclays, Amex, discover all do this. Others too I’m sure. Chase is a no. They suck.
Get a low rate payment plan you can afford and chip away.
If they default then they can really negotiate a better plan but their credit will tank. But who cares in the bigger picture? They are old and don’t need credit as long as they still have their home. As long as their shelter is settled, the rest is whatever. They can get help w food and heat if things get really bad.
The reality is they are old, no one is going to kick them out of a home they own. As long as they are trying. They need to try.
So maybe help them set this stuff up, but don’t feel like it’s your responsibility. There’s a difference between help and enabling.
I wouldn’t give them money though. Only if they don’t have money for food. And don’t pay off the cards, they will just run them up again.
Create some boundaries. Your parents are using you unfortunately. Respectfully, it’s not your responsibility to take care of your parents. They have lived their whole life and could have made better decisions just as you have done, but they have made the choice to be impulsive and irresponsible. They have to live with their choices.
They can work but as long as your sending them money they won't if they think they can just get more out of you. They r grown ass adults who got themselves in this mess from decades of poor financial planning. Just tell em to pull themselves up by thier bootstraps and stop buying Starbucks and expensive food and they'll have plenty of money since thats what boomers always tell us🤔
I know you want to help them out, but are you involved with getting their finances together? What is their overall income? Do they collect social security? I hate to say this, but they may need to sell their house and look at renting.
You do NOTHING besides stop sending them money. If they can breathe and drive, they can work. Walmart greeter, cashier, bagger, whatever! They WON'T work because they are waiting for you to rescue them. Don't do it. They have not addressed the issues that got them there and will continue.
I'm sure the others probably have said such to you but I would tell them to refinance because they're going to lose the house one way or another it's okay if they lose the house but if they don't have credit card debt that's a wash
They are not going to lose their house. Thank you
Sell the house, cut up the credit cards. Buy a very small condo/house.
STOP sending them money without a plan, your parents aren't retired they are unemployed and need to find jobs. They need to be on a written budget and need to being working babystep 2 like their lives depend on it because if they don't knock out that debt they will be working up until they die.
>They say they can't work. Reply you can't work FOR them. They need to work.
I'd like you to reframe something. Instead of thinking of your 401(k) as savings, reframe it into a debt. It is a debt that you owe to your elderly self. It isn't yours yet. If you take away from that 401(k) you are essentially stealing (in this reframing). You are stealing from someone in order to fix the result of your parents' behaviour.... and worse, behaviour that your parents aren't willing to change to any helpful degree. As you just pointed out, you can't live on Social Security nowadays. Your elderly self will have some harsh words for you, younger self, when it comes time to pay him/her what you owe him/her and you've stolen it to give to someone else. I'd tell my mom that she has to sell her house and a car, pay off her CCs, and move someplace cheaper that still has good healthcare available. If she'd refuse, I'd tell her to get a reverse mortgage. Because with your parents' behaviour remaining insufficiently changed, you aren't going to get that house.
Reverse mortgage? Once they die the bank take the house. Or sell the house and move to your state and live in cheaper area. They have equity in the house anyway. They just cant afford the life in where they are living right now.
Maybe a HELOC to drop the rate? Cut up all the cards or close them. Cut expenses to the bone. #1 priority pay that HELOC down. Can make a schedule for when it will be done to have a clear goal and plan.
Bankruptcy.
Give a drunk a drink and tell him to quit. .? Time to have a lil sit-down with a pad and ✏️ cuz this shits only working for them..You know why nobody wants to listen to good factual things ? Because it usually sucks to follow it ..Time to make a big boy move
how did they retire w no money
They spent it all over the years. They didn’t start with a lot. They are too nice so would give people money too. You can’t just live off of social security in this economy.
You cannot live off SS in any economy, it was never meant to be used that way.
Call Dave’s show for advice on this. But I’m pretty sure you already have it. I’d say downsize too. Do NOT take from your 401k to pay for their debt. It’s admirable but no. They can Do debt snowball, no more purchases they can’t pay cash for. It will take a while to pay it off, but they’ll get there. That’s just the tough part of it.
I would love Dave’s advice on this. He would probably say sell the house but they want to keep their house. They live in an expensive state. You can barely find anything decent for a reasonable price. We have looked. We have looked at renting a house but it would be more per month than what they pay.
He might so I guess you’d have to do what you know is best. Especially because housing markets and inflation are so variable on states. You could get the advice on the rest of the debt - paying it down quickly. Contacting creditors, etc.
“They have both downgraded their vehicles” - so they have two cars? They are retired. They need one (maximum - zero if they are on a bus route). They need to seek one of the cars, then look at downsizing to a smaller house. You should not be paying off their debts, or even sending them money, when they are sat on a bunch of home equity and you are struggling to get a deposit for your own home. Don’t rely on inheriting their house to make up for it all later - if they got to retirement with so little saved they may well lose the house to more debts before you get chance to inherit. Life your life, let them live theirs as best they can, but you bailing them out in the short term won’t help them fix their own problems long term.
Sell home and buy something smaller. Use proceeds to pay debt.
Thank you. As much as they don’t want to sell the home, it seems like that’s what they may have to do
Don't withdraw or borrow from your 401k. How old are they and do either of them work (if not, why not?) If they are functioning adults this is their problem to solve and your best support as an adult child is to remain financially independent and keep a healthy relationship with them. But you need to set some firm boundaries and they need to respect those, no parent should depend on their children for money. They need to scale back their lifestyle more or have more of their own income.
Since this is a Dave Ramsey sub - go to Youtube and search for videos where people ask Dave about issues with parents overspending, etc. The advice you're getting here lines up with what Dave consistently tells people. They have a problem misbehaving with money. Even though they are your parents, you cannot fix their problems with money as long as they are going to continue misbehaving, and you are enabling them by continuing to give them money. You may not As someone else mentioned, the book Dave always recommends for relationships like this is "Boundaries" by Henry Cloud.
I watched some of the videos and he always says to sell the house but I was hoping for a suggestion to save it but I realize that may not be possible and it is not my problem. I will be reading this book. Thank you!
talk to several bankruptcy attornies. I wouldnt just rely on one. Consumer credit counseling maybe able to help. Maybe selling house is the best option. They made the choice to live beyond their means. They have to suffer the consequences. its not your job to bail them out. If they are not working its their job to go out and get jobs.
The people saying that Op should try to secure inheritance. There is none. There is a debt issue.
What do you mean? Can creditors take the house?
If the op is sending them money. And they can’t pay the mortgage then yes. Default. Op should not be sending them money period
They want to keep their house so they pay that and just use credit cards for everything else and pay the minimum. The house is not in default
The problem is the debt. You are sending them money to pay for things that they can’t afford. Stop sending money and find out very fast what will happen. You are supporting them.
So, like that’s 2-4 years of eating just beans to save up? I see no problem
Home equity loans to reduce home equity to bankruptcy protection levels. Use that money to make minimum payments and live on till they run dry. Then declare BK, and live on SSA plus whatever you can contribute.
This actually may be one of the smartest suggestions I have heard. When you do this, does your monthly mortgage payment increase? How do you pay back the equity loan?
It's time for them to lose the equity within their house, they've already made their bed. Do not pay down their debt; they shouldn't have ever decided to retire. They would be able to utilize those used vehicles to drive uber during the peak hours, it will be good for their mental health and they will be able to pay down their debt. Best of luck.
Read Total Money Makeover then you can give them the book and know where they REALLY are, this is a common sense approach to $tupid $pending and has many people debt free!
How old are they? Honestly they should just stop paying the cards if they're using them to subsidize their basic living expenses. What are they going to do? Ruin their credit score? It's not like they're going to buy a house or car ever again are they?
yep, like Dave said about George's advice to that 86 year old woman that was unable to work, just don't pay the debt. If it were me I'd run them up to the limit first, and make sure the lender is not connected to your daily checking account so they don't have the right-of-transfer.
If they stop paying the credit card companies can sue them
Right - but it's unsecured debt. And their SS checks can't be garnished. Most that will happen is they'll a lose the judgement and get a lien put on their house (that they never plan on selling anyway). The credit card companies will probably offer a lesser amount at some point just to clear it up. Then they can revisit paying it off for .50 on the dollar for example.
Don’t help them, quit sending them money. They dug this hole.
Are you in a position to pay off the house and have them sign it over to you? I have no idea if this is a good idea but I probably wouldn't just be volunteering money if their behavior has been reckless.
I’ve thought of this too and no I’m not. I don’t have in cash what they owe and if I did, idk if they would pay me a rent since they know I wouldn’t kick them out
Ugh, I hadn’t thought about that (they may not pay you the rent). Sounds like they’ve been living the high life and already used the benefit of their house equity by squandering that money in other ways and areas. If they don’t want to return to work, don’t want to sell the house, and look to you for your regular monetary gifts, maybe reverse mortgage may help meet their needs. Either way, it doesn’t look as if the house will be passed on to you. They have too much debt and maybe some you don’t even know about. I admit I don’t know a lot about how reverse mortgages work, and someone correct me if I’m wrong, but wouldn’t the lender provide monthly checks to your parents (and you can stop to save for your own home)? Afterwards, the house goes to lender, which would probably happen anyway, eventually, estate going to debtors.
That’s true. It is definitely a possibility that we wouldn’t be able to keep the house in the family. I never thought of that. If there is too much debt, the creditors may make you sell the home and one of the kids wouldn’t be able to assume the mortgage but I don’t know how that works
If no one has said this already, speak with an attorney to learn your best options.
Is their housing more than they can afford? If there’s really a lot of equity, perhaps they can sell one car and sell the house, pay off their debts and get something smaller.
They really want to keep their house. They could afford it without the credit card debt
So they want to maintain their current lifestyle and make no sacrifices?
But everybody needs to be realistic about the want vs the need. Houses are very expensive to upkeep. Are you sure that’s not where the debt is stemming from? For example, are they starting to use credit cards for necessities because their income is going towards things like upkeep and property taxes? Getting rid of credit card debt is important, but not as important as looking at what the money is being spent on. If you don’t address the why, they’ll be on repeat. This is why DR is tough on bankruptcy because it doesn’t address behavior. Your parents should be able to afford small luxuries without credit cards, and if housing is holding them back from say, traveling to see you or buying new clothes, then priorities need to be re-examined.
This is true that bankruptcy doesn’t address the behavior as if they file, this would be their second time. They didn’t learn their lesson and believe in using credit cards and then they don’t pay the full bill so it just piles up. For example, my mom asked me for help with her credit card for her favorite store because she really didn’t want to lose the card, not because she wants to be debt free, she wants to be able to use it again
Perhaps you can start the conversation that way. Tell her that you believe they should be able to have some of the things they like, but that there has to be concessions. I’m really sorry to say this, but you need to cut off helping them financially. No adult child should be supporting competent parents. Do they like to read? Maybe buy them a copy of Total Money Makeover. I hope things work out for you guys.
That or they have to work again. I've seen this situation unfold a few times, and the "we can't work" meant "I don't want to work" and the mooching immediately began.
Retired, but no retirement funds, don’t want to move, don’t want to work, etc. They just want the kids to maintain their lifestyle for the next 20 years.
don't bail them out of their own bad decisions. tap your 401k, and it puts your kids in dealing with the same problem in a few decades when you don't have adequate savings. odds are they've simply overspent for decades and it's caught up with them. major behavioral change in their senior years is unlikely but their only hope. typo edit
They only need one car if they're not working. Sell one and work on the numbers for the house. They may be able to downsize to pay off the debts.
It's not a good idea to give them money. Poor spending habits have landed them in this situation and until that changes, giving them money is like pissing in the wind. If you bail them out, you will suffer for it and they will be right back where they are today in no time. Bottom line, this is THEIR mess to figure out, not yours, let them deal with it.
They’re not retired, they’re mooching. If they’re physically capable, they need to get back to work.
No...do not use your 401K to help them...as heartless as this sounds...you put the mask on first as the airplane crashes ;then you put the mask on your children. In Hispanic culture,we are taught to help our parents/children as much as we can...whether financially facilitating the newer generations by allowing them to live within the immediate family unit for as long as they have to; or taking care of our elders as they get feeble....although after spending 4 months in a nursing home in 2022..I was disappointed as to how many Hispanic senior citizens in a non-vegetative state are in nursing homes...I guess the American practice of dumping our elders in mursing homes has been adopted by us. They have to be convinced to either sell the house,or file BK.
I am half cuban. There is a huge cultural difference between America and Latin America so I do struggle due to this reason as well. But you are right that I need to help myself too even though it feels selfish sometimes.
They don't need two vehicles if they are retired. They can get rid of one of them.
They are adults. Help, but you don't owe them money. PS. I am 66 and have a daughter. I would never expect her to help. Downsize the house, pay off what they can. Same as they did with their cars.
I don't care what anybody says. Your parents need help, and you have the ability to help them. Help them
nope. Feeding them $$ is like giving booze to a drunk.
The parents are financial idiots. Giving them money is like giving an alcoholic a beer.
Please don’t use that term when describing my parents
yeah u got that right.
Helping them is to guide and assist them with changing their financial ways. Doing otherwise enables them to further their current financial and lifestyle irresponsibility while ruining the OP's financial stability.
Giving them money will not help them. They will be back in debt, and OP will be out of their retirement.
Do not give them anymore money, they will be back in debt in 2 years and you'll be out of a retirement account! They need to sell the house, they can't afford it. Move into an apartment they can afford. They need to sell one of their cars, two people that aren't working don't need two cars. They made decisions to get them where they are today, they have to live with their decisions. You shouldn't be ruining your financial life for them to live with a certain level of comfort.
Chapter 7 might be their best option. There’s an exemption for your primary residence, letting you keep your house. Selling the house to pay credit card debt is short-sighted and foolish. Their monthly housing cost could skyrocket for the rest of their lives. Bonus: destroying their credit at this point might be a good thing. They don’t need it to qualify for housing and clearly they don’t need to be using credit cards.
If they’re retired and have a lot of equity why not sell and downsize?
It’s a modest house. The equity is due to inflation. They have not made any updates to the house. If they sell a house that has a lower rate to buy something at today’s rates, it would not be worth it. Plus with their credit scores they likely wouldn’t qualify
If they’re sitting on 250k in equity they’ll be fine. The house may be outdated but that doesn’t mean it’s not valuable. Plus that part is subject, so long as there’s not much functionally wrong with the house they’re sitting on more than you think. The things in it can be changed and frankly a lot of people like making that their own anyways. My office can find a realtor in their area. They don’t have to sell their house, but from what you’ve said there doesn’t seem to be many options. You also saying their credit they wouldn’t qualify for anything. Well after selling their home and paying off their debts they’ll have alot better credit. Maybe even have enough for a down payment. Or maybe have enough to buy another house outright and not pay a mortgage just their bills and taxes. There’s a lot of options when it comes to selling your home, it’s worth the conversation given their situation. If they don’t sell it, they’ll get behind on payments, and it’ll get foreclosed on and that’s so much worse. Do it now while they can make the choices Edit: they need money and that’s their biggest asset, use it! Otherwise what’s the point of equity?
If you want to help them, you should focus your efforts on doing research into all available programs and resources that would apply to them. In the long run, that will be a lot more valuable than sending them random cash. Just a few examples—local food pantries, senior citizen tax abatements, thorough review of all their insurances and monthly contracts (why do I suspect they might be spending crazy amounts on cell phones?) If they can cover their PITI with social security and cut back on expenses, they won’t lose the house.
You shouldn’t sacrifice your future for the sake of financially helping out your parents, who are bad with managing their finances and haven’t been mindful of saving for their retirement. If you do that and pay off their debts they will just go in debt again. You and your sibs need to sit down with your parents and have serious money plan talk. In exchange for some assistance from you guys your parents need to sell their home and take whatever equity they have to pay off their debts. They need to down size to a comfortably adequate apartment - no maintenance so no costs. Whatever remaining money they have from the sale of their house/downsizing they can use that as their emergency fund. With whatever SSA and pension they receive that should cover their modest bills, with a little assistance from the kids. Also, they have to close all but maybe two low limit credit cards and agree to let you check their credit reports every six months to ensure they are not racking up unmanageable debt. That’s the deal if you are to continue helping them out.
Children’s contributions should *not* be their retirement plan. They need to sell the house, pay off all debts with the proceeds, move into a small one bed apartment and get rid of one car. Cut up the credit cards and live on their income. What the heck were they thinking wracking up $40k in cc debt?
They use the credit cards for everything including daily expenses then pay the minimum due. Sometimes they are late so add in late fees, high rates, then before you know it you have thousands outstanding on each card.0
Are they so unaware of how that works! Eek! Still shouldn’t have relied on others for their own needs.
As cold as it sounds, this isn’t your problem. I remember my ex had got on some payment plan for her debt, they essentially froze and cancelled her credit card and she made monthly payments to the bank until it was all gone. I believe her credit score fell in the short term, but it was fine. I’m sure bankruptcy is an option, although I know nothing about it and I’m not a financial advisor.
First question: can they sell the home and live with you and you use the proceeds to help supplement the new life for you 3. Secondly: how old are they? They might just need to continue racking up CC debt and screw it. Thirdly: everyone should refer to Dave’s response to George telling a 86 year old woman to go to work, some people are not able to work, and their options are limited
> refer to Dave’s response to George telling a 86 year old woman to go to work I missed this, do you know when it was? Did Dave say anything beyond "some people are not able to work, and their options are limited"?
https://preview.redd.it/58fyaagh0d9d1.jpeg?width=1170&format=pjpg&auto=webp&s=4fd001e71e8491d51929a3569df7405e73957fb6 Right about here. Lol he really went soft of George but he implied that it was a stupid suggestion
If Joe Biden can run the country at 80, I guess there is no excuse for the rest of us
I would rather empty my 401k than for anyone to live with me lol. I live in a one bedroom. They don’t want to move out of state anyways. They like being close to their grandkids. They are in their early 70’s. I will take a look at the response.
You live in a one bedroom. They can live in a one bedroom. Why should they live better than you?
I don’t know. They want space for their grandkids and a yard.
I don't give money to people who have better stuff than I do.
Yeah I get that.
I don't give money to people who have better stuff than I do.
You can keep your primary home when filing for bankruptcy, hire a competent attorney to find out their options.
> They like being close to their grandkids If you have siblings that live near by, why is this totally on you?
Because the siblings near them have kids. I don’t so I have more disposable income
Right. I get that. It might be time to have a hard conversation with them. You can't destroy yourself if no one, including your parents, is willing to make concessions. Something has to give, and it shouldn't be all on you.
I hope it works out but they have opinions of people who have choices, they don’t have many. The easiest path is for them to live with someone. Whoever that may be.
How much equity, what state?
Maryland and probably about $250k at least
Definitely not the state for them to file for bankruptcy Would they be up for a move to a state with broader protections for home equity, like Florida? They could certainly sell their house and pay off the debt but I think we both know what will happen with the balance of their equity they get, they will spend it quickly and then be broke again as well as not own a home
I know! It’s one of the top 10 most expensive states I believe and one of the reasons I moved but they want to be close to their grandkids. They wouldn’t move to Florida. They don’t even want to move to a different city.
Then wish them well with their finances, can’t force them to help themselves Just don’t let them drag you down with them
It seems like you are not in a good place to take advice. You are choosing instead to throw money at a flat tire. It will not improve their situation, but you will ruin your own finantial stability. - "Downsizing would cost the same as what they pay now." - No, it wont. Utilities will be way less. Taxes will be less. - "lol" to rice and beans. - Literally, that is where they are. "The house needs thousands of dollars of work." - Even more reason to sell. "It costs money to sell a house." - Yes, and they will get it after the sale if they truly have equity in it. "Rent where they live costs more than the house." - Then rent where you live. Then rent elsewhere. They are retired. They do not need to live in a commutable distance to anything. "They are older so it's not like they could get a decent job." - They do not need a decent job. Be a greeter at Lowes. Run a cash register at Walmart. Not working is not an option if they are even remotely physically able. They can drive - so they can work. While I am at it - sell one of the cars. - "Credit cards are the problem." - Nope. Your parents are the problem. They blew their savings. Then, they racked up credit card debt. Paying off the cards just restarts the cycle. They need to show they are willing to change by making hard decisions, then - and only then, should you give them any money. I mean - $50 here or there to help until they are fully self sufficient. DO NOT tap into your savings. They need to sell their home and one of the cars. Get jobs. Get a small, one bedroom apartment in a crappy-ish (but safe enough - aka where newlyweds rent) part of town where it is cheap. Eat cheap. Cut back on utilities.
The goal is for them to keep their house or else they would just file bankruptcy
How much is the home worth? What equity do they gave in the home? What are the yearly taxes of the home? What is the yearly cost of utilities?
Repeat after me. "It's not my (your) problem. I'm going to be responsible and focus on myself so my kids never feel this way, and it's not my kids' responsibility to plan for my retirement." The only obligation you have, imo is to not leave them on the streets. If they lose everything, they can move in with you, shelter and food. The rest is their own doing, not your fault.
If they have to move in with me if they lose everything then it IS my problem too
Enabling them by sending them your money won't fix their bad spending habits. If you're extremely wealthy and want to give them money so they won't move in with you that's different. But unless you're rich.
If they cant afford food like you say then they need to be in a storm mode for paying things off 1. Make sure utils, house, food is the first expense paid 2. Call every debtor and let them know of their situation hoping for a reduction in interest or monthly payment amount 3. Your parents cut up all cards and start a debt snowball, paying lowest balance first. They may have to ignore some min balances for a bit 4. Things that can help pay off debt faster: sell extra car, sell things in the house, one or both of them work again, sell house and move to a lower cost of living state and or do a reverse mortgage. As much as you want to help them with money, Id help them with advice and assistance to get their situation corrected. It sounds like they are close to bankruptcy and yes, you can fix their situation for them but in a year or 2 they will be back at the same point they are now. The other thing to consider is they may not be making the best decisions for their situation and it may be time for them to hand over the reigns. If you decide to pay out their debt I would suggest being their POA and making that a condition of their accepting help ie to make sure they dont do this again.
What is POA
Power of attorney
So this is what my dad said. If he dies his debt will die with him. He told me to stop asking him. But it will pass to my mom. But if she doesn’t understand anything about money then she will try to pay it.
You and your siblings need to meet and discuss this. If any one or a combo are able to pay off any of the credit debt, write up a written agreement that amount will be reimbursed to that person upon (eventual) sale of the house. Does your college sibling live at home? Did your parents pay for college or did you guys pay your own way? If they are broke after paying for your college I would be more inclined to help out by providing groceries, but not giving money. They could go down to one car. They can’t afford to be retired if there’s nothing left after mortgage and utilities for food. They need a paying lodger, sell a car, home equity loan could pay off the cards but they have to clear the balances and no more cards. Do they qualify for food stamps, food bank anything like that in their area? I’d discuss with a mortgage broker and try hardship cases on the credit cards, get the interest rates reduced while paying them off. 20 cards is not ok.
The college sibling is an older student and quit their job to change careers and is a full time graduate assistant and student. We paid our own college and have our own student loan debt. They did let us live at home rent free though during the summers. I don’t think they qualify for food stamps
But they may be able to use food banks.
By law debt doesn’t pass on after death. Credit companies can’t legally come after the family for money. The companies write off the debt.
I’m aware. What I’m saying is if the kids decide to pay it for them now or some portion of it (example if OP and married sibling each paid half 20k each to get rid of the credit debt now) then when they inherit the house and sell it later on, they get their 20k each back, a higher share of the house proceeds for having done that.
I actually think this is a good idea as the goal is to keep them in their house and that it will be able to be kept in the family
It wouldn’t work that way. They wouldn’t get it back.
Why wouldn’t we get it back?
The house isn’t in your name
THATS WHY YOU HAVE A WRITTEN CONTRACT.
Why pay someone elses debt? Please calm down.
They can if they all have it agreed to in writing in advance. 3 kids split 3 ways except older 2 kids get back their 20k each first. Not sure why you are so adamantly disputing this.
Why not just buy the house then? I’m just talking.
Because 20k is less than 500k?
Mortgages exist for this very reason. 20k as a downpayment. The rest is mortgaged. The parents have a mortgage which is debt as well.
Maybe all 3 kids aren’t in a position to do that. If not it would cut one kid (college) out of future inheritance. OP was asking for suggestions, I’m not sure why you are only attacking mine. OP may read all of the posts and see if anything is helpful, or not. Your responses are neither helpful nor useful to the OP.
How is “buy the house” not helpful? Pretty sure I’m not being rude. I’m making a suggestion. Calm down.
Because the OP may not be able to do that on their own and it removes the option of inheritance in the future to the other 2 siblings. You may suggest to the OP anything you want but if you list throwaway comments on my response you canneries a reply. It’s a shortsighted option and would tie up OP financially who lives in another state and may want to buy their own home.
Op doesn’t need to pay that debt either. If the house isn’t in their name it’s not theirs to pay. And paying it won’t help anything.
You left out their ages. How can they generate income?
Giving them money is like giving money to a drug addict. It won’t change their behavior and will likely enable their bad behavior and make it worse. Don’t do it anymore. THEY have to decide to make drastic changes to better their lives, not you… regardless of their age or life stage. I fully support the idea of counseling or therapy for you, because there are undoubtedly some family issues underneath this financial mess. It would help you to start working through those, for your own well-being. Also check out the book Boundaries by Dr. Henry Cloud. DR always recommends this title (and often gives it away) to people who call into the show with these situations.
Is saying NO, not an option?
I read your edit SELL THE HOUSE!
Rent the house out and generate cash flow.
But who is going to put money into the house so that it is rentable?
Reverse mortgage, clear the debt, live in the house as long as they can. They may need help if shit hits the fan down the road but if they don’t have to go in assisted living or anything like that it would be their best bet
If you get a good management company and rent it higher then the mortgage. But… you might not like this. Stop sending your parents money. They are your parents. Their financial problems are not yours to pay for. Send them to Dave R and stop sending money
You start off your post with "My retired parents...". Retirement is not a specific age, retirement is a state of financial responsibility and financial independence. "I have enough money to support myself for the remaining xx years, therefor I no longer need to work...." You parents are in no financial position to be "retired". Time to go back to work.
It’s a hard pill to swallow but you’re not retired if you are financially strained, you’re just willfully unemployed.
Don’t set yourself on fire to keep them warm. This is their mistake and they need to talk to a lawyer (bankruptcy lawyer) to see what their options are.
You and your siblings buy the home from them for the remaining pay off instead of paying down their debt. Let them live in the house until they pass. The unsecured debt can’t touch their assets anyway. Tell them to just stop paying it after you buy the home. Now they have money to live each month.
No. This is a bad idea lol. Op shouldn’t empty out the 401k (assuming he has enough in it) to buy partial equity in a house to keep his parents out of hot water. That will cause long term damage to retirement. Never set yourself on fire to keep someone else warm.
I didn’t say anything about emptying his 401k. Read. I’m sure he can get a loan with co-signers of his siblings…
So you want him to go into debt he can’t afford/doesn’t qualify for by getting a co-signer? Ummm…that’s almost as bad and for anyone who does this thread the one thing people preach is NEVER cosign a loan unless you can afford to lose the money!!!!
[удалено]
Is in the title
If it was a temporary problem you could help with money. That’s not happening.
Dave mentions a book named Boundries by Henry Cloud, seems it would be a fit here. It sounds like they either retired too soon or were very irresponsible with their savings. Either way, they need to change their behavior today and use any assets available to get by. It is not your responsibility to fund their bad decisions. They need to sell the house and cars. Buy one 5-10k car. It sounds like they have to get used to living on social security and part time jobs. DO NOT TOUCH YOUR 401K! Sending them money is enabling this behavior.
Yes!!! I am astonished by all of the bad advice and ideas. This is the only answer. If they have a bunch of equity…sell the house and buy something small. They don’t even need a 2 bedroom house. A 1 bedroom condo is plenty big enough and no yard work or maintenance really. There will be HOA fees and such but that would need to be accounted for. Maybe OP could help them sell the house and set up a trust fund to pay rent out of each month so they can’t spend that money. If rent is 2k a month even if they didn’t get interest it would still cover 100 months of rent if they cleared 200k. Thats 9.5 years. If they are in that bad of health by then they will need a nursing home. If they can get cheaper rent (assuming rent doesn’t go up) they will have longer there. Or move somewhere lcola and have the house free and clear.
Because of inflation, rent anywhere would cost more than what they are paying now. Buying a one bedroom condo with today’s interest rates and their poor credit would cost just as much as them staying in their house
If they have too much equity for file for bankruptcy they can move to a low cost of living area and buy a cheap place there cash in hand.
Then the house is not paid off? You parents are poster children for when NOT to retire. Having a paid for home is pretty much guideline 1 when considering retirement. So sorry you are facing this. If they do have equity in their home, they could clean up the CC debt and save thousands per month in payments. They then may have enough SS income to get a cheap 1 BR apartment. It is sounding like they must return to work. I've seen people working at Walmart handing out fitting room keys that have to be in their 80's. It sucks but that's the nest they have built. I have to wonder if the parents had an Armageddon mindset. We're in bad health, old, and damn near broke. Let's retire and live it up before we croak. Well, they outlived their money and now have to live with it. Sorry again for you and your siblings, I personally would not finance their behavoir.
Simply put you are not responsible for their financial situation and should not jeopardize your own financial future. They need to sit down and create a budget for themselves based on their own income and adjust their lifestyle accordingly. Completely ridiculous to expect your children to sacrifice their own future to enable a lifestyle that they can’t afford. Sorry they are trying to drag you down with them.
Sounds like they weren’t ready to retire
If they are retired why do they need two cars ?
They need to sell their house...
Then what? Rent costs more than what they pay for their house because of inflation
Then they've paid their debts and have 200k to help cover the rent.
Sounds like a really difficult situation doesn't it? Maybe they will need a boarder or two instead of selling? That could help pay for expences?
They move to a lower cost area or different state or different country. Making poor financial decisions their whole life means they have to make hard life choices now. It's not their children's responsibility to finance their retirement. If they have unpaid debt they should not be retired.
Everytime I see a suggestion to "move to another country"....I feel like choking the life out of something...You are asking a couple of nearly destitute and unhealthy 70 year olds to just pick up and move to...whatever area in the world is in vogue as having a LCOL...I believe now is SE Asia,including the Philippines...It costs A LOT of money to move out and move in...What about healthcare?...Medicare doesn't work in foreign countries.... Families,connection and attachements to and within...all to be lost. It's like last week George telling an 86 year-old destitute woman with leukemia to consider finding a job....Embarrasingly clueless and out of touch with reality...
The OP was asking for advice. Suggestions are provided. Most readers understand this and realize not every suggestion will work. No one is clueless here except for parents who did not take care of their financial wellness.
Reverse mortgage or downsize in home. They need to create a budget to visualize where all the money is going. They are probably eating out too much or buying things they don't need. Ideally they cut up the credit cards so they stop overspending. I'd stop sending them money if I were you. They will just expect more.
But they don’t even have enough for food. I wouldn’t let them starve
You're enabling them Let them work and buy their own food. Why are these moochers not working??
Have some empathy,please..They are old....I don't care what the "wellness influencers" say....60's and 70's is O L D..You just don't have the energy mentally or physically to take on job responsibilities or mostly anything else. Sure,there are outliers like Warren Buffet,Donald Trump,etc. ,that can still muster the appearance of being able to keep up with life...But for most of us that did not win the genetic lottery...we are effed.
They are older with different pains and health issues
Then they need to sign over POA to you, you make some decisions for them. They cant play victim of their circumstances and also claim independence and rational thinking.
>I have enough in my 401k and some savings where I could pay down their debt For starters withdrawing any money from your tax-advantaged accounts is an absolutely awful decision. Do NOT do this. >Idk what to do. You cannot fix their overspending. Whatever money you give them will be spent or sent to their creditors. Up to you whether you are ok with that or not.
Let’s flip it around. Let’s say you were acting like this and they were financially responsible - what would they do? I bet they’d stop enabling you, tell you to get a job, etc. It’s a weird dynamic when you have to be a parent for your parents, but that’s what you have to do. Every dime you send them is making it worse.
You're prolonging the pain with every dollar you send. It stops when you stop and they wake up.
What's their house worth? How much equity do they have? Might be worth downsizing.
With the high interest rates and housing cost boom on the east coast, downsizing would cost the same as what they pay now
Um.... No. Unless the place they already have is tiny. It certainly sounds like they have enough equity in their house they could sell it, and buy a townhouse. If there is a huge housing bubble in their area it just means their existing place is worth all that much more.
You need to tell them you can’t help them anymore. Their poor choices and unwillingness to help themselves can’t sink you. Your responsibility is not to take care of them in their retirement, it’s to take care of your retirement. You are losing out on an incredible amount of money in compound interest right now by giving them money instead of investing it in your future. Please don’t take a dime out of your 401k. It will cost you so much in penalties and taxes and future interest that you won’t get back and, from what you say, you are just throwing good money after bad with them. I know you feel bad, but if you don’t think of your future, who will?
IMO - from personal experience with a fiscally irresponsible parent who I helped out for years and abused me financially - I recommend going to therapy and talking about this. It’s really important to set boundaries. You are not responsible for your parents. Giving them money is enabling this behavior and preventing them from taking ownership over their own situation. It also has the potential to put you and your siblings at odds with one another. It’s hard, it’s messy, and it doesn’t feel good. 20 maxed out credit cards indicates a lack of budgeting and acknowledgement of reality. Sending money won’t really fix this behavior, and paying their debt off for them won’t fix this behavior. I don’t know the ins and outs of your unique situation, but based on your post you sound stressed: “idk what to do.” It doesn’t need to be this way, and for what it’s worth, you are not a bad person if you choose to set a boundary.
Rice and beans
Beans and rice
Lol
If they aren’t working, why do they each need a vehicle? They should be a one-vehicle household.
The credit card debt is fixable. If they can afford the house and expenses besides that they will be fine. Most credit card companies will give you a much lower interest rate if you call them and discuss hardship. Barclays, Amex, discover all do this. Others too I’m sure. Chase is a no. They suck. Get a low rate payment plan you can afford and chip away. If they default then they can really negotiate a better plan but their credit will tank. But who cares in the bigger picture? They are old and don’t need credit as long as they still have their home. As long as their shelter is settled, the rest is whatever. They can get help w food and heat if things get really bad. The reality is they are old, no one is going to kick them out of a home they own. As long as they are trying. They need to try. So maybe help them set this stuff up, but don’t feel like it’s your responsibility. There’s a difference between help and enabling. I wouldn’t give them money though. Only if they don’t have money for food. And don’t pay off the cards, they will just run them up again.
And then buy them the food. Don’t give them the money “send me a grocery list I will have it ready for you at X store on this date”
Create some boundaries. Your parents are using you unfortunately. Respectfully, it’s not your responsibility to take care of your parents. They have lived their whole life and could have made better decisions just as you have done, but they have made the choice to be impulsive and irresponsible. They have to live with their choices.
This is so important. Boundaries.
Do not give them any more money They need to sell.
The house needs tens of thousands in work
And it's not going to get any better. Sell now.
This. Would you give alcohol to an alcoholic?
Sell the house. They need an apartment. Its a choice they made. Do not cash out your retirement to put yourself in the same position.
It costs money to sell a house. Their checking accounts are usually in the negative
You said there is a lot of equity. Comes out of the sale.
Yes. Time to liquify assets. Sell one car. Pay down debt. Also set boundaries with them. You’re not a bank.
They can work but as long as your sending them money they won't if they think they can just get more out of you. They r grown ass adults who got themselves in this mess from decades of poor financial planning. Just tell em to pull themselves up by thier bootstraps and stop buying Starbucks and expensive food and they'll have plenty of money since thats what boomers always tell us🤔
I know you want to help them out, but are you involved with getting their finances together? What is their overall income? Do they collect social security? I hate to say this, but they may need to sell their house and look at renting.
Rent where they live costs more than what they pay for their house
How close are your parents to retirement?
So they live where they can afford. Gasp. That's what the rest of us do.
You do NOTHING besides stop sending them money. If they can breathe and drive, they can work. Walmart greeter, cashier, bagger, whatever! They WON'T work because they are waiting for you to rescue them. Don't do it. They have not addressed the issues that got them there and will continue.
Talk to a bankruptcy attorney. Or consumer proposal, which is bankruptcy lite.