I had written on this forum before about a year ago, I think, about my parents and their terrible financial problems and gotten feedback that improved my clarity. Hoping for more of the same now....
Well, they had some problems through the last year (a few trees fell on their house and destroyed a good portion of it) and the insurance payments didn't cover everything (tree removal wasn't covered except for the tree that landed IN their living room, for example) and they desperately needed cash to get through the ordeal... Long story short, they were supposed to pay me back when the insurance check came. But, in order to get the final payment from insurance, all the work needed to be finished... the work couldn't get finished until they paid the contractors to finally finish it all... so they needed to borrow some more cash.... sigh.... anyway, the final check came and it wasn't for much, but they gave it to me, and promised that they would give me their tax return.
I know that when you give money to family, you should consider it as a gift and not as a loan, but I am not exactly in a position to give away that much money (it is my emergency fund and I am a single parent of three kids that I need to provide for.) So, unfortunately, I need that money back.
Anyway, tax season comes around.... they are expecting a $4000 return. Turns out they OWE $1500, because my mom got Obama-Care insurance and took a premium discount that she didn't actually qualify for.... and, of course, they don't have the money to pay the taxes.... and need to borrow the cash.
I insisted that they disclose all of their finances to me (I am out $6500 now... I am tapped out and I wanted to see if there was an ETA for getting the money back). They did so begrudgingly.
Ok, here is the depressing part.
They owe
$130,000 on their house (not bad, but not great)
$14,000 in credit card debt (making minimum payments)
$23,000 on a HELOC (they are making interest only payments)
No car payments (wooohooo!)
$38,000 per year income.
When it is all said and done, they are short almost $700 per month. I can only figure out how to squeeze them down by about another $300 per month (cut cable, get rid of a car...etc etc.) And all of that short fall either goes onto a credit card or onto the HELOC. They got the HELOC to consolidate their credit card debt 2 years ago and it was only $14000 then.
Anyway. I am trying to show them there is a better way to live. They are depressed, they are angry with each other, and at this rate, they will be bankrupt and homeless in a very short time. My mom seems to think that everything will be fine once my dad can get his social security. He is 57. He works a hard job as a laborer and has no education. My mom watches my kids so I can work and I pay her for it. She is an artist and hasn't had a job since I was a kid.
I work hard and I save a lot of my income, but I don't make a ton of money either. I am putting myself through school and am doing my best to avoid incurring debt in the process. Their situation is dragging my household down along with it, since, even though I cut them off and will never offer cash again, they have so much already with no hopes of repayment. I am making them apply for welfare, which is a sever pride shock for them. I made them a budget and I intend to sit with them every week and pay their bills and work on their weekly spending allowance... I am an only child and I feel that taking care of my parents is mandatory, but taking care of my kids and household is MORE important... I feel incredibly guilty saving money for my future......