Author Topic: Dealing with Relatives with Money Problems  (Read 4955 times)

champion

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Dealing with Relatives with Money Problems
« on: August 02, 2012, 02:33:32 AM »
Here's a question that many of us will face. How should we handle (and plan for) inevitable demands for help from family members who are bad with money?

Here's one situation. My father in law has significant debts and no savings. He's always had a decent income, top 25% of Americans or so, but he has consistently lived beyond his means and just never saved a dime, and racked up lots of debt along the way. He's a big spender type--driving a (leased) SUV makes him feel special, for example. He's deep enough in the hole at his current age of 65 that he'll never be able to accumulate any retirement savings, even if he dramatically and voluntarily changes his lifestyle, which is unlikely.

So, I worry that he will come to me and my wife at some point and say, hey, I need money. By the time he realizes how little resources he has, he may find it very difficult to generate any income himself. We'll have assets and capacity for income producing employment, and he'll know it. My wife (who is incredibly close to her father) will find it very difficult to see him suffer in any way--she'll want us to give him money. And if he needs some money for bills or medical care or even for a trip to see his grandkids or something, it will be hard for her to see his needs and our accumulated savings and not want to just hand over chunks of money.

This is all upsetting to me. I feel like I have a huge looming liability. He's still healthy and making a decent income.  I resent the idea of being the ant to his grasshopper. I feel guilty and selfish for thinking this way. But the guy is a financial train wreck. I would never directly marry a person like him. And yet, I fear that his financial problems will be a part of my life, one way or another. The biggest problem is that it interferes with my ability to feel in control of my own saving and financial planning. If I moderate my own lifestyle to save money, and the result is a pile of money that I will be considered heartless not to share with my bad-with-money father-in-law, it makes the saving a lot less fun. 

How should early retirees and would be early retirees manage these types of liabilities? Any thoughts?


gooki

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catalana

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Re: Dealing with Relatives with Money Problems
« Reply #2 on: August 02, 2012, 04:16:26 AM »
Have you talked to your wife at all about this??

nevinera

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Re: Dealing with Relatives with Money Problems
« Reply #3 on: August 02, 2012, 06:20:36 AM »
If you expect that expense, you can plan for it.

My in-laws seem to have things well in hand, but family is family. If I had to work an extra 10 years to cover the additional expense of keeping them safe and healthy, I would. (Realistically, 4 years of extra income and compounded interest would probably cover the expense stream).

I don't know your internal politics, but if you can stand the guy and your wife is really close, consider merging him into your family unit at some point. It's way more efficient, it allows you to handle all the culinary expenses (by far our largest monthly outlay), and it exposes him to frugal living in a way nothing else can. It used to be fairly normal to have an extended family under one roof, and you might find you like the larger family :-)

galaxie

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Re: Dealing with Relatives with Money Problems
« Reply #4 on: August 02, 2012, 11:13:31 AM »
Budget for it.  We bought a two-family house with the knowledge that someday my in-laws would probably live in the other half of it (right now we rent it out).  We'll be giving up some income when that happens, but at least we know about it ahead of time and have planned so that the loss of income won't kill us.  It's not a surprise.  Besides, it'd be nice for our hypothetical future children to have grandparents around.

strider3700

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Re: Dealing with Relatives with Money Problems
« Reply #5 on: August 02, 2012, 11:41:08 AM »
You could always take the easy way out and lock your wealth up in non-liquid ways.  Making it difficult and time consuming to access it for "unexpected" reasons.   Then you can be wealthy  but not willing to sell a rental property to come up with some extra bucks.   Way easier then explaining you don't want to take money out of the ATM because they'll just blow it...

JohnGalt

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Re: Dealing with Relatives with Money Problems
« Reply #6 on: August 02, 2012, 11:59:00 AM »
Maybe I'm just cold and heartless... or maybe it's just that I'm not married and have no idea what it's like to have my life and finances intertwined with someone else... but I would make it very clear to my wife that I had no intention of watching her Father live his current lifestyle and then support him down the line.  If she cares about him at all - she will confront him now and make it clear if he continues to live like that, he should not expect anything from you down the line.  If she isn't willing to do that - I'd recommend she save money for him on her own.

If all of that is unreasonable - when the time comes - I would make sure to keep in mind and point out that there is a big difference between maintaining the life style he is currently accustomed to and him actually "suffering".  Social Security + Medicare should cover most of what he needs when it comes down to it.


tooqk4u22

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Re: Dealing with Relatives with Money Problems
« Reply #7 on: August 02, 2012, 12:05:45 PM »
Others mentioned but the best strategy is:

1.  Talk to your spouse - you see this as a potential issue, which because of her close relationship will turn into marital conflict down the road.  Put it all on the table, what you are willing and not willing to do.  I have a same issue with my in-law and I don't want to be responsible for her lack of responsibility.  I have talked to my spouse and we both recognize that any choice you make will have some kind of impact so its good to talk throught he possibilities. Your spouse may take the position that I will do whatever and whenever to make sure dad doesn't suffer. 

2.  Plan for it - Even if the decision is we won't provide any level of financial support you have to realize that you are dealing with emotions so what you decide now may be radically different when the time comes. 

Ultimately, the options to help but minimize your pain include buying multifamily property (he can have the small unit), save a bit monthly in a separate account (but he can't know about it), he can move in with you, he can get a roommate, nursing home, etc. 

Remember he will be getting SSI and medicare.

Also a key element that is being missed is that support doesn't need to be unconditional (a lot of people have an issue with this especially when it comes to family) - can't afford to live and needs your help - then the SUV needs to go, house needs to be downsized, maybe he gets put on a budget (this won't go over well).  But its your money that you earned/accumulated by being responsible so your help shouldn't be squandered.

Also don't feel guilty, but be consistent in your approach (i.e. if your willing to do something for your dad then you should be willing to do it for hers). 

kisserofsinners

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Re: Dealing with Relatives with Money Problems
« Reply #8 on: August 02, 2012, 12:27:20 PM »
Maybe I'm just cold and heartless... or maybe it's just that I'm not married and have no idea what it's like to have my life and finances intertwined with someone else... but I would make it very clear to my wife that I had no intention of watching her Father live his current lifestyle and then support him down the line.  If she cares about him at all - she will confront him now and make it clear if he continues to live like that, he should not expect anything from you down the line.  If she isn't willing to do that - I'd recommend she save money for him on her own.

If all of that is unreasonable - when the time comes - I would make sure to keep in mind and point out that there is a big difference between maintaining the life style he is currently accustomed to and him actually "suffering".  Social Security + Medicare should cover most of what he needs when it comes down to it.

I'm in the hard ass camp. I'm here because i've watched my parents destroy their financial outlook through a full subscription to the American Marketing Machine. In addition to their failing health. I grew up with 6 cars in the driveway, TV's in no less than 4 rooms of the house, and scarcely recall a time in my childhood without cable. We also never seemed to have enough for things like food; my mother went to 3 stores to scrimp our weekly meals together.

My mother bitches about me never telling her about my life and then openly mocked me for sharing my financial goals telling me, "Oh that won't work. You need to..."
When i shared about my goal to save $1800 for an emergency fund, my step father mocked me saying, "that's what your credit cards are for!"

Both have not been employed full time in years and live in my grandmother's house rent free.
They liquidated my mothers retirement only to loose it all in Texas real estate, in the bubble i told them was there.

I suppose there is still light in my heart to plan for it, but i'll be damned if it's to the standards that they know now. They'll learn that life is not a fucking super bowl ad! ...But i'm under no illusions that i'll be able to get through to them any sooner. :(

I choose to focus on my sister. Teach her about what i find and be ready for if she leaves her husband. I'd sooner take on her and two toddlers, before my own parents, quite honestly.