Author Topic: Parents and in-laws with money problems  (Read 24325 times)

rationaloptimism

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Parents and in-laws with money problems
« on: July 06, 2012, 12:35:02 PM »
My situation, which I think is pretty common, is this:

We’re ants but my spouse's father is a grasshopper. He’s already in his 60s, spends like crazy, and has TONS of debt. He has a decent income, but his spending is way above his income.  He has done no retirement saving, he has burned all the way through a few hundred thousand dollars in inheritance money (won’t be passing *that* on to the next generation), and he has racked up tons of debt, and in the process gotten used to a lifestyle that is probably twice as expensive as he could have reasonably afforded on his actual income.

But it’s not like he gets in trouble once a year. He’s going to get in trouble all at once, and then we are either going to spend money to help or see an old man suffer.

I saw a great quote: If you jump off the top of an 80-story building, for 79 floors you can think you’re flying. It’s the sudden stop at the end that tells you you’re not. That’s the problem with our grasshopper. He thinks he’s flying. His expensive lifestyle feels like a sign of success to him, not a wealth-building failure.

Today it is still pretty easy to rack up debt. Banks will keep giving you credit cards. So when someone is still working, and has the capacity to borrow, they can live well above their means for years.

So the problem is, he will come to us for the first time when he’s in his 70s, unemployed, with no savings, and massively in debt. And it will be too late to “teach him how to fish.”

And, he will be surprised. One thing about grasshoppers–they don’t worry. They think everything is fine. So he won’t blame his past habits, he’ll blame the economy, or the banks who won’t give him more credit, or whatever.

Another thing about grasshoppers–they think money exists to be spent. The idea of a big pile of capital throwing off a modest annual income does not compute. If they suffer and they know you have a stock portfolio that you aren’t liquidating to help them, they’ll be mad.

Finally, there’s the whole old age factor. It will just seem more heartless not to help.  To me it seems very unfair for us to have to effectively subsidize (after the fact) a lifetime of reckless spending that is the opposite of the way we try to live.  But it will be too late to teach him a lesson he can learn from.  And my spouse will hate to see him suffer in any way.

One other note–he’s never asked for money yet, and probably can’t imagine that he eventually will have to. 

So, what do we do in this situation? Confronting him now will seem disrespectful. And it will likely have no impact. A) It’s hard to get people to change; B) He has a LOT of debt. It would take even dedicated ERE types more than a decade of hard, high-paid work to get through his debt.

But just waiting for him to report the financial “surprise” that we can easily see looming seems like a nightmare too. And stressful.

In the European bailout talks, Merkel from Germany made a good point: Liability and Control belong together. 

But when it comes to spendthrift parents and in-laws, it’s hard to take control ahead of time but hard to fully sidestep the liability for elderly people you love, no matter how irresponsible they’ve been. 

But the financial liability could be significant, could derail our plans for freedom, etc.   

How to handle???

eldub

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Re: Parents and in-laws with money problems
« Reply #1 on: July 06, 2012, 01:18:22 PM »
Here's my opinion: you can't just stand idly by until he clues in and comes to you for help.  Despite the fact that you say it won't make a difference, you have to say something NOW. Maybe it won't make a difference, like you say.  But there's always a chance that it might.  Not right away, not in any way that is overt, but it MIGHT.

Even if you are right, and you're pointing out this ticking time bomb does nothing to change his behaviour or his way of thinking, you still have to say something.  Because we have no control over anyone else, even those we love.  We only have conrol over ourselves and our own actions.   And the only power you have here is to try to make clear to him that he is trouble.  You need to be able to sleep at night that you did your best to help him . Whether he takes your advice or not is out of your control. 

Just my two cents.  Good luck.

arebelspy

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Re: Parents and in-laws with money problems
« Reply #2 on: July 06, 2012, 01:41:06 PM »
Ugh.  I can offer no solutions, but will be reading carefully for ideas.

My parents are much the same way.  About as bad in spending, luckily not as bad in terms of current debt level. Starting to talk with them about it has them working a little bit on shedding debt, but their spending is still way too much.  And conversations about it... haven't gone well.  I fear for when their spending will have to cut from 150k+ to 30k (social security income) in a decade.  I will continue to try, however.

Luckily my wife's parents have pensions lined up, so although their behavior is similar, and their spending way too much, they'll be mostly taken care of.

I do luckily have a sibling that can share some of the burden, if it comes to that.  Although she may, at some point down the line, be in a similar situation as my parents.

The standard advice is lead by example, but with someone like you've described, I don't know that will help much.

Good luck.
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igthebold

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Re: Parents and in-laws with money problems
« Reply #3 on: July 06, 2012, 02:06:34 PM »
Not sure if this is helpful, but a couple basic principles come to mind:
  • It's important for family members to take care of each other. It's how societies have resiliency. Part of that, incidentally, includes community accountability—something that's lacking in most suburban contexts.
  • Nobody deserves a lavish lifestyle. So if you end up having to help out, it doesn't mean you have to help out at his current expectations.

I'm reminded of a character in Dickens's "Bleak House": Mr Turveydrop. He is a self-styled "master of deportment," and essentially lives off his son's hard work. The sad part of it is that the son feels it his duty to do so, but isn't really doing any favors to the father, who continues to be a leech past the end of the story.

I don't mean to be disrespectful in this.. it's just a very vivid picture that Dickens paints. You can see him in episode 3 of the BBC adaptation.

CNM

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Re: Parents and in-laws with money problems
« Reply #4 on: July 06, 2012, 02:14:42 PM »
I don't think there is anything for you to do.  Talk to your spouse and decide ahead of time how much you are willing to help out if and when the time comes.  If you decide to provide cash support, start setting that aside but know that you are under no obligation to do so. 

I would also try to confront him about his spending.  Let him know that you're worried about his spending and fear that he may be submarining himself.  He will probably deny it and tell you to butt out (which is his prerogative) but at least you made your position known.  Be direct but when he tells you to leave him alone, leave him alone.    It's possible he may even think about his finances after you've mentioned your concerns to him.  That's really all you can do.  You can't change people.

AJ

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Re: Parents and in-laws with money problems
« Reply #5 on: July 06, 2012, 02:30:22 PM »
As someone in a somewhat similar situation, I can't offer any philosophical advice, but I do have a couple of hard-won practical tips:

1. Don't live too close. Be close enough to visit on holidays, but far enough that it is inconvenient to ask you to bail him out. This won't help if he comes asking for a large chunk at once, but it will slow the flow of small requests if/when they start.

2. Fake poverty, if you can. You may understand that you can't liquidate large assets to pay for his mistakes, but, as you say, he won't understand it. The less he thinks you have, the less it will hurt your relationship with him to tell him No if/when you have to.

3. Do not give or loan cash, ever. Its like smoking: if you do it once it may be very difficult, painful, and expensive to quit. If he does need assistance, try to offer it in non-monetary ways if at all possible.

Its hard. The fact is, he is a grown man and he has the right to spend himself into oblivion if that is what he wants to do. If you confront him now, it will strain the relationship because it really isn't any of your business yet (IMO). It isn't your business until he starts asking for things from you. The best you can do is just prepare yourself for that day. For DH and I, it was much harder to say No than we thought it would be. It is still hard.

AJ

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Re: Parents and in-laws with money problems
« Reply #6 on: July 06, 2012, 02:35:47 PM »
Also, I would add that a lot of times people spend money to offset their insecurities in other areas. If you can boost his ego in other areas (like, praising his parental wisdom, while simultaneously being unimpressed by his new purchases) you may create a subtle social incentive to get his self-worth from things other than material possessions. This is just a theory, I have yet to try it out myself...

MooreBonds

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Re: Parents and in-laws with money problems
« Reply #7 on: July 06, 2012, 05:28:33 PM »
I don't know that it would necessarily be any different....but sometimes, when someone verbally communicates to someone, it goes in one ear and out the other.

However, if your spouse were to actually type up a very short memo to their father, after they have a short talk with him, and gives it to him a week or so after their talk, it might finally sink in, and the father won't be able to convince himself "Bah, my son/daughter didn't really mean what they said - they SAID xyz, but they didn't really MEAN it", because the memo will be in black and white, and his conscious can't twist and reword what his ears are hearing. And trust me - if he lives that far beyond his means now, it's because mind isn't grounded in reality, but instead in his fantasy world where he can do/spend/enjoy whatever he wants now. Likewise, his mind will twist things he hears and sees to fit his agenda and lifestyle - including words of warning from his child.

So obviously, I'm in the camp of 'saying just a quick word of caution to the spendthrift father' - because you can bet your bottom dollar that people like him WILL seek out anyone and everyone that will allow him to at least try and maintain whatever type of lifestyle he can sponge off of people. He may not be hitting you or spouse up for money now, but I'm willing to bet that if he's living that far beyond his means now, he'll at least try with a variety of sob stories/outright lies.

Nords

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Re: Parents and in-laws with money problems
« Reply #8 on: July 06, 2012, 08:50:58 PM »
So, what do we do in this situation? Confronting him now will seem disrespectful. And it will likely have no impact. A) It’s hard to get people to change; B) He has a LOT of debt. It would take even dedicated ERE types more than a decade of hard, high-paid work to get through his debt.
But just waiting for him to report the financial “surprise” that we can easily see looming seems like a nightmare too. And stressful.
But when it comes to spendthrift parents and in-laws, it’s hard to take control ahead of time but hard to fully sidestep the liability for elderly people you love, no matter how irresponsible they’ve been. 
But the financial liability could be significant, could derail our plans for freedom, etc.   
How to handle???
The biggest issue here is that you can't (and won't be able to) change his behavior.  About the only thing you can manage is how you feel about it.

You're absolutely right-- you have no reason to confront him about his behavior.  You won't change it, and you'll only aggravate everyone (including yourself).

Is your FIL eligible for Social Security?  That could delay the crash somewhat, or at least give him a landing pad.

When he's eligible for low-income housing, you/spouse could offer to pay a portion of the rent directly to the landlord.  That'd keep him from being too irresponsible about the rent.  Another option would be to give him a debit card that you load with $100 every month (or some appropriate number).  That way he's receiving a subsidy that makes you feel better without him being able to blow it all at once.  And if he's irresponsible with it then... you're already doing all you can afford to do, and you don't have to feel obligated to do more.

There's a thread on Early-Retirement.org about a poster whose mother-in-law cannot afford the co-pays for her cancer treatment-- due to her earlier financial irresponsibility.  (She also has an expensive smoking habit.)  His spouse (her daughter) of course wants to pay the co-pays.  He feels it's just going to derail their ER planning.  There are probably significant marriage issues between these two spouses that have little to do with his MIL's co-pays.

There are other posters on E-R.org who have similar situations with parents who have been abusive or neglectful to them in the past.  Those posters feel no remorse about cutting off those "parents", and in fact they're even concerned about taking additional steps to make sure the courts can't make the adult children liable for the spendthrift parent's debts.

DocCyane

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Re: Parents and in-laws with money problems
« Reply #9 on: July 07, 2012, 05:17:29 AM »
I agree with AJ. Distance will be a benefit to you. The child who lives near the parent ends up with the bulk of the responsibility.

Instead of focusing on your FIL and trying to change him (which won't happen), I would have lots of conversations with your wife and write up an action plan. Put on paper what you are willing and not willing to do for her father, so emotion does not become a part of the decision making process. And you can prepare, as best you can, for what will be asked of you.

You two should come to an agreement because you don't want this to stress your marriage.

Most importantly, you are taking on your FIL's worry and that's not good. Don't carry that burden. I know a lot of Baby Boomers who plan on riding the credit wave to the grave, spending everything banks are dumb enough to give them and then checking out with a large bill left behind. This is their plan. Don't take responsibility for it.

arebelspy

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Re: Parents and in-laws with money problems
« Reply #10 on: July 07, 2012, 10:14:38 AM »
I know a lot of Baby Boomers who plan on riding the credit wave to the grave, spending everything banks are dumb enough to give them and then checking out with a large bill left behind. This is their plan. Don't take responsibility for it.

It'll get ugly when they have more life left at the end of their credit.
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herisff

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Re: Parents and in-laws with money problems
« Reply #11 on: July 07, 2012, 10:20:50 AM »
<snip>Instead of focusing on your FIL and trying to change him (which won't happen), I would have lots of conversations with your wife and write up an action plan. Put on paper what you are willing and not willing to do for her father, so emotion does not become a part of the decision making process. And you can prepare, as best you can, for what will be asked of you.

You two should come to an agreement because you don't want this to stress your marriage.

Most importantly, you are taking on your FIL's worry and that's not good. Don't carry that burden. I know a lot of Baby Boomers who plan on riding the credit wave to the grave, spending everything banks are dumb enough to give them and then checking out with a large bill left behind. This is their plan. Don't take responsibility for it.
I totally agree with this. Have a thorough discussion with your spouse and make a plan for the future. If she feels that she really will want to bail him out, then figure out the best way for you to do so - a monthly stipend including a refillable grocery store card, a set total dollar limit, taking control of his utilities, whatever you and she feel best about. The hard part will be sticking to it once the inevitable happens. If you have a plan, it will be easier to stay the course.

sol

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Re: Parents and in-laws with money problems
« Reply #12 on: July 07, 2012, 10:28:04 AM »
Previous threads here have highlighted the problems with trying to provide a monthly stipend.  An earlier poster had a FIL who was using his SS check for gambling and liquor, and then coming to them begging for money for food and rent. 

I agree that trying to dole it out in small pieces is preferable to large checks, for someone who is so irresponsible, but don't think you can improve someone's spending habits just by keeping them on a short financial leash.


herisff

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Re: Parents and in-laws with money problems
« Reply #13 on: July 07, 2012, 10:34:27 AM »
<snip?I agree that trying to dole it out in small pieces is preferable to large checks, for someone who is so irresponsible, but don't think you can improve someone's spending habits just by keeping them on a short financial leash.
I agree you can't change a person's character or habits. However, the wife would probably feel much better if her parent had enough food (grocery card), heat (pay for basic utilities) etc for basic survival. These suggestions were for the child of the profligate parent, not for the parent.

Nords

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Re: Parents and in-laws with money problems
« Reply #14 on: July 07, 2012, 05:19:44 PM »
... but don't think you can improve someone's spending habits just by keeping them on a short financial leash.
I think we've already agreed that we're not going to improve a spendthrift's spending habits, and that we're not even going to bother trying. 

Doling it out in small pieces, and to the biller rather than to the beneficiary, just helps drag it out longer while making the donor feel better.

sol

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Re: Parents and in-laws with money problems
« Reply #15 on: July 07, 2012, 05:42:13 PM »
Doling it out in small pieces, and to the biller rather than to the beneficiary, just helps drag it out longer while making the donor feel better.

Sure thing.  I'm just reminding the group that we've seen previous instances of well-meaning adult children effectively supporting a parent's vices by contributing food money to a person who is going to buy drugs and lotto tickets with whatever other income they have.

Sometimes the best option is to just cut him off until he gets his head screwed on straight.  Otherwise your charity is just enabling more self destruction.  That doesn't really make anyone feel better.

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Re: Parents and in-laws with money problems
« Reply #16 on: July 07, 2012, 08:47:24 PM »
I agree with the others about giving him a heads up regarding your concern, though only sparingly to avoid problems.  If you mention it and he is interested in changing he will ask for more advice.


Once he does start to crash, I think it's very important to let him crash HARD.  DO NOT help until he reaches bottom.  Let him get kicked out of his house, be bankrupt, struggle to find money for essentials, and THEN and only then be willing to help in small but meaningful ways.  I think that would be the biggest way to avoid a huge money pit of slowing trying to bail out a sinking ship.  When he has nothing, your small something will be huge and will make a real difference in his life.  There is a lot of assistance, government and otherwise, for elderly people.  Make sure he goes there first, and you be the "extra" help he needs to have the small extras that he will enjoy.


Having said that, I know your circumstance very little and freely admit that my suggestion may not be the best for your circumstance, no one can know how it will play out.  But it is what I thought of when I heard your story.

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Re: Parents and in-laws with money problems
« Reply #17 on: July 07, 2012, 09:27:19 PM »
I have family members like this except they are already in the "crash" stage, asking for assistance. You have to be very careful and set strong, well thought out boundaries when dealing with this kind of behavior. Trust me, the freeloading will never end and it is very, very unlikely he will ever learn a lesson.

I agree with AJ, that you should not let him know you have a stash if at all possible. If you are able to, there is no reason why you shouldn't help him have the basics as he is family. But by that, I mean the very basics. Since he's worked his whole life, he should be getting social security. Along with that, he can get housing assistance as a senior as well as food stamps. That's all he needs to stay afloat other than health care. If he asks for more, don't feel like it's your responsibility to come up with it. It's not.

As far as the debt, there is always bankruptcy. The lenders gave him that money, they can take the hit...it's not your debt to deal with.

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Re: Parents and in-laws with money problems
« Reply #18 on: July 08, 2012, 07:52:51 PM »
I'm in a similar position with my 63 year old father. He finally had a come to Jesus moment a few years ago after we had a serious talk about his finances. He's pared down his lifestyle substantially since then and has actually saved a decent chunk of money. During the conversation that sparked his change in behavior I told him that I (and my two siblings) were prepared to take care of him once he was no longer able to work. But. If that ended up being necessary I would be in charge of ALL of his money, social security, savings, everything. I would pay his bills and give him an allowance. He absolutely hated that idea (understandably) but the threat of it was what made him finally realize that his spending was unsustainable.

I feel for you. I'm lucky that I have two siblings (and one very high paid one at that) that can help carry the burden. It sucks to be put in this position just when my own young family is still trying to get its footing but we don't get to choose our family, right?

Good luck.

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Re: Parents and in-laws with money problems
« Reply #19 on: July 09, 2012, 08:23:02 AM »
I agree with everyone who says that you cannot change someone else, and you should avoid giving the parent money. My parents and I financially parted ways (completely) when I was 18 and moved away. A decade later, my father called me in late November to say that the heat had been shut off due to nonpayment for over a year. I buckled and paid $1,600 of the bill (something I had promised myself I would never do). I made it clear to my father that it was a loan, and we agreed on a payment plan of $100 per month. Of course, he never paid me back any of it. He has since bought a new car, and the heat has again been shut off due to nonpayment. I think the best thing that happened to me when I was 18 was that I had to fend for myself completely with the knowledge that no one was going to help me pay any of my bills. Possibly, when no one will bail him out, my father/your father-in-law will learn to live within his means.