I had a bit of a shock this weekend when logged in my bank online. Due to being added as an Authorized User on my mom's Chase card (so she could get a point bonus), her credit card is now visible when I login -- so I guess it was snooping, which I feel bad about (I didn't log out and tell her right away), and leaves me conflicted as to how to broach the topic.
But what I really feel terrible about is the state of her finances -- I knew that she had soft spot for shopping and generally lives a considerably anti-Mustachian/typical consumerist lifestyle, but the magnitude really threw me off. I'm also feeling bad about encouraging her to get this credit card -- I've been in the churning hobby for the last year and half, and have racked up enough points and trips for a two week honeymoon in Hawaii and a round the world trip next year to Asia and Europe. But the most absolute rule in credit card churning is don't carry a balance!
To give a few highlights, over the last 4 credit card statements:
- ~$75 in interest charges per month. The balance has stayed at about $5,000 each month, and monthly payments are generally treading water (e.g. not paying it down) + one $25 late fee. It works out to ~$950 annually
- She's been going to the salon monthly for hair cuts/color/highlights/pedicure/massage. $200-400 per month... the last 4 months annualized works out to $4,300 annually!
- Various retail shopping expenses, which I'm going to ignore, as I'm trying to walk a fine line between bossing around my own mom and trying to give her some financial guidance, so I'm going to focus only on the interest/late fees/running balance and extravagant spa expenses.
- Whole Foods weekly grocery shopping over $100 for one person
- $190 per month in internet + cable TV
For some additional background -- about 18 months ago, she sold her house and moved, and pocketed a nice return on the house, I believe about $75k, which was tax free due to having lived there more than 2 years. At that time, I told her to either invest that money, or better yet, max out all tax-advantaged retirement accounts and use a portion of the cash proceeds to live off of, while her salary was diverted to retirement accounts. She is approaching the age of a typical "early" retirement, but I believe has less than $300k-500k in retirement savings, meaning she will likely have to work until ~70 years old.
After selling the house, she rented an apartment that actually cost more per month than the previous mortgage + insurance + property taxes. And she upgraded her old, paid-off car and bought not just a new car, but a new $30k car with financing, despite the fact that there was a similar model with zero percent financing. At the time, I gave her an Amazon Fire stick with my Netflix login included, so that she could cut cable. But because the internet + cable combo was the same price as just internet for a year, she went with that. And of course, a year later, the price has jumped to $190 per month for internet and cable TV (which has not been cut). Finally, she spends more on groceries at Whole Foods for one person than my wife and I do for the two of us!
She
did take some of my advice and increased her retirement contributions and employee stock plans, but did it a bit too much. With the expensive apartment + expensive car payment + excessive shopping, it sounds like she doesn't have enough to cover monthly expenses, hence the credit card balance. Taking half my advice (save more) without the other half (cut costs) turned it into bad advice.
I've been on my own MMM journey, learning to save and relinquish my previous dalliance into the consumerist lifestyle. I've found it liberating and enlightening. Wanting to stay true to this, for a birthday present this year I specifically told her that I didn't want any gifts purchased at retail, but would instead prefer a scrap-book album of old family photos, and for her to share the cost with us for an airplane ticket for my wife and I to come visit family.
This was of course before I knew she was living in debt. Now I would feel bad about asking for her portion of the $300 airfare, while I'm sitting here without debt and saving as much money as possible, so I want to forego that gift and tell her to use it to pay down the credit card. But at the same time, I don't want to save her some money just so it can be used for spa treatments. And I'm also feeling a bit selfish because part of my concern here is that at some point this spending will catch up to her when she's no longer able to work, and the cost of elderly-care will fall on me, while I've been budgeting and saving for FIRE.
Any advice on how to have a conversation about this? The whole thing is admittedly messy and messed up, not the least of all because I inadvertently had access to her account, but also because she's my mom. But to me it seems like a dozen or more financial decisions, any one of which would be bad, but taken in the aggregate combine to create a dumpster-fire debt emergency.
Thanks for any advice.