Author Topic: Need Advice on Money Family Issue  (Read 3500 times)

RSGG

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Need Advice on Money Family Issue
« on: November 21, 2012, 01:24:13 PM »
Hi there,

I came across this forum recently and think it's an amazing resource for all types of people for achieving financial success and eventually financial freedom.  I'm 21 years old and a senior in college graduating in May and am glad I've gotten into the financial freedom mindset this young.

There is this one issue however, and it's my mother financial issues.  Money in our family like many others is a sensitive issue.. I"m sure because it's caused so much frustration and pain in the past that everyone wants to avoid it.  My parents divorced when I was about 8 or 9 and I can guarantee that money played a large part of it.  I'm dedicated that in my life and family that that will never be the case. 

With that said, unfortunately I can't stop feeling frustrated over my mothers financial situation because it's just simply STUPID.  Let me explain.

My mom works in a management position at one of the largest and most prestigious law firms in the world.  Filling out student loans one year I accidentally and unfortunately came across her annual income.  I truly wish I hadn't because ever since then this constant anger and rage has somewhat built up inside me.   Her annual income is about 175K.

I can't stop questioning how this is happening?

How the hell can you be drowning in debt?  She told me it was about $10K, not sure if she's lying about that though, because I would think 10K would be pretty easy to pay off with such an income as 175K.

(Her credit is so bad that she cannot get a credit card anymore, and needs to use her company's.)

I always want to ask where exactly is your money going?  You must have another family your spending all your money on.

The income tax rate is 5% in my state.. and it's a flat rate, so it doesn't increase because of her higher income. 
She's taking over 13K in / month.

With a little nosiness on my part the monthly expenses I"m aware of are:

$1,800 in rent
$300 phone bill (ridiculousness)
A large car insurance bill $600-700 (I feel bad because I made it go up quite a lot being a young male)
Car payment of $400-$500
Then of course food.. not sure how much she spends on that.
She has no cable or internet..
She travels to LA frequently.. about once every couple months.. but I cannot imagine it costing thousands of dollars.  She also travels to D.C a decent amount but that's for work.

I always try to tell myself, "Look that's her issue, don't get involved, accept her as she is even with her financial flaws, and learn from her mistakes."
But now she has been asking me for some money, and while she has paid most of it back on time.. every time she asks for money I just want to scream "WHY????"

However it's hard for me to say anything other than "sure," because I feel partly bad considering she's paid for a considerable amount of my student bills over the past four years. (Totaling $50K over the past 4 years) and I also contribute to that horrid family phone bill and car insurance bill. 

Does anyone have any advice on helping resolve this issue.
Also should I even bring up this issue with her?  If so how should I go about bringing up this issue without ruining my relationship with my mom, and also so that she stops stressing out about bills and such.

Thanks everyone!

EngGirl

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Re: Need Advice on Money Family Issue
« Reply #1 on: November 21, 2012, 01:43:14 PM »
Hey RSGG,

I feel your pain. I was about to post something similar in fact! My Mom and Dad make 150K or more a year combined, but they have always had money problems. Even though I love my Mom like crazy, I have to give her most of the blame. They are both constantly amazed at how they don't have anything to show for their money, but I watch my Mom hand over fistfulls of money for stupid stuff - daily wheat grass from Booster Juice, $100 facial moisturizers, $60 bottles of red wine, the list goes on and on.

I would also like to hear from the MMM community - how do you talk to irresposible parents about money? I'm actually really scared that they won't have a single cent saved for retirement and that it will fall on me, the financially responsible one, to take care of them in their old age. What do people like RSGG and myself do? 

totoro

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Re: Need Advice on Money Family Issue
« Reply #2 on: November 21, 2012, 02:00:52 PM »
I sat mine down and gave them the talk.  Yep, really.

I asked them point blank what their retirement plans were about fifteen years ago.  They did not have any.   I asked them to go see a financial planner.  They did and they started to save.  I also gave my mom the book, "The Complete Tightwad Gazette".

I haven't been more involved in things than this.  It is just uncomfortable for us all.  My mom is now 63 and still working.  She basically supports herself and my dad for extra things above basic cost of living.  She can't retire until 65 when her pension kicks in.  They will be okay.

I would say they are not really unhappy or desparate now.  But things would not have been as okay without "the talk".

As far as your mom goes, I think it is worth the effort to have a heart to heart on it.  She is obviously educated, unlike my folks, and should know better but for some reason does not act on it.  I have a friend who is a compulsive shopper and this keeps her from making progress - or maybe she has debts she is trying to pay off?  She might not want to talk with you but it is worth a try.

bogart

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Re: Need Advice on Money Family Issue
« Reply #3 on: November 21, 2012, 06:32:13 PM »

However it's hard for me to say anything other than "sure," because I feel partly bad considering she's paid for a considerable amount of my student bills over the past four years. (Totaling $50K over the past 4 years) and I also contribute to that horrid family phone bill and car insurance bill. 

Does anyone have any advice on helping resolve this issue.
Also should I even bring up this issue with her?  If so how should I go about bringing up this issue without ruining my relationship with my mom, and also so that she stops stressing out about bills and such.


I dealt with (some) similar issues with my dad; while I never got him to change his behavior, I did manage to set boundaries on what I was willing to do to help.

Not having read any of your other posts (if they are out there) and what I see in the above (from your post in this thread), you are someone who is not yet self-supporting and who your mom (and dad?) is (are?) supporting -- is that right?  So that when she asks you for money she is in effect asking for some of her money back? 

My advice to you based on that assumption is (1) finish school and become financially independent, including paying for your own phone and insurance; (2) ask your mom what of what she paid for your education, she'd like you to pay back (or what loans she'd like you to take over), and work out a manageable plan for doing so; (3) once you've done (1) and (2), talk to your mom about finances, and use those conversations to set some boundaries (that you can then enforce).  Bearing in mind your situation by (3) -- a recent college graduate, setting out -- you could always start the conversations as ones involving your seeking advice from her, i.e. "I want to get off on the right foot and am hoping to steer clear of mistakes, what advice can you give me as I start ..."  You could also read a few books yourself and use those as starting points, i.e., "I just read ... and they recommend ... what do you think about that?"

Good luck to you.

RSGG

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Re: Need Advice on Money Family Issue
« Reply #4 on: November 21, 2012, 08:20:22 PM »
Thanks for the responses.

Bogart, you understand my situation very well.  Thank you for that, and I'm going to follow your advice.
Thanks again.

cdngb

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Re: Need Advice on Money Family Issue
« Reply #5 on: November 26, 2012, 03:34:15 PM »
Bogart had a great idea.

Once you know how much she paid for your education, set up a savings plan that would pay if off in a reasonable amount of time.  However I would not let her know about these savings but would have them available if you ever need to take care of her in the future.  You may or may not need to use them but it would be available.

Giving her the money directly would not help as they would probably not use it wisely.

It is likely that if she is not financially responsible now she will not change and that at some point you will have to take care of her.  Remember it will only get worse when she retires with a reduced income.

I assume that she has group life insurance at work and that the children are the beneficiary.

If she passes while working, any funds that you end up paying for her her will be re-imbursed with this policy.

Prior to retirement I would purchase a life insurance policy on her.  This would provide a method of repaying you for the expenses that you will have to occur in her retirement.  If she has health problems consider using the option of converting her group life insurance policy to a personal one when she retires.  There is only a short period of time to exercise this option which requires no medical underwriting so you will have to find out the rules and act quickly.

Insurance is an inexpensive way of resolving many financial obligations if used properly.

I am impressed with your insight as to your probable future financial responsibility.  The question is how to fund it.