Author Topic: Please help - concerned for a family member's financial well-being  (Read 2204 times)

nanana13

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Ever since waking up financially (almost two years now), I have come to notice more things that my parents do (financially speaking) that really make me worry for them. Well, to be honest, their money management has never stood out as particularly good to me, in fact, I was probably bad with money in the first place due to their example. But, that is neither here or there.

I have tried to offer my help to them (I'm a CPA) by offering to do a detailed budget and helping them plan, but it goes ignored. Alas, here is their situation.

- Mother is stay-at-home-mom (never got her HS diploma and doesn't speak English well), step-dad is 69 years old and plans to work for the next five years (he's in good health, and I cross my fingers that he continue to be)
- Step-dad makes income of about $150K
- Step-dad has zero in retirement savings outside of social security (he had 401K and pension balances from previous jobs which he took out and used to pay for other things like down-payments on homes, etc.)
- Signed a 30-year-mortgage (yes, at his age) in late 2015 for about $400K. Total monthly payment is a couple hundred dollars short of the max amount under SS
- Does not plan to stay in this home, only for the next five years until he retires which he claims he will then sell and downsize to a smaller home
- Took out SS early this year, which will make his income subject to tax due to his job's earnings
- Sometime in 2014/2015, financed a BMW (sigh) for about $40K or $50K. This is after he finished five years paying $700/month for a different car. My mom enables this by saying he "deserves it"
- Even though he has a about 4 or 5 siblings, he is solely responsible for his mother's financial well-being. She receives a measly pension from her late husband, and my step-dad supplements the rest. It's good that he helps her but it's completely unfair that his other siblings don't chip in despite absolutely having the resources to do so.
- He does not keep a budget, just spends as he goes
- He has an irrational obsession with purchasing DVD's, has literally hundreds. He pays full-price for these at places like Best Buy. Luckily he has now discovered Netflix but the damage has been done. Thousands of dollars down the drain - yes, thousands.
- Purchased a $4K TV last year, on credit
- Takes the family out for dinners every weekend, easily upwards of $150 per meal
- Gambles occassionally ($13,000 in 2015, I saw his tax return. This is nothing compared to previous years)
- As noted above, the only income he'll be relying on in retirement is SS, with no outright ownership of a home and my mother not bringing in any money
- He has six biological children, ages 18 - 42.
- He still has student loans from his MBA program in the '90s!!!! Despite making $200/month payments every month, still owes close to what he took out - about $30K-$35K
- He has declared bankruptcy in the past, he clearly has not learned any lessons

This is all that comes to mind at the moment, I'm sure there might be more that I'm not even aware of.

Honestly, his irresponsibility is scary for someone his age. I'm concerned that I'll be the one paying for all his mistakes, which is unfair as I am only now getting out of my own debt hole and previous bad habits (still have a couple bad habits, it's a work in progress).

He won't listen to me obviously, but maybe if I get some good comments down below, I might be able to print them out and show him to slap some sense into him?!

Please help, any insights, advice, reality checks, etc. ... would be really appreciated. Thank you!
« Last Edit: February 24, 2016, 05:31:16 PM by nanana13 »

rubybeth

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Re: Please help - concerned for a family member's financial well-being
« Reply #1 on: February 24, 2016, 05:44:18 PM »
Honestly, he dug this hole and he (and your mom, unfortunately) will have to lie in it. You could let your mom and step dad know that you are not able to help them financially (meaning by giving them money or paying for anything)  at all. That can be your boundary and you can offer advice if they ask, but parents don't often want advice from their children (step or biological). You may experience guilt by exerting this boundary, but stay strong. Good luck!

One additional thought: you could refer him to a good hourly fee financial adviser who can lay it all out for him.
« Last Edit: February 24, 2016, 05:46:08 PM by rubybeth »

okits

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Re: Please help - concerned for a family member's financial well-being
« Reply #2 on: February 24, 2016, 07:08:27 PM »
You are not likely to be able to convince your step-father to change anything unless he actually wants to.  Fortunately, you also don't need to accept responsibility for any of his choices. 

As rubybeth said, make clear that you don't have the financial resources to give them money, then I would just let them live their lives unless they ask for your input.  They've already refused your unsolicited advice, so harping on their finances any further will just damage the family relationship.  The "worst-case scenario" you fear probably involves him being unable to work, them having to sell whatever assets they have, and finding a way to live on whatever income and savings they end up with.  It won't be the lifestyle they're used to, but that's hardly a death sentence (one can have a very nice life without owning a house or driving a BMW.) There may be social or government supports they'll qualify for which will help (e.g. low-income seniors housing, food stamps, other subsidies).

Goldielocks

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Re: Please help - concerned for a family member's financial well-being
« Reply #3 on: February 24, 2016, 08:03:54 PM »

He will do ok when he runs out of money, to scale back to SS.   If he has been working and contributing all of his life, should be fine.  Definitely will need to downsize the house, and likely will get no $'s out of it when he does.   

Check into what $'s your mom would get if he dies before her, though.   Maybe suggest he puts $'s for her savings after he goes, unless he has a paid up life insurance policy.  Need to set aside money that will not go to his estate after death, though, or will lose it to creditors.

His plan seems to be to die with debt owing and spend every dollar he can.   Good thing the SS will not be spent out, it will keep coming.
« Last Edit: February 24, 2016, 09:41:10 PM by goldielocks »

Adventine

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Re: Please help - concerned for a family member's financial well-being
« Reply #4 on: February 24, 2016, 09:39:28 PM »
I also started worrying about my parents' bad money habits after discovering MMM and becoming more intentionally frugal. I've tried direct advice, books, buying cheaper groceries, etc. None of it really worked. They are completely stuck in the mindset that You Are Our Child, And Always Will Be, And So We Will Always Know Better Than You.

Even if I've never been in debt and they always have been. Even if they've had to ask their own parents for financial help, and I've never asked them for a loan.

The most effective approach I've seen, which is also the most hands-off, is to live a frugal life by example. If they're interested in learning more, be open to them. But don't provide any more unsolicited advice. Distance yourself physically and emotionally from their situation. You have your own life to live the way you see fit. I'm pretty sure you want your mom and stepdad to respect your life choices, even if they don't understand them. For your peace of mind, you will have to treat them the same way.