Author Topic: Sitting down to discuss finances with struggling parent - what should I prepare?  (Read 3220 times)

ethereality

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Hi everyone! My mother and I are sitting down for breakfast this Sunday to discuss some serious issues with her finances. I could really use some help with how to approach this conversation, and ways I could help prepare. For reference, I am in my young 20s, and she is in her mid-50s.

Background: My mom left a 50-60k job in her 40s (as a CPA) to pursue a small business. The business made enough for her to get by, but did not ever make much profit. My mom spent all of her money on raising my brother and I, and largely raised us on her own. My dad lives in a different country, and visits every three months.

She has less than $1000 in liquid cash, and no retirement money saved. (Maybe some from when she worked for big companies, but I have no clue how much). She let my dad handle investing, I believe.

Their relationship has never thrived, and is now tanking. Due to past physical and emotional abuse, my mom has a poor relationship with money and asking for help. They may divorce, though they both don't have many assets. His money isn't in USD, and he saved for his own retirement, but not hers. He brings home $2000 - $4000 every two or three months, but it's not consistent, and it only started recently. Now, if they divorce next year, not sure what will happen.

We had a very difficult conversation and now she's willing to open up for me to talk to her. We are otherwise close.

Problems:

- She owes about $400,000 on mortgage. Monthly payment of $2,000 only goes to interest.  House is in a really good area, walking distance to elementary and community college, safe neighborhood. 4 bedrooms, rents out every once in awhile, but not now. (*My boyfriend and I may move in with her next month, and help her by paying her rent.) House would need repairs before it could be in selling condition. Has tons of stuff, would take lots of time to move out.
- My younger brother needs about $5000 to get through undergrad (he graduates next May). I worked and paid my way through school, but my mom supports his tuition/living expenses. He did take out government loans, and has some scholarships, the $5000 is the remainder. My mom feels obligated to support him for these last 5 months (he's thrown things like you don't care about me when she's not given him the money).
- LITTLE TO NO RETIREMENT MONEY!
- Drives leased van

Income
- I pay her $3000/month gross for her admin support with my small business (30 hours/week)
- She's in a MLM. I'm not supportive, but no amount of fighting has helped resolve this issue. She swears she will make money soon. I'm guessing she earns $600 - $800 a month?

She does not want to be dependent on her kids (mainly me); hence, we are sitting down to talk to see if we can turn this boat around. She has good credit and no consumer debt, but is not saving any money each month.

My plan:

- YNAB? I don't use it myself, but she's not very computer savvy (can do basic internet things and word processing/excel).
- Sit her down and figure out usernames, passwords, account info, etc. She's quite disorganized.
- Figure out where her money is going each month, and try to help her budget. *My guess that she's lived for 15-20 years on a poverty mindset (always just have enough to scrape by), so it's hard to change her ways. But she has no major consumer spending problem.
- Immediately help her find a renter for 1-2 of the bedrooms. It's been easy to rent out, but she didn't follow up with the inquiries, so my past attempt to help didn't really pan out.
- She has lawn service for $100something/month. My boyfriend offered to do it, for a small rent reduction. We both offered to help fix up the house, clear out clutter, etc.


Money is a touchy subject, and maybe she doesn't feel entirely comfortable talking to her daughter about it, but I honestly want to help. I would support her in the future if it became dire, but obviously we both want to stop this freight train before it gets there. For what it's worth, I have $60,000 saved, and no debt, but obviously not able to support her at this point in just starting my own career.


What else should I ask her to do? Any general advice on how to approach this? Anything I'm missing? Thank you so much for reading.


ltt

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Honestly, three numbers stick out in this----less than $1,000 in cash, $0 retirement, $400,000 mortgage.

I would get the house sold as quickly as possible and as much of the contents (clutter) sold as you can and get out from under this mess.  Have her move in with you instead temporarily and get her back on her feet financially.  Then you can start a budgeting plan with her and find a cheaper place for her to live.

deborah

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Whose name is the house in? Your father's?

pminkler

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Lots of very volatile stuff happening in that post, OP.  Sorry to hear.

I'm not even sure what to say.  I mean my first reaction is to SELL THAT HOUSE.  Then there's the whole "what happens with the house during a divorce" thing.  I doubt the husband would want the house if he's out of country anyway...but still.

Approaching this, apart from the divorce, she has to hack and slash and sell everything and live way way way below her means.  Get into a nice little concrete bunker.  That brother?  Eff him.  Sorry.  And I have no idea how you'd ever convince her to do so, but eff him.  He's not the one making posts on internet forums to strangers in a plea for help.  He's the one (probably) getting drunk off his mom's dime and breezing through life without the cruelty of getting a job (or going to war) to pay for their education.  YOU seem to be the responsible one here. 

So.  To sell the house.  You're going to need some spare change.  $1k that your mom has isn't going to cut it.  How bad, really is the house?  Like...unsellable because of code?  Or, "there's some holes in one wall"?  I've seen houses sell where the basement FLOODED during the final inspection...and it still sold to where the buyer paid off the mortgage. 

If you were fine with the idea of paying her rent for the house, you'd be fine with paying her some cash to get out from under it.  Spruce it up the best you can, and sell.  Keeping the house is not an option at this point.  It's going to really test everybody...but yeah, fix it up and sell it.

After she sells and hopefully stops giving a bone to your younger brother, and she's moved in with you...  hopefully she gets back on her feet.  She sounds really sweet...trying (way beyond her means) to provide for her children even when it puts her in grave financial danger. 

I think this is more a battle of her feelings towards providing for her children than the best way to handle the finances.  If she hasn't felt satisfied with her provisions, she might refuse all help whatsoever.  Let her know she did a good job.  She did such a good job, that you're in a position to help. 

ethereality

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The house is in both of their names. Rent for a single room in someone's house goes around $650 in my area.

If my mom can get enough renters to pay for $1600/$2000 payment that she makes monthly, should we still sell it? Her initial idea is to find renters asap, and keep the house at least until May. If the financial picture isn't getting any better, sell the house. The house is definitely liveable - I guess I don't know much about selling houses...the wood floors are really old and damaged in some places, the kitchen sink is sinking in, etc, but not bad.

No matter what, decluttering is my goal. It needs to be done regardless of sell or no sell.

As far as moving in with me...I currently rent one bedroom (with an electrical kitchen, no stove/oven, etc) with my boyfriend for $650/month. It's maybe 125 sq. ft? Her house is closer to my work (all three of us work together), and within biking distance, and that's why we're considering all living at her place. So she can't move in with me right now. Two bedroom places nearby would cost about $1750? I work very long hours, and would rather cut a slew of things before commuting.

As for my brother, he claims he can't find a job/work because he's too busy applying for post-grad stuff. I have a hard time feeling sorry for him as I did two degrees in 4 years, and worked 20+ hours the entire time. My mom can't cut him off, as she feels guilt for not being able to better provide. Should I write him an email explaining the situation and tell him to get private loans? (we're not particularly close).

former player

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$400,000 mortgage on the house, in her fifties, and paying interest only and no principal?  That is not sustainable.  Even if you get renters in (or start renting yourself) that massive, hair-on-fire debt will still be hanging over your mother's head for ever more.   While she has that house it's not just that she can't save for retirement, she will never be able to retire.

There are two problems with selling.  The first is condition.  It sounds to me like the problems are fairly minor at the moment, and that a blitz on decluttering and basic cleaning/DIY would make a big difference.  No point putting a lot of money into doing it up: it will sell better as "sound and liveable and you can easily put your own stamp on it if you want to".  The second problem is the status of your parents' marriage, plus the issue of who owns the house and who owns the debt.   You need to sort those out with your parents before selling - it is a hopeless business when those issues arise during the selling process.

After you have talked to your mother and sorted out a plan for selling the house, I would suggest that you send an email to your brother along the lines of "you probably aren't aware of this so it might come as a bit of a shock.  Mother is $400,000 in debt and has no way of paying it off, so the house is going to have to be sold.  Also, she is now in her fifties and has nothing saved for her retirement.  She doesn't want to be dependent on us in the future, so has decided to put any money she earns from now on into tax-advantaged retirement funds.  This all means there will be no spare money to support you with after you graduate, the benefit is that hopefully she won't have to spend the rest of her life living for six months of the year with me and six with you."

Good luck.

Dee18

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Help your mother figure out what her social security will be, either from her own past earnings or from your father's if he had U.S. Employment.This could be an important source of future income since it has a cost of living adjustment.