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.