Illustration by Hadley Hooper
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Web Exclusive…
Your Wisdom and Worries
November 2006
We asked readers how they’ve helped their adult children with money—or been dragged down by their problems. Here’s what they told us
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No Money Tree
"My parents grew up during the Depression, so we didn't have much and I learned the value of money. I have instilled in my children that you have to work for your money. (I tell them the stories of struggling to make it on my own, and how I worked double shifts to get into my first home.) Things have not been easy for them, with a divorce and moves out of state, but they are learning. I know it sounds harsh, but I am not the money tree. It is better for me to save my money, so I won't be depending on them in later years."
Eaten Up
"I've helped my only son financially for the past five years, off and on. Now I want to cut him off, but he has nowhere to go and will lose everything. He is 100 percent disabled in my eyes: his self-esteem is so low that he's not functioning and very depressed. My sister says that it's better to help him now than pick him out of the Dumpster. I am so stressed over this, I cannot eat."
Easing a Burden
"Our son went through a very painful and costly divorce. They had accrued a great amount of credit card debt, along with school loans, car loans, and a new home. To help our son with his half of the credit card debt, we took out a second mortgage on our home. Monthly he gives us a check for the loan that is considerably less than what he owed monthly on the credit cards.
"At tax-refund time we give him the money we receive because of the interest on the second mortgage. The mortgage ties up our home, but we aren't planning to move. The debt will be paid off at a predetermined time this way, rather than seeming to go on forever."
Inheritance Spent
"My mother left me $80,000 in 1997. Basically I went through all of it putting my two boys through college and helping them out afterward. Now I have only nine years left before retirement. I could kick myself for falling prey to the guilt I felt that made me spend it on them. (My parents put me through college, so I wanted to do the same for them, even though I am a single mom.) It was a bad decision. Now I'm frantic about my own situation."
Rivalry Helps
"My two children had 'emergencies,' each of which came to around $2,000. I told them I had no money to help them, but I did have an entirely empty credit card they could use and then make payments online.
"I feared I would be left holding the bag, but since they can each view the other's payments and charges, they have been competing to see who can pay off their balances the fastest. They know my credit report has 'no late payments' beside each former creditor, and that I insist on keeping it that way."
A Fine Line
"You name it, I've probably done it when it comes to trying to help my children meet their financial crises. My six children are between the ages of 27 and 44, and over the years I have cosigned for autos, paid auto insurance, and occasionally helped pay rent. Most recently I bought one son's house when it was up for foreclosure, and now it is in my name! Yes, I admit that this was an enabling act, but I did it for his four children.
"I would like to add that I was unable to put any of my children through college. They each began part-time jobs when they turned 16. Had I not put 10 percent of my earnings in a 401(k) and been fairly frugal with my own expenses, I would never have had the funds to help any of them. Only a couple of my children have followed my example where money is concerned. They rarely ask for my help.
"Young people need to be taught money management at an early age and also be shown the importance of saving. It is okay to help them when hard times hit. We parents just have to be careful. There is a fine line between helping them and finding ourselves saddled with their expenses."
If I Could Do It Over
"I bailed out my son and his wife repeatedly—over and over and over and over. I kept on thinking 'this time they learned.' Not so. They had a car repossessed and filed bankruptcy. They repeatedly borrowed thousands from me to catch up on bills. They borrowed several thousand dollars to avoid foreclosure, but my daughter-in-law spent the money on other things. I then gave them more money and they lost the house through foreclosure anyway.
"If I could do it over, I would give them food and let them sleep in my spare room, if necessary, and I would clothe my grandchildren, but nothing more—not one cent in cash—nor would I pay any of their bills. I do not know if that would have worked, but it would have preserved my retirement."
Pass It On
"I have two daughters. When the older one wanted to buy a car, I loaned her money but said she would have to pay it back into a 529 [college savings] account for her young daughter. Recently, my younger daughter adopted a second child and needed financial help. I made the same deal with her—a 529 account set up for the new baby."
Crisis Management
"Our 30-year-old daughter was diagnosed with a pituitary tumor a few years ago. When she couldn't work any longer, she quit her job but didn't keep her insurance. She accumulated over $20,000 in bills and couldn't support herself because of the side effects of medication, so she moved back home. To help her out, I went back to work for two years to pay off her debts.
"Now she's able to return to work, but she still doesn't have insurance. We are worried sick that she'll have an accident or get sick again, so we've offered to pay the insurance premiums. We've also told her that if she gets herself back in debt, she'll be on her own."
A Definite Plan
"My philosophy: Give them the tools they need to succeed, then they are on their own. My kids went to college. This was funded by a combination of parent/student loans. Upon graduation, my daughter was feeling uncertain about whether she could manage on her own. When she accepted a job out of state, I provided the seed money for utility deposits, rent, and food for three months. Together we worked out a budget that she implemented.
"I made it clear that I would help, should an emergency arise (car breakdown, medical, etc.) but that she was on her own should she make any reckless choices that put her in debt. It's worked out. She doesn't ask for money. She's working on her Ph.D. I send a little extra now and then, but I have not and will not clean out my savings. I hope to retire one day!"
IOU
"I am 46 years old and I have drained my parents terribly. Ever since I can remember, my parents have helped me financially. I am sure that I owe them hundreds of thousands of dollars by now. My father died a year ago this past February, and it just sickens me that I was never able to pay him back. They paid off unbelievable amounts of credit card debts. I only wish I would be able to give my mother what I owe them for the years of trouble I have caused her, but in reality I know that will never happen."
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