Bank of Mom not kids’ financial crutch

Dear Debt Adviser,
I am the parent of a 21-year-old and 19-year-old. They both have been out of work, one for six months and the other for one year. I am paying all their bills as well as mine, including my son’s car loan, my daughter’s college townhome rent, both of their gas and phone bills, and insurance. This is what is sending me into debt.

My daughter is trying to finish college. If I give up, she will have to pull out of school, pack her bags and come home. My son is living at home, but cannot find work in our rural area. I’m draining my home equity line of credit, or HELOC, in paying their bills, and my credit card bills are getting high! I’m sure a lot of people are in this spot now. Any ideas?
— Kelly

Dear Kelly,
I remember when I told my son that he would have to take out some student loans to cover a portion of his college tuition. Now mind you, he was and is a great kid. His response was, “Can’t you work harder or something?” Now he wasn’t being mean. He just didn’t understand how finances worked on a personal level. He does now! My take is that your kids don’t know either. So it’s up to you to have a serious conversation with them.

You and your children are up against some tough decisions. I don’t recommend jeopardizing your own financial well-being for your children’s debts. It would be different if you could afford to help them financially, but you are going into significant debt to do so — debt that will likely take you many years to repay. This may put you in a weakened position, and it could possibly preclude you from being the financially strong parent they may need in the future when a really serious problem comes along and they need your support.

Here’s my take on your situation. I believe it is time for your children to begin handling more of their own debt. I completely understand that you want your daughter to finish college. I want that, too. However, the Bank of Mom is running short of funds, so your daughter needs to apply for school loans to finish her education. I recommend she schedule a visit with the financial aid office at her school as soon as possible. It may not be too late to get some funding for the spring semester. She can apply for loans that will cover her school expenses as well as reasonable living expenses. In addition, she may find some work/study programs with the school that would help her to pay her bills. If that doesn’t work out, then she might consider a less expensive community college for a year or two.

Now for your son. The current job market is dismal in most places, so it is not likely your son will be hired for the position he would prefer, at least not now. However, it is likely he could be hired for a less desirable position. It is unlikely that any job he gets now will end up being in his final career field. That’s OK. He can obtain valuable work lessons in any job. After all, the key to most any entry-level job is showing up on time and getting along with others. Bottom line, he needs to find employment, doing whatever and wherever it may be, and to start paying most of his own debts.

Once you get your children off the payroll, I recommend you develop a household spending plan that includes agreed-upon expenses, contributions from the kids and an amount to pay down your credit card balances and home equity line of credit. I would tackle the credit card debt first and then the HELOC. Paying down the card balances first is important because most cardholder agreements can be changed by the issuer. With high balances, any change to the agreement would likely mean a higher payment for you.

Good luck!

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