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Ask the Readers: What Is My Financial Obligation to My Family?
Published on - May 13th, 2011 (by J.D. Roth)
Last Friday's question about the moral implications of spending prompted a great discussion, as well as a few personal messages. One of those e-mails was from Dave, who wrote with his own ethical dilemma. Instead of looking at the world at large, Dave wants to know how to handle a financial dilemma closer to home: with his own family. Here's his story:
I read your site though I no longer need it. I did a lot of the things you talk about and was able to retire early because of it. The rest of my family hasn't been as smart or lucky. My sister is doing okay, I guess, but my brother is in a lot of trouble, and my parents aren't anywhere near ready for retirement.
My brother and his wife have two kids. They declared bankruptcy a couple of years ago and have tried to make a fresh start. Life has dealt them some bad blows, but they're doing nothing to protect themselves either. To be honest, I feel like they just set themselves up for trouble. After declaring bankruptcy, they just returned to their former lifestyle and now they're back in debt again.
I could help my brother but I don't know if I should. (Plus I don't know if I even want to, which makes me feel like a jerk.) What if I loan him $10,000 (or give him the money)? That might solve the immediate crisis, but what does it help long term?
My parents have problems too. They don't spend a lot, I guess, but they hardly have anything saved for retirement, and they should both be retiring in a few years. I think they have maybe $20,000 total in a savings account, and maybe the same in various retirement plans. They don't spend a lot, but still $40,000 won't last long.
I guess I'm wondering: What's my financial obligation to my family? I could bail them out, but I feel like that won't solve any of the problems. Should I do it anyway? How? I don't want my brother and his family to be living on the streets and I don't want to see my parents eating dog food, but I find it difficult to help them when they won't even help themselves. What are my responsibilities here?
I sympathize with Dave. I'm not as well of as he is, but I sometimes wonder what my obligation to my own family is. Like Dave, I have a brother who has really struggled with his finances over the past few years. Some of this is because bad things have happened to him, but a lot of it stems from his choices. And he just seems to keep making the same poor choices, even when I offer suggestions on how he might help himself.
Family issues like this are a perfect example of how money is more about mind than it is about math. It's tough to make an objective, logical decision about how to help your brother or your parents. There's just too much other baggage involved.
In my case, I'm not willing to loan my brother money. Though it sounds harsh, I don't think he'd ever repay it. (And yes, I know that when you lend money to family and friends, it's often best to view the loan as a gift instead. I'm not even willing to do that, though.) Plus, I don't think my brother has actually reached a point where he's ready to make the changes he needs to in order to take control of his finances. He'd rather spend money he doesn't have to look like he has it than to cut back for a few years and live with less so that he can have more in the future. In other words, he's not willing to make sacrifices today in order to have a better tomorrow. And that's what getting rich slowly is all about.
So, I don't actually have any constructive advice for Dave. I'm in the same boat, though on a smaller scale. Like Dave, I can't figure out what my financial obligations are in this situation. Can you?
When your siblings get into financial trouble, what are your responsibilities? What about your parents? Have you bailed out a family member before? How did that work? Can you give tips on what went right, as well as offer suggestions on what you would not do in the future? And if you've never had to face a situation like this, how do you think you'd handle it? Help Dave (and me) figure out how we can steer our family in the right direction.
This article is about Ask the Readers, Relationships
My family members are doing OK, so I can't speak from experience. But I believe I would feel more responsibility towards my parents than towards a sibling. They did, after all, raise me. I don't mean I would support even my parents endlessly, though.
That said, my husband and I have had the issue with one of my stepdaughters, who has had financial problems since she got married. She did pay most of the loans back, but it often felt very uncomfortable. I felt like a banker. Most of the time we would only hear from her when she and her husband needed money.
Ironically, two weeks after she paid off her last loan, she said she needed a "break" and wanted no more contact with us. That was over a year ago. We are not clear all the reasons why, since she won't tell us. I don't know if the money tension was part of it. She is just now showing a few signs that she may be ready to connect again.
So, money issues with family members, in my experience, is loaded. Good luck!
I'm curious to see how this conversation pans out. I haven't had to deal with this situation yet, but I wonder at what point does helping become enabling? I like LifeandMyFinances's suggestion to pay for classes. I'd take that one step further and offer to pay for counselling or a financial advisor, if they were open to that. Though I realize it's hard for some people to admit they have a problem or accept help. Ultimately, you can't help someone until they want to change.
As for parents, I've seen a lot of research on how much time and money baby boomers are contributing to their parents' welfare — even to the point where it risks their own financial security or retirement plans. It's something I think people need to be aware of and think about ahead of time so they don't get completely derailed.
I'd like to see the numbers about how many early gen Xers are supporting their baby boomer parents.
The first question to be considered is: is or has your family ASKED for help, or implied that they are expecting it?
According to my very straight laced relatives, I'm going to be the "need to be helped" relative. But not because I spend too much, but because I have lived a bare life by choice and my road doesn't look like their road. To them, I am not a success. However, if my life ends me up under a bridge, then I'd rather the bridge than to cow tow to my relatives "all about money, all the time" and "security at all costs–even freedom" lifestyle.
I'd like to see those numbers too! I keep reading about the baby boomers being the "sandwich generation", but I have friends in who are in their 30s and 40s who are helping look after their 70+ plus parents. The baby boomers may be the first trying to look after parents and kids, but they won't be the last!
One theme I consistently see in my research is that people have to look after their own financial security too. It's noble to look after your parents and kids, but part of the way you can do that is to be financially secure yourself so you don't become a burden later on.
Keep in mind that the boomers were the first generation forced to pay through the nose into Social Security so that THEIR parents — many of whom had good pensions — had money to burn during retirement. Take a look at who's been flushing money away at the Indian casinos.
The "Greatest" Generation and the Silent Generation have had money to burn because they worked during worker-friendly times, NOT because they worked hard or were frugal. Then they turned around and replaced their kids' pension systems with the 401K lottery, among other things.
I'd say you shouldn't provide monetary assistance. I'm a firm believer that adding money to the situation would likely complicate the problems further.
Besides that, if they haven't shown a desire to save more and/or spend less, your money will be wasted anyway. That would almost certainly breed some form of contempt and then things go down hill from there.
I assume you have, but have you attempted talking to both your parents and your brother? Until you know where they stand and how they feel about the situation it would be difficult to make an educated decision.
I guess you should not give money to your brother. If at all, you can try to help his two kids. But it will be difficult to make sure that help is really reaching them and not their parents.
With your parents, that is indeed difficult. It sounds you could afford to give them some money on a monthly basis, but such things are almost always questions of pride. So you might need to find other ways to help them so they can keep their face accepting it from you.
If the parents live nearby, invite them over for a dinner of a regular basis.
That way you get to see them and you know that at least once a week/month what ever their are getting a good meal without needing to offer them money or food hand outs.
It's surprising how much they could save by knowing they don't need to buy food for one particular night. Of course it only works if they are close, no point doing that and then having them pay more than they would on food to get to your home.
My wife & usually cook in big lots on the weekends and divide it up into weekly meals. Every Sunday after church, we stop by my mother's house and give her enough meals for lunch or supper every day during the week. We visit for about an hour and she is happy. For her birthday and holidays, we give her a gift card to her favorite grocery store. My brothers are on their own.
I love this! How thoughtful and caring to do this for your Mom! You are helping without being pushy and I'm willing to bet that every time she heats up a delicious meal, she smiles and thinks of you.
Yes, this is generous on so many levels. What a kind and gracious commitment.
Oh your mother has to love this! Such a great solution. She gets good meals & quality time with her family.
Thanks for this suggestion! My mother is nearing this point (although still in her working years), and we are generally opposed to buying her even groceries or grocery gift cards. I can see how cooking meals assures she would eat well, she eats the best when she comes to our house for dinner, but it would be great to know she was actually eating balanced meals at home.
When we invite my folks over for dinner, they take home a CARE package with almost all the leftovers – we intentionally cook a lot, and sometimes they can eat for a few days on the leftovers (which I think my Mom enjoys, as cooking is not a favorite activity). I really like the idea of reviving the Sunday family dinner.
Yeah, good luck.
Obviously no on the brother. We do offer to directly pay for certain things for the children of a relative… specifically educational opportunities, etc. So far offers to pay for classes and counseling have been met with offense, and books left unread. But, the fact that we send financial books every time they need money means we're the last relatives they ask.
Re: parents. Suze Orman says you have to support them. It doesn't sound like you have to support them now, but you probably will in the future, sometime between when their money runs out and they need to be in a nursing home on Medicaid. So yeah, save up for that. Medicare doesn't cover everything.
"But, the fact that we send financial books every time they need money means we're the last relatives they ask."
Hilarious. If anyone ever asks me for money, this will be my response too.
I'd send the personal finance book with a note saying, "When I receive an e-mail from you discussing what you got out of reading this book, then I'll send you the $X you asked for." It's probably a fecal thing to do, but for me it'd be worth it.
Isn't conditioning your help in this completely arbitrary despite being well intentioned and serves no purpose? What stops the person from merely perusing the book and throwing together a quick book report?
Are you sure about the Suze Orman thing? The one Suze Orman book I read said that parents are obligated to help their children (because the parents chose to bring the children into the world), but not the other way around. And no one is obligated to help their siblings. Seriously, I don't think anyone is "obligated" to do anything for their parents. I have wonderful parents who likely will never need my help, but I would be glad to help them if they ever asked (because they've been a wonderful influence on my life). My DH, on the other hand, has parents who never should've gotten married, fought all the time, one cheated on the other and they finally divorced when DH was 13. The divorce and lack of parenting skills seriously scarred him for years, probably through his mid-late 20s. I really don't see how someone who was raised by parents like this could possibly be "obligated" to help them out financially, just because his mother chose to give birth to him. His parents never had and still don't have any financial saavy and are completely broke. We don't help them financially, except to pay for his mom's phone bill, so we can get in touch w/ her, but we do spend many hours helping them to access services they need (mom is disabled). We really don't do any of this out of a feeling of obligation, though. We just do it because it's the right thing to do.
As someone who bottomed out and turned their financial life around, I have to say that you just can't really help people who are still on a downward trajectory. I received help from my family when still digging into debt, and it did nothing for me really. It might have made the hole I was digging a tad bit less deep, but it didn't turn me around.
You also can't always help someone who's hit the bottom either. There's a period of time after bottoming out that little progress is made and attitudes haven't really changed. The new habits haven't formed at this point and it's almost a 50/50 chance whether or not assistance at this point will help or hurt.
The best point to help is when someone is on the upswing. They've begun to reform their spending habits, are establishing new behaviors and are seriously trying to get their life back in order. This is the point where you can help a LOT. Plus, a little bit of money at this point goes a long way. A $5k gift when someone is still in freefall isn't even a speedbump, but when they're in the process of paying off the debt and building savings, it can be a huge shot in the arm.
Like others will probably write, I don't think you can help your brother at this point. The motivation to fix something like this comes from within. Any meddling from the outside will either be ignored or taken offense to. Wait until he begins his own turn-around to offer help.
If that doesn't sit well with you, and you feel you still must help the family, start a college savings account for his kids. It sounds like they won't have the money (or the credit) to pay for their kids to go to college if that's what the kids want. Put away some money that can help them get through a semester or two. Not the whole thing, just something to supplement grants, scholarships, part time jobs etc. This will make a huge difference for the next generation of your family.
Your parents are a tough call. You haven't told us enough about their situation to really offer advice. I think one way or another you will be helping to support them in the future. Plan for it, but don't jump in immediately. Wait and see what the actual need is.
I have to agree with this, from personal experience. I won't go into details about my downward spiral, but I'm on the upswing now. A relative sent me $1000 out of the blue (probably because she saw the signs of me really trying to dig myself out) and it has been a huge help. I took about $400 and bought a good bicycle, and it has already paid for itself in the gas I've saved running around town. I only use the car when I have to go out of town, now. The rest went into an emergency fund that ensured I wouldn't end up back at square one if something unforeseen happened.
Those were both goals that I would have achieved, eventually. They were goals I had already set for myself, and I had a plan for how to achieve them. However, it would have taken me a lot longer, and I can't even say how much that huge boost improved my morale.
This is a really interesting point of view, one that I didn't think of before.
You are right, the "help" wouldn't do anything if the person you are helping does not want it… It's throwing good money after bad.
I do have siblings who are not financially savvy. I used to worry about them incessantly, lecturing them, and then helping them out of guilt. But did that help? Not really. I don't think it was ever appreciated or recognized… In fact, it made things worse because it gave the irresponsible party a sense of entitlement – that the help should be automatic and expected.
We're all adults and have the responsibility to manage our affairs. I realized I can't worry too much about other adults, who clearly have the choice and means to manage their lives.
I have however, started a small savings fund for my parents. They don't know about it, but I plan to draw from that account when they ask for help. I am preparing myself now for the inevitable. They have no savings/retirement aside from the house they are intending to sell.
My brother and his wife seem to do ok. I think more paycheck to paycheck than downward spiral, although I don't really know. Anyway, their kids are the only one's in the family and they get tons of toys and junk for birthdays and Christmas. So I put $100 in their 529 plans (that I started) instead. Sadly, it's probably the only help they'll get, other than government and whatever scholarships they find for themselves.
I've loaned my sister money so she could pay off a loan to my dad – I know, you don't have to tell me.
It wasn't a huge loan by any stretch of the imgination, only a couple of hundred pounds but it was significant given we were both teenagers at that time. I viewed it as a gift, but I told her that I wanted it all back plus a little be of interest so that she would learn (0.5% if I remember correctly – at the time Current Accounts were paying about 3%).
To her credit, she paid it all back without missing a payment and I don't think she got herself personally into that sort of overdrawn issue again, although I suspect she was lending money to a dead-beat boyfriend at one point and probably as a couple they were in some tight spots at times.
I used it as a learning opportunity and I think it worked. However we were both young and I believed she would learn from the experience, which she did, and I could easily afford a couple of hundred quid.
Luckily my immediate family is financially responsible. I'm the oldest kid in the family and I helped out a bit when my brothers were in college. I shelled out the down payment for a two bedroom condo when my bro went to grad school in Texas (cheap housing there.) He rented out one room and that covered the mortgage payment. Once he left school, he sold the condo for a small profit and then sent me back that money. It worked out well, but I wouldn't recommend it unless you can afford to lose that money.
As for Dave. You shouldn't lend your brother money because he'll just use it up. He needs to make some changes and you can try to help him by giving advices. As long as he keeps racking up debt, nothing will help. I think you need to help your parents out though. If you're retired now, you should try to spend more time with your parents and really work on getting their finance in order.
I agree. There are two situations in which I'd help family or friends.
1) The amount is small enough that I can think of it as a gift and not worry about getting it back. I can take it out of savings without really noticing.
2) They have dramatic life needs — that is they are hungry, out of a place to stay, etc. But again, it would have to be money I could spend, not money that might put my family in the same spot.
In my family, I seem to be the only real saver. I'm uncomfortable with debt (when our mortgage got to the point that we could fairly easily pay it off from savings was a happy day) and am edgy if I don't have savings that I consider sufficient.
My siblings are generous and lovely, but they often spend in ways and on things that I just wouldn't. Also, they're older and looking at retirement now, in the face of the current economy. Fortunately they're all in relatively good health, because they're going to be working (or looking for work) for lots more years.
I think that family is family–they should know they can turn to you as "the safety net of last resort".
By that I mean, to bail them out of jail, pay for lifesaving surgery for their kid, put food in their fridge if they're retired and have no savings anymore, or maybe give them one month's rent so they can keep their place until they get a paycheck from their new job. I've had to do this–my ex-husband's family (in another country) got into trouble repaying a loan that they got by using their house for collateral, so we sent them $5K so they could keep their house (gift, not loan). Yeah they were stupid but the house/land was pretty much all they had and if they'd lost it there was no way they'd ever get it back. They never did that again, BTW.
On the other hand, while telling your relatives that you'll help as a last resort, I think you can feel free to say that their current situation isn't that bad so you aren't going to give them anything. If they're just in debt up to their eyeballs, that's not a reason for you to step in, that's a reason for them to step up. If they're behind on the cell phone bill or car payment–it's their problem.
I think the trick is to communicate to family somehow that you might step in and help, if you can, if things get really dire, but probably only once so they better take care of things on their own if they can.
I agree with this 100% – I'd step in to save a sibling or parent from homelessness, but not give them cash infusions to keep on doing the exact same thing they've been doing. For a debt junkie it's just like giving booze money to a drunk.
I'll help my neices & nephews pay for college tuition if they go – but I won't give their mom cigarette money.
And I just say, thank God for my stepmom and her pension, I wasn't looking forward to taking care of my spendthrift addict of a father and she took it on voluntarily.
On the other side of the coin: I have two adult children, one of which always is short of money and the other of which is not. She has been gifted/loaned substantial money over the past 18 years until about 6 months ago when I said to myself "enough is enough." I will not be an enabler any longer. Now there is a grandchild facing college and as far as I know there is little, if any, money for that. Now I ask myself if I should offer to help or not. So far it has been not. That child has learned behavior from the parent that will only perpetuate the problem. I'm still working – long past retirement – and could help but I don't believe I should. It's a tough decision and one that causes me much heartache, soul searching and, yes, prayer every day. I have decided, painful though it is, that the best way I can help right now is not to help.
One thing to remember regarding the grandchild facing college: She can apply for grants and loans. You don't get grants or loans for your retirement. She's got her whole life to pay back those loans. And she might take her education more seriously if she has to pay for it herself.
After I graduated from college, paid for with a combination of loans and my own sweat equity, my grandmother gave me a lovely gift. She asked me for my student loan servicing number and she paid off a chunk of my student loans. She had made some really good investments and needed to reduce her estate each year, so she'd gift monies to us grandkids annually, but only for things that helped with our education. She didn't want us to fritter it away. It was a good call on her part, and I can't tell you the relief that came with not having to make another student loan payment. If you're of the means later on down the road, you have options for how to help your grandaughter with college, but bailing out her parents right now doesn't sound to me like the best call.
I'm coming late to the table, but I agree with the suggestion regarding your grandchild's college education. Let her decide if she really wants to go to college and go through the steps of getting loans and grants, etc. After she graduates, gets a job, and starts paying her loans back, then you could step in with a gift to pay her loans off if you like. Meanwhile, she's learning some good life lessons. My husband's grandmother did this with us and I wouldn't trade those times of being frugal to make loan payments for the world – such a great learning experience.
For what it's worth, I'd encourage you to have a conversation with your grandchild. My mother passed some atrocious spending habits to me, and no one in my family pulled me aside to let me know what she was doing was abnormal until I was in college. By then, I had accidentally adopted some of her habits. I'm not blaming my family – at all – I just wish someone had given me the guidance I needed. I would be wealthier than I am and probably would have spared myself a lot of emotional ups and downs if I had had a better relationship with cash earlier on.
So, I'm just encouraging you to at least open the door to conversation, if you can. I'm not suggesting you necessarily subsidize anything, unless you feel comfortable helping with tuition or books, but that decision is obviously entirely up to you and dependent on many other things. Regardless, I hope everything works itself out.
Have your parents or your brother actually asked you for money or any other sort of financial help? If no, then I'd say you don't need to be shelling out cash to them.
From my personal experience of giving money to family members who aren't directly asking for help, it just creates tension, either between them and myself OR for me b/c I'm giving up money I could have used for myself (selfish, perhaps, but that's how I feel).
I think other commenters are dead on about your parents – you may have to help them out one day. May not be today, but some day you might. So focus your worrying energy and financial savvy on prepping for that reality.
I think Jen (comment 10) had excellent points for you to consider as well.
Good luck! This isn't an easy decision.
I definitely agree that until one of your family members actually asks you for money, there isn't really an issue here. It would be incredibly insulting for you to approach your brother or parents out of the blue with the news that, after much soul searching, you've decided to help them out by giving them money.
That being said, if you anticipate that your parents my someday need help, quietly plan for that eventuality without telling them you are doing so.
But to respect the dignity of all involved, don't assume your relatives are expecting (or even hoping) to get a handout.
Well, said, Rachel, and most importantly, keep preparing and staying open as a means of support but having personal limitations, even with family.
For your parents. Start planning to have them live with you. Lots of people may say – just leave them be. But if they can't make ends meet, you won't be able to watch them just live in poverty. (Unless you guys don't have a decent relationship.) So start planning. Once they have a home with you, they should be able to live comfortably on social security. And they can even pay towards their expenses.
If you feel you will need them to have separate space, start looking for a home with an inlaw suite. If you can't afford that, accept that you will have to have a place for them in your home. Life is unfair. Plan for this eventuality since it seems like your other sibling is not going to be able to help.
There was a time when people just accepted this was a normal part of the cycle of life.
And if they have a house and sell it and are able to live with you, they will have a little money to rely on.
I don't know how expensive housing is where you live. So I have no answers if this is simply something you can't afford.
My other recommendation would be, DO NOT buy their house (if they have one). A friend' parents wanted him to do that. If you buy their home and move in, they will likely just continue to feel it is their home and that you live with them.
As for your brother. Don't give him any money. Or at least not a lot of it. He will come back and ask for more. But you can always give him a 20 to make sure there is food on his table. Take him out for dinner. Bring pizza for a night in at his place. You can broach the subject of learning better money management. But if he doesn't want to hear it, he won't. Giving him a large chunk now, may mean you can't help him later when he's really desperate and he NEEDS your help. When his kids need shoes or food.
I think this is practical advice that isn't the "cultural norm" in America, but is commonplace in other parts of the world. In many cultures, generations of families live together and take care of one another. Not only does it help save money due to economies of scale, it ensures that the older generation doesn't get "left behind" economically.
I'd take this piece of advice with caution–what sounds doable in theory may be horrible in practice, particuarly in light of the "powdered hinney" theory. (The theory is based on: one who has powdered somebody else's hinney (the parent) will not be able to accept abiding by rules set in place by the powdered hinney (child)). My in-laws had their mother (my dh's grandmother) move in because she couldn't make it on her own after Grandfather died. But you can't have two queen bees in the same house. Grandmother wanted dishes organized her way, MIL wanted them her way. Laundry, cleaning, etc, all had the same problems. Grandma ruined pots and clothing, MIL began to be nasty to Grandma–it was not good. And they each expected FIL to take their side because for MIL, he was her husband (and to Grandma, he was her son and she brought him into the world.) The problem is, when a person has been in charge of their own home for 57 years, you can't expect her to live under another's rules with no say, regardless as to who owns the home on paper. Grandma wanted to still have her own autonomy and had 57 years of prior practice using her own autonomy–she felt she was being treated as a child. My MIL felt she was being disrespected when she was sacrificing so Grandma could move in–she wanted to keep as much as possible the same and was set in her ways as to how things should be organized and done in her house.
I moved in with my parents after a divorce and after a few years decided it was a wonderful way to cut costs on both sides. We split the house payments, utilities, and food, and my children have a great opportunity to know their grandparents. They are only 69 and in good shape, but as time goes on, we won't have to worry about what to do with Mom and Dad when they get too old to live alone. Thankfully neither of us is too much of a "Queen Bee."
I really think parents moving in with an adult child in their old age will become a norm in America. Financially, it will be the only way to pull off retirement for many of them.
Personally, I am hoping for a child with enough land to put a tiny house in the back. I would love to live near- very near- but not IN the house. This would not be for saving money- but the loneliness that happens in the elderly stage.
I'm one of six kids, but I'm the only single one, and right now my parents don't need any assistance.
My grandma sold her house and helped my uncle buy a house with a mother-in-law apartment attached to it. It's a great arrangement. They have separate entrances but a door between their residences they can open if they want. They check up on her and bring her dinner most days (she's 95), but she still has her own space and independence.
I have a distant, elderly relative who sold her house, and used the money to build a mother-in-law suite onto her son's house. The son lost his job, couldn't pay the mortgage, and they all lost their homes. And now the elderly relative has no home and no money.
I have struggled with this situation multiple times myself. I have twice bailed out family members but I was lucky that I was paid back within a year both times. At one point I had even established a family loan sub-account in my ING savings for such situations. This was early in my stage of taking control of my finances.
However, as I have progressed in my financial life and reached a number of goals, I have made a 180 on the situation. I did away with that family loan fund and have decided I won't help them financially.
Now I am willing and eager to teach them what I have learned over the last few years and show them all the tools I have used for success, but not give them money. While this has led to little or no change on their part, I think its a form of "tough love" that has a better chance of helping them in the long term more than just giving them money.
You aren't obligated to give your family money. In fact, from what you say, it doesn't seem like it would make much of a difference for them. If you still want to help them, you could think of other, non-financial ways, Could you have your parents over to dinner more often? Babysit your neices/nephews? Or find other ways to be there for them?
Talk to them about ways you can help without bankrupting yourself. You are family, but you aren't responsible for their debts.
Yes to the excellent suggestion of indirect or non-financial assistance, especially for your parents. You can do things like buy them groceries (it was on sale and we bought too much, so here you have some) and things. My mom offered to pick up my grandfather's meds all of the time and she'd just pick up the tab and not mention the cost or anything like that. Another thing my parents will do is take my grandmother out in her car and fill it up with gas. They pay her cell phone bill because she didn't understand the technology so they just bought her one and added the line to their account for her.
For your brother, I think you need distance on that and when you see things get bad, again step in with non-monetary assistance especially with kid things. Kids are always going through shoes, clothes, etc. During summer, there's school supplies. You can offer to take them shopping for school stuff, things like that. That way you're giving directly to the kids who really shouldn't have to suffer because of a parent's silliness AND you can teach the kids some money-saving opportunities like sales flyers and things like that. Your brother and his wife might be a lost cause right now but you can help the kids a lot and they stand to learn the most.
Or why not take the kids for a working vacation – even if it's just at your house for the summer? Teach them about finances and spend an extended period of time with them – perhaps having that time alone will help your brother and his wife work on their own issues as well. And maybe the kids can then impart their new knowledge to their parents. But at least they will know someone cares about their welfare and they will have the skills for their future.
Also, I agree that parents and sibilings are different, but that said, at some point your parents are also adults and also had to be responsible. So yeah, make sure they aren't starving or freezing, but don't give them money for trips, extra clothing, extra food, etc because they should have planned for that. As a child, you should help keep them:
1. in some kind of shelter, not necessarily their house but even a small apartment
2. fed with decent food – we aren't talking organic fruits and $20 meats but basic grains (rice, pasta, couscous) and beans and such
3. clothed and warm – basic electricity, water, sewer, trash type bills, maybe a landline, although many cities have subsidies for elderly for a phone line.
I also like the idea of giving your siblings books and advice – its up to them to take it, but you can offer it, even as a story of your own trials and successes.
I think you are already helping your brother and your parents — by taking care of your finances so that they don't have to worry about how they will help you make ends meet.
Family roles and scripts are easier to detect when they're turned around. Who said you get to be the safety net for them always?
All they have to do is take care of themselves, and they won't even do that — yet here is everyone thinking that *your* role is to double and triple up for them.
UNDER NO CIRCUMSTANCES should you loan your brother any money. Not only will you lose your money, but you'll lose your brother as well. Giving money to somebody who has a proven track record of financial irresponsibility is like giving a drink to an alcoholic. Despite your best intentions, they simply won't have any self control. And burdened with the guilt of not being able to repay you, they'll eventually remove themselves from your life completely.
The best thing that you can do is to sit down with your brother and try to lovingly teach him the things that you did to get where you are today. Same goes for your parents. There's absolutely no sense in giving them any money until they get their financial lives under control. If/when you believe that they have truly changed their habits for the better, you can GIVE (not loan) them a small amount of money in order to help give them a jump start, if you feel inclined to do so.
If your brother refuses to listen, then there's not much else you can do to help him. You'll just have to watch him drive his own future into the ground. Don't stop being his brother, but don't feel guilty for not giving him any money either. This is the path that he chose for himself.
Everyone seems to be focusing on the specific situation, so I'll add to the conversation by stepping back a step. It seems to me that the general rule is that each of us should seek to help others be their best selves. Someone that has learned a lesson and could use a hand out of a tight spot is very different from someone that has been bailed out and gone back to the same old thing. Giving money to such a repeat offender (as it were) would be encouraging them to destroy themselves (or at least miss out on growth).
Also, I think that an individual should consider what their motivation is in giving money. People should think hard about whether they feel that they can assert their success or can control the other person using their monetary assistance. I believe in rewards for good behavior, but monetary support should be based on specific items of good behavior and treated as compensation for fulfilling those items rather than a general obligation for doing whatever pleases the giver.
I agree with this thinking. There are parents and siblings who are destructive in their relationships and with their finances. It helps no one in the situation to continually bail them out and enable them. But if someone is having a tough time despite trying to be responsible then help them out to the fullest extent possible. And there's no point giving money if you then want to spend your time lecturing the recipient. Either it is given freely as a gift with no demands, or else keep your wallet shut.
This is such a difficult subject and at the same time so personal.
For us, the question arises about one of my parents (divorced) who did an AWESOME job raising us on a low single income and who started her pensionable career quite late. She was self employed when our parents were together, then worked administrative contract work to ensure the bills were paid and we were fed WELL and we had heat, hydro and a roof over our head. She even paid off her house in the high interest '80s.
But now, she's soldiering on to age 65 to try to get as much pension as she can. She won't talk finances with me but I feel she may need some help in retirement. We are at a place where we can help, but I think her pride won't allow her to discuss her now, future, or to accept help. I feel helpless. I want to help if she needs it as she did SO much for us with so little when we were dependets. Perhaps I should write a readers story for you to get feedback from you and your followers …
We approach that as suggesting ways for them to save money. It might be by getting on a family cell phone plan and splitting the bill. Down the road, it might be offering to let them move in with you and charging substantially less than a market rent.
It's less damaging to pride if they're still paying something, but you can look for ways to quietly split costs.
If your mom does not want to talk about her retirement finances, you can't make her. What you can do, is let her know you're available if she ever wants to discuss them and that if she needs help you will be there for her. You don't have to know the concrete numbers to let her know you'll be there for her if she needs you. If you're really worried about it, then I would follow one of the earlier suggestions – start a savings account for any future help you think she might need. That way if she ever does come to you, you'll be ready.
Also, it sounds like you have a frugal, savvy mother. She took care of you and your siblings on a single income, paid off her house and now she's working to get the most out of her retirement. She may be in better shape than you think. Anyone staring retirement in the face, especially after the last few years of instability, would worry about the money lasting.
Thankfully, I have not had to endure this with my family, but I know someone who has. A brother and sister had been bailing out their sister for years. Eventually, they got fed up with her act and cut her off. Within 6 months she changed her ways and is doing a lot better financially now. It was the best decision, and she actually did change. That does not always happen, but in this case it worked.
Like many things, this depends on values and culture and family expectations.
I've seen my parents take care of my grandparents and great-grandparents, so I can't imagine not doing the same for them when it comes the time that they need my help. It's just what we do, and I don't think pride would be an issue– if anything, it would be more of a shame for me if I didn't.
My brother is doing great financially, much better than me, and I don't think he'll ever need my help, but if he ever did (some sort of disaster) I'd be inclined to lend a hand, especially because he has 3 kids. He's a very responsible person, so I'm sure no help would be wasted.
I agree with the other commentors that you shouldn't be giving your family money. People don't value others' money as they do their own and your family doesn't sound like they're ready to make major changes.
I also want to suggest that Dave (or J.D.) shouldn't feel guilty about this decision or feel like a jerk. You're being entirely reasonable, want to help your family and are trying to find the right way to help. That's worthy of applause, not guilt.
I am sure many of you are in the same situation, but what do you do when you have a sibling who absolutely has no desire to make the sacrifices necessary to live on the money she receives (from disability, which is a whole different issue) who is bleeding your retired/close to retiring parents dry? My parents (1 retired, 1 close to retirement, but out of work on medical leave) live like misers, but give thousands of dollars a year to my sister. She is recently separated, but this has been happening for basically all her adult life. She cries and says she needs money for medical bills, prescriptions, food, gas, after blowing her money on god knows what.
I've tried many times to convince them that they aren't helping her by giving her this money. Shes 29, but hasn't had to learn how to be an adult since shes always had this safety net. Any advice from others in this situation? I can and do refuse to help my sister, but if my parents end up in dire need because of her, I will have to help them!
I'm in a similar situation. I'm more inclined to help my parents (who raised and took care of me, paid for most of my college) than my siblings. But my alcoholic brother lives with my mother who leeches off both her and my father. I've often found money I've given to my mother ends up being spent on my brother. Along with other things I'm not going to go into, it has put my mother in a precarious financial situation. It makes me really sad, but as long as this co-dependent relationship exists I am unable to help my mother out financially.
We have a similar situation with my husband's sister and their father. My mom-in-law (who kept track of their finances) passed away leaving the his sister with control of everything (his father is not well). While we expect that she should be compensated for the help she is providing, we also know that she's using his money to support herself (unemployed, under water in her house, expensive toys). While mentally we are preparing to learn he is broke, we really can't contribute to his expenses at this point (2 college kids). It gets verrry tricky.
I think this is the worst situation of all. My grandparents have always helped out everyone else in my family. I've heard my cousin/sibling refer to the "bank of grandma and grandpa". And where did all this money come from? They remortgaged their house. They saved nothing for retirement except what my grandfather's company put in (very little). They gave away everything they had if anyone needed anything. Some days I'm angry at them for not realizing they have to take care of themselves too and some days I'm mad at my family for taking advantage of the nicest, most generous people I've ever met. Mostly, the second one.
The worst part, is that even now, with my grandfather laid off and them trying to make do on social security, they still give my uncle money. He's laid off too. And he has health problems that make it hard to work. But it's ok, he wants to buy a hot dog stand. And in turn, he gives money to his daughter. Her and her guy are both out of work you see. Because she ran off with a guy from the internet and neither of them has a HS diploma. My grandparents also mostly support my cousin who has a learning disability. (I can't be angry at him because he doesn't understand.) Technically he lives with his parents, but spends 95% of his time with my grandparents. Oh, and my other cousin just moved back in with them too. No idea what's going on there though.
So yeah, hard to justify giving them money with so many "leaks". So I don't. They'd never take it anyway. I do occasionally buy them grocery gift cards though, for christmas and birthdays and such of course. They make my grandmother REALLY happy. But what's really gratifying is that my grandma will actually talk money with me. We can sit down and she'll tell me what they have and the things they're looking at cutting to make everything work. And I can make suggestions and she listens. Because they're not stupid with their money, they've never lived beyond their means…they're just generous to a fault. I didn't use to fully understand that phrase….but I do now.
MrP has a similar issue.
Lecturing has not helped. We even sent BIL to school for a semester to start retraining for a new job, helped him relocate to an area with a better economy, to no avail.
As "rich brother" MrP feels obligated to help. We get very occasional requests for help now, but think there may be more in the future. Our solution was to budget for future requests. We set up a "family emergency" savings account, to which we make small automatic contributions. Since the account is in MrP's name and not mine, he can take the money at any time without involving me so we don't fight about it.
Hopefully some day your brother will decide to change his ways, but don't count on it. If you must do something, then budget for it.
Unless parents have been abusive in some way, I think children are obligated to help them in their old age. We have given money to siblings over the past 10 years.
One family reached their bottom when they had to ask us to bail them out, and the act of asking for help was a real kick in the backside for them to start living responsibly.
Another family has had uncovered medical issues come up with their child. I don't think there was so much irresponsibility as just outright need.
The third relative is the most troublesome to us because 1) no children are involved and 2)she has received far more from us than the others. Over the past 5 years we've given her more than 40k, a good bit of which has gone to pay vet bills for her cats. THing is, it was either cough up the money or visit her in the mental institution where she'd already spent years of her adult life.
I'm not sure we'll do it again though. This last time (about 2 years ago) we gave her a little more than 20k, and she told us this was it, that she had learned to live responsibly and she even hoped she'd pay us back someday. Ashamed to come back to us, I suppose, She's now hitting up other relatives for 500 here, a thousand there to pay for her vet bills.
Because we're in the best position financially, we fear she'll be back. We'll cross that bridge if we come to it, but with our kids approaching college age, I doubt there are any big paydays from us in her future. Ultimately, we can't take responsibility for her mental health.
Provide nothing but moral support, suggestions if asked for, limited help for nieces and nephews (e.g. you'll match scholarship money if they go out and get one for college) if you desire to. Nothing you do will solve their ultimate problems. They would pauper you, say they were sorry, then turn and try to find someone else to pauper. They are not evil or mean, it's just they aren't willing to change.
I've a similar issue in my family. I cannot provide financial help to my mother because in essense all that happens is I am funneling money to my brother. I've put food in my mother's fridge, she gives it to my brother directly or he comes over and eats it. I've paid off her heating oil bill, suddenly they're going to shut off his electricity and what I saved her goes to stave off his crisis. I provided funds for her to pay off her car loan, his car is in the shop so she gave him my money for his repairs and continues to pay on her loan. My mother went from having hundreds of thousands in the bank fifteen years ago to living on nothing but social security now. Its been a slow, but consistent bleeding.
Who do you blame? The parent who won't let their child take responsibility for their bad decisions or the child who assumes the parents will always be their to bail them out so they don't have to worry about the decisions they make? It's not like my brother is a horrible guy or a drug addict or threatens or demands the money from her. Nor is it that my mother is a fool who doesn't know better and doesn't understand that he's draining her money away.
I suspect that Dave's, and most people who have such issues, siblings or parents in financial trouble are not evil, nasty, or particularly stupid. That's part of the reason its so hard to believe that if you help they'll be unable to get back on their feet and turn things around. But they won't. It's like they're robots on a track who fell over, you pick them up and right them, and they happily chug along the same path to destruction they were following when they fell.
They're adults. They make their decisions. With my family my decision is not to participate in their poor actions. It's not fun, it's not easy, but it's necessary for my own families sake.
My recommendation is that if you decide to help, you make it clear how much you will help, how that help will end, and you stick to it. For example, you could decide it's worth it to provide housing for your parents. So you set them up in an apartment and pay the rent and you understand you're doing that until they pass. But if you want them to pay for water and electricity, don't pay it. Similarly, you could tell your brother you're willing to give him your car (assuming he may need one) since you're getting a new one anyway. One time thing, no strings attached. You will need to determine what you are willing to give up, because you will be giving it up. Just don't become their new meal ticket.
I've been fortunate, to a point. When my brother was having financial issues, I was too, so I was in no place to have to make a decision about helping him.
My parents have always been fairly careful with their money; my dad has a pension that will continue after his death so my mom will be well looked after. My mom has less, but her money is their "fun" money, and I know they expect it to cover their travel plans for another 10 years or so – hopefully they are healthy that long.
As a Canadian, thankfully health care is not a major consideration, but both my husband and I are prepared for one or both of my parents to come live with us at some point, we even built our new home with that in mind. It would likely be due to the loss of one of them, perhaps combined with a health issue, rather than financial, but even if it were financial, we would do it without question. They did so much for me!
It's a very tough decision to have to make for some people though, and can really add strain to your own relationship with your spouse (luckily my husband adores my parents!).
For the brother, until he's ready to face his finances and make some changes, any help you give will be a waste of money. Don't bother.
The parents are a different story, because no one's going to feel comfortable letting their parents struggle if they can help. Since it sounds like the parents are still working, now might be a good idea to say something along the lines of "I was looking over my finances to plan my own retirement and I was wondering if you would mind telling me how you are planning for yours?".
That way it's more of comparing notes on a common situation instead of grilling them on their finances. You can share your tips and they can share their concerns if they have any. Encourage them to save more if necessary and make contingency plans of your own if their plans don't look like enough.
I'd probably start a savings account of some sort for both the parents and the brother's children. Like a 2nd emergency fund in case something crucial comes up that you feel you have to help with.
If the parents are sickly or have the potential to be (health issues that might get a lot worse if they don't take care of themselves properly), some sort of long-term care insurance policy might be an option.
This question is to JD: does your brother read this blog? Is he not offended/hurt by your admissions? I wonder what his side of this story is?
I personally believe in helping family, slowly though I am learning that you can only do so much.
My advice is to do up to a certain point, without it hurting you financially.
I like giving books on personal finance as well.
I manage my sister's finances. She was so out of sorts she couldn't even get a bank account. Now, she sends all her paychecks to me. I've automated all her accounts and she has a pre-paid credit card that I periodically put spending money on for her. We're slowly getting her out of debt, only need to pay the bank and her student loans (about 8k left) and then I'll slowly turn things back over to her.
Wow. I'm curious, how are you ensuring that she doesn't just turn around and make the same mistakes after you get her out of debt? This is an interesting solution, but is she learning anything through the experience? (For example, is she sitting down with you while you make a repayment plan, etc?)
While I'm glad that this is working out for you, I have to say I'm stunned that anyone would a) suggest this and b) go along with it.
Repeat after me – you're not your sister's dad!
I'm a softie, but I think if your parents need financial help and you can afford to help them, then you should. I don't think this help should come at the expense of your own family, but I see nothing wrong and everything right about helping out parents that need it.
The brother situation is a little stickier to me. I have 2 little boys and I would hope they would help each other one day should the need arise. I have a brother with mental health issues and I would totally help him out if he needed it, as much as I could. Like I said before, I would never sacrifice my family's well-being, but I would do as much as I could.
I don't think you have an "obligation" to help your family. I think if you want to you should, and if you don't want to you shouldn't. Do what feels right and what you can afford and I really don't think you can go wrong.
I think the problem with that thoughtline is that how do you define what does and doesn't affect your family. Obviously, if you give the money to your brother your family won't have it to spend. Do you wait until your kids' college account and your own retirement accounts are fully funded before helping him? If not, at what point do you say "Ok, this person needs this money for XYZ more than my kids will need it for college, and more than I need it for retirement." ? I expect most people here are in a position where they have *some* extra, but not infinite extra, and how do you decide "need" in those cases?
I think of when my inlaws asked us for $5k for a down payment on their house. I had it in savings, but it was ALL I had in savings. It was hard to say no because they didn't understand why I wouldn't help them when technically I could. But what if I lost my job (or worse) the day after giving it to them? I couldn't put my family in that precarious position, even though I did technically have the money to help them.
It is those sorts of pro/con lists that make situations like this hard.
I guess, in my mind, I would say that if I had an emergency fund, enough to house, feed and clothe my kids and was saving enough to pay for their educations and my retirement, I would feel perfectly good about helping out my family and/or in-laws. Like right now, if my family needed help (they don't) my husband and I are a fine situation to provide it. I only hope they'd feel comfortable enough to ask. (They wouldn't.) However, if our situation changed, (my husband lost his job, we had another kid, etc.) we'd have to stop. I guess I'd make that clear upfront.
But that's just me, I think the answer would be different for everyone, that's why I don't think people have an "obligation" to help their families, I think it's about your own level of comfort and how much money you're willing and able to part with.
Maybe a good example would be I'd take the money we donate each month and give it them instead. Now, if my brother bought a plasma TV or something, I'd certainly reevalute. Or if, like the poster below, they started asking for large amounts often, I'd say no, I would have no choice but to say no. So I guess I'm thinking more along the lines of a couple hundred bucks a month to help with groceries and utilities, rather then big expenses like property taxes or car loans.
But, honestly, I think I would actually relish the opportunity to help people out that have given me so much over the years. But I have an excellent relationship with my family and I know that's not true of everyone. The type of relationship you have would certainly be a deciding factor, I would think.
Mary, that's what we have done – we made the limits clear up front.
I have a nephew to whom we offered a family 'scholarship." I offered it in a letter that set out the terms (payment made directly to the school, a minimum GPA requirement, amount paid per semester, max number of semesters…) and also that said that we intend to pay it for 4 full years of college, but if I lost my job or one of us got really sick or something, we might have to stop the payments. It's worked fine so far.
I think that's awesome and an absolutely brilliant approach, Shalom!
Ironically, I find myself asking the same question today. In my case, it is my BIL and SIL who are asking for the money.
They are a very low-income family with 2 young children 3 years old and 1 1/2 years old. BIL has been on leave from work for depression since last July. SIL was on unpaid maternity leave from July 2008 until September 2010 when the government paid for her to go to school. She has since finished school and is now working.
Last week they asked us for $800 because their house insurance was up for renewal and had to be paid immediately for the entire year. We loaned them the money, worked out a payment plan and everything. I said to SIL when I gave her the cash, let us know if you're caught in this situation again. Preferable to borrow from us (even though we have to take a cash advance against our credit card) than to go to a payday loan place, which they have done in the past.
Fast forward to yesterday, when they ask (by email) for an additional $600! I was shocked but heard their story on how they arranged for the mortgage payment to be delayed but it didn't happen so the money came out of the account and there wasn't enough left for car and other bill payments. We reluctantly decided to loan them more money. Now up to $1400.
This morning, yes, this morning. I get ANOTHER EMAIL asking for another $300. Saying SIL was sick with the flu last week and didn't get paid as much as they hoped and they now have no money for groceries for the next 2 weeks or gas to get to work.
Husband and I both want to put our foot down and just say no. BUT they have 2 little kids who need to eat, and whose parents' financial situation is not their fault. And if they can't get gas to get to work, that will lead to more low paychecks.
However, Husband and I have been trying to pay off our own debt. We don't have this money sitting around, and we have to take cash advances on our credit card to make it happen.
They say they will pay it back, and have even laid out dates and amounts they will pay on. I know they will pay it back eventually but I know it won't happen as quickly as the optimistic payment schedule they have proposed.
Right now, I think we will say no to lending them MORE money. But we may dig through our cupboards and come up with ingredients for a few meals to tide them over, and maybe get a gas gift certificate.
I think you will probably feel that we've already gone too far… but I'm still asking.
How are they going to pay back the $1400? How could they pay back $1700? The larger it gets the worse in debt they will be and the harder to pay it back.
If you are in debt yourself, you don't HAVE money to be giving to other people. Giving/loaning money is a luxury. The government/public safety net may not be as big as in other countries, but we do have it. They need to look into WIC and other public programs and hit up a food bank to get them through times when they're short.
I might have the money to help out DH's relatives, but our only debt is the mortgage and we have substantial savings. If you're in debt you cannot afford to give money away. You are tapped out and in bad straits yourself. Take care of yourself first. No consumer debt, 6-12 months of emergency savings etc.
Also… when we had less money and gave, said relative went and spent it on luxuries we'd been denying ourselves. That kind of put a damper on our generosity.
Those credit card cash advances are going to be charged higher interest rates than normal retail purchases. You have been beyond generous. But this could quickly derail your financial stability if continued at this pace. I love that you are so generous as to get into your own cupboards. But you should also point them to a food pantry and government assistance. They might also need to consider more afforable housing. Renting might be a better option for them right now.
Perhaps in-kind contribution is the way to go? I bet you can come up with a few ideas that will make sure the kids aren't malnourished without requiring you to hand their parents cash. If you are close geographically, invite the family over for a meal and/or offer to babysit the kids on a semi-regular basis so that you can feed them.
Does the family live someplace where food aid is available? Sounds like they might qualify.
Good luck!
Alicen, if I send you an email asking for money can I get on this gravy train too?
It's great that your heart is in the right place but "loaning" money to family via credit card advances when you have your own debts to pay is silly.
Wow. It was very generous of you to want to help and it sounds like it comes at a high cost if you took a loan on a credit card to do it. It does not sound like you can afford to take care of them further. Of course you worry about the kids. I would tell them "I'm so sorry, we borrowed to lend to you and can't borrow more, if you don't have money to eat here is where the nearest food shelf is." They sound like they are not in a good place and money seems to be a symptom of not being able to take care of themselves well… but money isn't the only problem, and you can't solve their underlying problem.
It is very hard to see people you love in pain and I'm sorry you are going through this. If you have to borrow to give, do not give another penny. Their problem has already become your problem. And yes, it is hard to see people in pain. You absolutely don't have the ability to keep them afloat. Drive them to the food shelf, offer to take the kids for a few hours if you can and want to.
This comes from seeing my family be seriously dysfunctional with money. There are mental health and addiction issues underlying it and money can't solve those. Unless your family is becoming self-sufficient and you can see it changing, you're supporting a dysfunctional pattern and your best intentions of giving may have a bad effect on them and you.
Again, you clearly have good intentions! I'm sorry your family is in such a tough place. Don't put your own family financially at risk to try to ease others' pain. It is painful to see people in a tough spot, and that may be what you have to do right now. It can be hard to see that.
I agree 100% with JD!! My husband and i have a similar situation with his family. His brother is like JD brother. We have tried too many times to help him and all he wants is cash. My husbands parents are the same way too. It's quite sad. They earn more than us yet never have enough money. Recently my husbands family asked for $10,000 as they knew we had saved cash to fix our porch and reroof our home. we refused. But offered to help in other ways but they only wanted the cash. They have not spoken to us in a month because of it. My husband and I are releaved in a way as we do not have to worry about them constantly asking for money. Yet sad as money should never come between family.
I'm going to have to read each and every one of the comments today because I could BE Dave, except for a few changes like:
My brother and sister-in-law have 4 kids and neither works, they haven't declared bankruptcy because they take money from my parents.
And…my parents recently had another baby so I have a 3 year old brother who they are taking care of despite not having retirement funds (I did make them get term life insurance policies tho that will last until the baby is 21). They still work full time in their 60s and have yet to finish paying off their mortgage, any spare money they have goes to my brother and his family.
At least my sister seems to be doing okay, and oddly she is the one I would help out the most if she needed it because she…doesn't need me? Does that make any sense?
Suze Orman says in one of her books that you owe your parents if they need money, but not your siblings. An interesting distinction!
Your mom is in her 60s and had a baby 3 years ago?
Yes. Which…I hope people don't do digging because it's rare enough to take the anonymity out of internet posting.
Needless to say, they don't make personal finance books about what to do when your spendthrift, not-saving, retirement age parents decide to have a toddler in their 60s.
And since I'm the only sibling with sense, they have named me executor of their estate and full custodian if something happens to them before he's 21 (or 18…I forget now).
Maybe they can get their own reality show. Financial problems solved!
I have a ton of friends in this position – not quite the same age gap, but the exact same responsibility gap. One of my coworkers had her mom and teen sister living with her and her husband when she was only 23 or 24, because she and her husband were the only responsible adults in the entire family. Another has an infant of her own and a 6 year old sibling she fully expects to end up raising. Another ended up as the foster parent of her own younger siblings after her parents imploded.
Your parents and your little brother are lucky to have you.
My SIL has helped us out on a few occasions. We are paying her back as we can. She's actually told us NOT to pay her back until we have a substantial emergency fund set up. Over the past three years, each of us has been laid off at least twice, draining our emergency fund to almost zero before we get employed again. Each time we get caught up, (trying not to jinx) one of us gets laid off, AGAIN. Thankfully, we've both been employed somewhat comfortably the past several months, so we're paying off both vehicles in the next three months, one will be paid off this month! Then we're cutting back on paying down stuff and we'll be throwing that money towards a healthy emergency fund. And then we'll sit down with her and determine the repayment plan. So we're thankful that we've been blessed to have a family member who realizes our financial issues are largely out of our control and not due to extravagant spending.
I sympathize with the parental dilemma, and also the mental illness angle brought up by "Mom of five" — It's tough dealing with people who can't be reasoned with.
I've always felt it would be easier if my parents would just turn their affairs over to someone else. If it had to me, I'd do it, but really any sort of custodial oversight would change their lives so much. That said, there's a wide chasm between 'having a problem' and being 'ready to put your fate in someone else's hands.' I guess with addicts they call it "hitting rock bottom." I'm afraid that with my parents, it'll be called "foreclosure."
My sibs and I have formed a unified front: no money without control. If they want our help, we're willing, but only if they do what we say (i.e. move out of ridiculously large, ridiculously mortgaged house etc.) It makes for some very hard conversations, but to us, the situation is clear: they're eventually going to find rock bottom. The only remaining question is, "how much of our money will they spend getting there?" Obviously, we're trying to keep that figure as low as possible.
I feel the pain here.
I like that motto "no money without control". That is sort of like what my family and siblings look at it too.
Leave your pride outside, in the house we talk openly and honestly, its a lot of tough love, but family is so much more important than any money in the world and any money problems that everybody would rather fix the money problems before it happens and before it gets in the way of family.
I understand the sentiment behind "no money without control," but you should think about the flip side of that. If you are controlling their lives, then it's no longer simple generosity. You are asking that they accept your rules and values over their own.
This is just to say that if you demand "control" over your relatives' lives in exchange for money, don't expect effusions of gratitude from them.
I wouldn't help an adult sibling* who consistently made poor financial choices but I would help my parents, regardless of their financial choice. If their financial skills were terrible, I would pay some of their bills myself (electric, water, garbage for example). If their skills were good, and they simply did not have enough money, I would offer a set amount each month or gift cards to various stores each month- the pharmacy, grocery, gas station.
I would go over their Medicare and any supplemental insurance plans and make sure they had adequate coverage, particularly for long term care and prescription drugs. I would also ask to be kept informed of their health and any treatment plans.
*: I would ,however, help an adult sibling who was sick or otherwise incapable of taking care of themselves. My BIL is mentally ill, and we may have to assume some of his bills, along with my husband's other siblings, if his condition deteriorates. He's pretty stable now-holds down a job, pays his bills on time, saves his money- but that can turn on a dime, I'm sorry to say.
Family and money — one of my favorite topics.
I grew up lower-middle class and chose to attend a private college on the east coast. Between that and grad school, I've accumulated a fair amount of debt.
When I got out of undergrad, I lost a job and ended up defaulting on about $10k of credit card debt. My parents paid the bills to get the creditors off of my back, and I'm slowly paying them back. They're of limited means, so I figure I owe them in retirement — I've seen their 401k statements, and helped dad select some better (read: low fee) funds to invest in. For his age, his balance scares me. OTOH, if they both collect full social security and have the house paid off before retiring, I think they'll be fine.
My wife's family, OTOH, is a complete financial disaster. My brother-in-law (also married into the family) makes a good amount of money, and I've seen my wife's immediate family run to him for financial support and what not.
One thing I made clear to my wife before we got married is that if she expects us to part with cash for her immediate family, I'm not the right guy. She understands, but is in a bit of denial with just about how bad her family really does manage their personal lives, although she accepts it a little bit more and more each day.
For instance:
My brother-in-law (her 34 year old brother) had eviction papers filed on him twice in three months. His vehicle got re-poed, and has his license suspended for not having any auto insurance. He couldn't afford plane tickets to our wedding. Sounds bad, right? Imagine my shock when I found out he makes about $5k less than I do, and lives in a really cheap city. How'd I know? He left a paystub in our car by accident.
My father-in-law was going through a divorce with his second wife, and decided to quit his job and move 500 miles to live in said affluent brother- and sister-in-law's basement, which is actually pretty close to us.
My wife has asked if she could take dad out to lunch every now and then, because he doesn't have much money and is going through a lot. I told her no. This might sound cold, but he chose to quit his job without much of a financial safety net. I realize he's going through a lot, but most guys don't quit a decent paying job. He has to reap what he sowed. I told her if he got laid off or something, that's one thing, but quitting your job and expecting to mooch off of family? No way.
Before I catch too much flack for my hard line stance, I should point out that my wife and I both have significant student loan debt, and after 1.5 years of marriage, have *finally* started to build an emergency fund. We also want to buy a house, in a region where housing isn't cheap. So, quite honestly, we really don't have extra cash just to hand out.
So, my advice to the OP is this: If your family are hard-working people who manage their money well, but just happen to have low-paid jobs, then help out when you want. But if they mismanage their funds or just generally don't have a clue, don't send them cash. You wouldn't throw good money after bad in business, don't do it in your personal life either.
isn't it crazy to find out someone who's always poormouthing you actually makes as much as you? My most chaotic sibling, always broke, always on the brink of homelessness, was making more money than us for YEARS. But they decided health insurance was too expensive, so every health issue put them on the brink.
Would you be willing to help out your own parents had they not been there to help you out financially (paid your creditors)?
Not only do I not comprehend the refusal to let your wife feed her poor father, I don't understand why it's your decision. Shouldn't that have been a discussion?
And while I don't know you or how you think, have you considered that divorce is an incredibly painful experience? Yes, your FIL chose to leave a job. If he did it to be closer to his only remaining family, it sounds like a good decision. Would you prefer he be lonely?
It sounds like we come from a similar background, and I know that many people who fought their way out of near-poverty have little patience for others who don't do the same. But everyone's different, and people have their own problems that they may not tell you about or you may not fully comprehend.
You bring up some good points, so I'll give you my best shot:
1. With her family, it's never "just this once." How does one manage expectations? You buy lunch the first time, and now you start creating expectations. Since I don't want to fall into that trap, it's easier just to say no the first time.
2. Combined, we have $110,000 in student loan debt. We've just started building our emergency fund. You tell me whether or not we have extra cash to spare.
3. As far as being lonely goes… my father-in-law has an adopted daughter (who is still a minor), biological son (said 34-year-old I mentioned) and two grand-daughters back "home." So he doesn't have to be lonely if he doesn't want to. I just happen to have a very cynical view on things, but if moving out to the area where both of your daughters are "of means" (and away from those who aren't) means not being lonely, well then…
4. Is it ever a good idea to move out to a really expensive city with no real means of supporting yourself? Yes, he can find work in his field, and while it pays decent for the midwest, on certain parts of the east coast, it's just struggling to get by.
This is something I think about a lot, as my parents near retirement age. My sister and I are in our early 30s. I am in the early stages of financial stability, while my sister continues to rely on my parents for financial support.
As people live longer and longer, I assume that eventually one or both of us will need to help out our parents either financially or logistically (with health matters and daily living). At this point I'm assuming it will be me.
Part of why financial independence is important to me is that some of my relatives remain dependent on parents or spouses for money, and it does not usually turn out well.
My brother and his wife are financially responsible now, but weren't always so. Their credit plummeted, she bounced some checks, their ARM mortgage rose. They also had intended to have 2 kids, but the second pregnancy resulted in twins, and now they have 3 kids.
My brother asked me to cosign a loan several years ago. It was tough, but I had to say no. He's never asked for cash outright. I would probably give them gift cards for groceries and gas before I'd lend cash.
I do feel obligated to help my mom out. She's been disabled for some time and does have SS, she also pet sits a bit in her home. I put $200 monthly in an account for her, she occasionally uses it to help pay for medical/dental bills. I'm glad I can help my mom out.
I would have serious misgivings about lending money out to people who are spiraling downward financially. It's like throwing good money after bad. Unless they're facing homelessness or seriously dire straights, I'd have to say no.
Somewhere, there was a blog post about this, but I can't remember off the top of my head who wrote it.
The gist was this: Don't help someone on a downward spiral. Wait for them to hit bottom and help them when they're on the way back up.
If I had a relative who had been very financially irresponsible in the past, but had obviously made major changes to their lifestyle and were trying to get their life in order, I would help them. On the other hand, if someone clearly has not learned from their mistakes and is trying to use me to postpone the inevitable crash, I would not help them.
It's always tough. There's no fast and easy rule of thumb for when you should help relatives. But ultimately, there is potential to do real good for someone if they are legitimately struggling to reform. (I've been the beneficiary of such help, and I was able to use it to turn my life around. But that was only because I'd already had the epiphany that I couldn't continue the way I had been.)
The only family member that I wouldn't help under any circumstances would be my sister. And that's just because she is so manipulative that she has actually pretended to be trying to turn her life around to get money out of relatives, and then turned around and blown it the same as the rest of the help she's been given. At this point, I think it's safe to say that she has no desire to live any other way. I don't feel guilty or worried about her, because the world is full of suckers, and I'm sure she'll just move on to the next one when she can't get anything out of me.
I think the article was on The Simple Dollar. "What is the 'Bottom'?"
Thanks Ash, I'm pretty sure that's it.
Only give money if you do not expect to get it back, and you only think of it as a gift. Otherwise you will have hard feelings when the family does not really help themselves with your gift.
My situation was a few years ago when my wife's family was having many medical bills. We gave them a few thousand dollars to help with the bills. The money may or may not have been used for bills at that time, but a few months later there was a brand new HDTV in the family room, that cost somewhere in the neighborhood of what we gave. This was rather deflating to say the least. We still have a good relationship, because we looked at it as simply a gift, they did not use the money as we had thought they should, but it ultimately was their decision. They still struggle, but we gave them money that they squandered and now we will not gift them again.
Most of my immediate family is irresponsible with money as well. My older sister is well off, but my parents are swimming in debt and my younger siblings are always looking to be bailed out of some kind of trouble.
My older sister and I both have the same policy when it comes to dealing with family: practical – not financial – help. That means when my brother asked me for $500, I said no freaking way. But when he ran out of formula for my niece, I took him and my sister-in-law food shopping. I don't even trust him with gift cards at stores because I once found out they were being used to buy cigarettes instead of food. I was more than a little upset about that.
Anyway – I don't feel like a jerk about your brother. It hurts me way less to know that I'm there for a crisis than it would to know that the help I gave to prevent the crisis was wasted. I've been in both situations at this point and I know which is better for everyone involved. And no matter how much your family might resent you for not helping, or how much you resent them for not getting their acts together – it is NOTHING compared to the complicated feelings and epic levels of resentment that arise from family not paying back loans or feeling like they owe you something (even if they do).
In the case of your parents, it's a different story. I don't know what to tell you. In your position, I'd feel like I had to help. But I don't know the full picture and I'm also not you.
I really think it depends on the situation. My husband's siblings are very financially responsible and if they ever had an emergency, I'd be the first to lend them money. Although, I'm sure both of them have an emergency fund in place. My own brother, on the other hand, I wouldn't have given a dime. He spent money like it was water. He passed away two years ago and left behind a significant amount of debt.
It's all about the choices that we make. You can't force someone to make good money decisions, and you only blur their decision making process when you throw money at the problem.
Millionaire Next Door ( http://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1563523302 ) has an interesting chapter on this subject; I believe they call it Economic Outpatient Care. The bottom line is those who live off their wealthier relatives tend to underperform.
I see this in my own family. I am one of three kids. I have IL of the same social class as my parents and my one brother is single. My other brother has wealth in-laws that help them with things. However, the "help" doesn't always seem that helpful from my point of view.
They helped them finance a house they could have never qualified for with a regular bank loan and as a result have been pretty house poor ever since. They give them late model, but gas hogging SUV's, but the still need to insure and put gas in them. SIL has a free country club membership to take take the kids to the pool with, but most likely it will cost more to drive across town to it than it would to pay to go to a public pool closer.
Anyway in the long run paying their own way seems to me that it would be cheaper and more dignified way to go, not as "fancy".
Funny how GRS's holier-than-thou "oh, everyone should donate to charity, it's important" crowd turns into a "oh, not that guy, he doesn't deserve it!" crowd as soon as you put a face to your charitable donation.
Oh, it turns out that a lot of the people who need charity have made mistakes or have bad habits? Who would have guessed…
I don't see any contradiction. People are saying to help parents and to give in-kind rather than money. Most charities also provide goods and services in-kind rather than just giving out money.
In-kind transfers and targeted transfers have many benefits that straight monetary transfers lack. That's why they're used even though they take more effort and money than just giving cash transfers. So long as they're not completely fungible they change consumption patterns.
People are also saying to make sure your ducks are in a row before you give money to family, the same holds true for charity unless you have very strong religious beliefs otherwise. (And even Dave Ramsey says it's ok to take care of yourself first before tithing.)
I can't speak for anyone else, but my two charities of choice are the Toronto Humane Soceity and Care Canada.
One gives money to shelter animals and find good homes for them, and the ohter feeds starving children in under developed nations (without bibles given out with the help).
Neither of these recipients of my donations made "bad choices" except being born in the wrong place at the wrong time.
So, this doesn't make people here hypocritical, necessarily.
It's easy to look at distant children as blameless victims of their own situation, both because they are children and because you don't know their individual stories. Animals as well look blameless, because they're incapable of moral decisions. As such, you've managed to skirt the issue — you'll never have to give money to someone who might not "deserve" it because you only donate to charities that that help the morally uncorrupted.
Meanwhile, your own brother is someone you've no doubt seen have moral failings. I know I've seen this in my brother. He's flawed and sometimes needs help.
It seems a sort of perversion of the charitable spirit to put everyone who needs help through a moral screening process first before deciding whether or not they'll be worthy of your assistance. Certainly there are limits here and someone could ask, "oh, then you'd be ok giving to the 'suicide bomber family relief fund'?" or something, and no, I wouldn't, but I feel like that's a far cry from helping out my own brother who's bad with money. It seems that the filters people are applying are a lot tighter than that, and you don't have to much wrong to get put in the 'no longer deserving of help' category.
I don't mean to pick on you with this comment, Adam, it's a commentary on the overwhelming response towards Dave's brother in general.
It's sound policy. It's called "avoiding moral hazard." Sometimes the non-market changes we make cause problems precisely because we've made those changes. http://en.wikipedia.org/wiki/Moral_hazard (It's also a reason that some insurance markets fail.)
Many people don't believe that government should intervene at all in cases that produce moral hazard. So no EITC. But even Ron Paul thinks we should feed hungry kids because feeding them doesn't cause them to stop working. They don't have problems of moral hazard. That makes WIC popular.
There's nothing immoral about it. We all have constrained choices on where to spend our time and money and some folks care about the efficiency of their dollars. You can't save everyone and some folks prefer not to waste money in ways that end up hurting people long-term.
Nicole's points are great.
I actually don't prefer to help people that made or continue to make extremely bad choices, which is why my charity goes to those two places.
There are hundreds of other charities with similar recipients of people that need help and in my opinion deserve it. What is wrong with that, exactly? I'm not sure why this is such a problem.
Others may be more lenient/forgiving and donate to people who are where they are primarily due to bad choices, I choose not to when I can.
As for my brother, I don't help him. I would help his children and would never let them go hungry or without basic needs however, and I buy them presents whenever I see them. It's not their fault if their parents aren't able to support them. They didn't choose their parents or decide to be born.
If, after his children are self supporting, my brother needed help I would rather the State gave him money before I did.
On the one hand, I'm with you on this one… I think that if you resolve to never give money to anyone who is responsible for their own situation, you're not going to be helping anyone close to home. (Especially since humans have a tendency to blame the victim. It's just a natural part of how our minds work.) I don't agree with that kind of attitude, and I just can't live that way.
On the other hand, there does come a point where your family is just taking advantage of you, and it comes time to cut them off.
Take my sister, for instance. She's been in one mess or another her entire adult life. She's been coming to me, asking for money, practically since I first moved out at the age of 17. Once she had a child, I felt it was unethical to let the child suffer for what her mother did, so if she showed up asking for grocery money, I'd offer to take her grocery shopping.
That worked for a little while. Then came the day when she showed up with her hair freshly dyed and her nails freshly manicured, wanting me to buy her groceries. What's funny is that if she had come to me really exhausted, complaining about how she hated her hair or something, I'd have probably taken her out for a spa day to help her relax. But the fact that she spent her grocery money on beauty products, knowing that I would bail her out, was too much. Since then, I haven't given her anything, and (surprise, surprise) she doesn't contact me anymore. When she does, it's usually so that she can come back the next day and ask for money.
There's nothing wrong with giving money to people who have made mistakes. (Geez, if I took that stance, I really /would/ be a hypocrite! Considering how much my family and friends have helped get me back on my feet…) But there does come a point where the person is obviously just using you. And that's the point where you have to say "no."
"Since then, I haven't given her anything, and (surprise, surprise) she doesn't contact me anymore."
I'm the same commenter in #51 above. Not too long ago, I told my wife that her brother was a leech. She got horribly offended. I then asked her, "Does he ever call you when he doesn't want money?" (No.)
She's actually really pissed at him right now. He's going through some particularly hard times, and she'll call to see how he's doing. He won't answer the phone or call her back. She actually left him a message that was something along the lines of "How come you only call me when you want money? You can call just to talk, you know." He actually went and blabbed to the rest of the family about that one.
The real turning point for me was when, at one point, my sister asked for money and I made the mistake of saying, "Sorry, I don't get paid until Friday."
Then, /months/ later, I had turned her down for money again and she called my mom up to complain about it. She said that she "knew" that I had just been paid, even though I told her I didn't have any money. I still can't believe that she tracked my paydays for months after one slip on my part. I can barely keep track of my own paydays without a calendar!
That's when I really started to take notice of the patterns in her behavior. I started asking her questions about her income, and trying to figure out where her money was going. I asked her what her hourly wage was, and I extrapolated what she made from that. Basically, I found out that she makes at least as much money as I do. Given that she probably lied about her hourly wage, she probably makes more than I do. While she does have a daughter to take care of, half of my paycheck goes to student loans, so we're pretty much in the same boat, financially.
When I confronted her and asked her what she does with all her money, she whined that all of it was being taken out in taxes. Apparently she thought I was too stupid to remember what she did with her huge tax refund last year. (She went on an expensive vacation.)
That's when I started really paying attention to try and figure out where her money was going, and noticed things like the fresh hair dye and manicured nails.
Thank you Tyler for posting this sentiment. I had actually come back to muse aloud at how surprised and sad I am that the default response here is not to help out family even if you are able.
Our experience with my sister and her husband was such that the very act of needing to get money from us to pay their mortgage and their car insurance was enough of an impetus for them to turn their financial lives around. Yes, they had a flat screen TV and a sailboat which they couldn't afford, but they were in a jam. And she's my sister. I was glad we could help.
I'd make the same decision. Other family members aren't always aware of what's going on in a given situation.
I think that some of the "don't lend" crowd (like me) have had bad experiences, but I think mainly this is a difference between one-time help and repeated aid. I'm willing to give/loan to family that is actually trying and has just fallen on hard times, but I'm not going to donate to someone that's constantly lacking funds but is living as well or better than I am and refuses to make compromises in their standard of living, relative or no, near or far.
I guess a good example would be the single mom that's just been downsized but is looking for a new job and needs to keep her phone on so that she can get calls back vs. the single mom who just quit her last job because "she was too good for it" but had nothing else lined up and needs to keep her phone on.
It's not a perfect example, admittedly.
Exactly. I'll help out once or twice. Bad luck happens to people. But once it's a pattern? No.
I'm totally glad to help the local homeless shelter, and if one of the addicts in my family ends up on the street, I hope they have access to their local homeless shelter and a treatment plan.
But, if one of the addicts in my family comes to me and says "Oh no, I put another mortgage on my house and gambled away the money and now there's a balloon payment and we're going to be homeless!" then I wouldn't give them cash – they'll just drink THAT away too. It's not like I haven't seen it happen.
There is a huge difference between helping people pretend there's nothing wrong so they can keep fucking up, and helping people out when they are trying to change.
It seems to me that people are more so advocating a hand up, not a hand out policy. Personally, I mostly offer assistance and advice with the exception being some grocery cards for my grandparents. Their cardinal sin is being too generous to others when they can't afford to, which I can't entirely fault, but also means I won't give them cash.
We're in the same boat, but with my husband's parents, who once asked us for a $10,000 loan. They overspent on their home, like many in the early 2000s. Then their business went bankrupt during the recession, yet their spending never changed — even after it became clear that they were headed for financial issues.
We decided not to loan them money because 1) it was part of our own emergency fund, 2) we would have trouble saving another $10,000 quickly because of our own economic situation at the time, 3) it wouldn't solve any problems — just keep them afloat for a couple of months and 4) they didn't have a plan for changing their situation.
They were just buying time, so to speak. And it would have put our family (with two small children) at risk.
This was not an easy decision. But that was almost 3 years ago, and they are doing better now. They had to make the changes necessary to get back on their feet. They are still at risk, but the lessons they've learned are helping them make better decisions. I don't regret it.
Its wholly irresponsible (in my family) to watch another family member commit financial (and/or life) mistakes and NOT intervene.
This is not the 'American' way, people have too much pride and they want to do things their way because… they're free to do whatever they want… until they are knee deep in trouble. Even then, people still have too much pride, which leads them back to their old ways again.
My sisters and I are pretty tight, we always chip in money to fix/renovate the house we grew up in. We watched our parents and uncles/aunts help our grandparents financially so we expect that our turn will come.
If one of us gets into money troubles, I am sure we will help each other. One sister is particularly irresponsible with spending… and we ALL worry about her and she gets lectured every now and then (but only because we are the ones who will be there when she needs rescuing).
Ironically I had to borrow money from that sister to settle a tax mishap that I incurred working abroad.
While reading JD's post, I immediately thought of a post on the '48 Days to the Work You Love' Blog (By Dan Miller). There is some very sound advice from one of history's most respected persons: Abraham Lincoln.
You can find the post titled "Need a quick loan for the hard times?" at http://www.48days.com/2011/03/29/need-a-quick-loan-for-the-hard-times/
But, as for the parents, openly talk with them about how you might be able to help themselves. Can you offer them a "job" of babysitting their grandkids (Date Night!), gardening at your house, or other things they might be passionate about that would give you some extra time in exchange for paying them?
Oooooh, I like that! I have not read it before.
I wonder what the step brother did??