Digging my parents out of debt

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sojersey
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Digging my parents out of debt

Post by sojersey » Tue Dec 03, 2019 10:34 am

Hi guys, wondering if anyone has good advice for this kind of scenario (or, the right kinds of mechanisms)

Long story short, my dad is in his 70s with ~$25-30k in credit card debt -- separated but still married/financially entangled with my mom who is in her 60s (who also didn't save much for retirement and won't have a pension). Kind of a classic spent their lives making good money yet still living beyond their means, not saving, late fees, and not paying attention. Perpetually in a hole. My dad's always been bad at finances/spending, and his mental faculties are unfortunately fading.

Health issues aside (which I'm now also dealing with helping him address), what are the best avenues for consolidating the high interest debt? My dad gets hammered by mail daily with things that I'm not really sure seem reputable… in an "are they just targeting gullible Veterans" kind of way?

Part of my instinct is trying to somehow get control of finances, but I'm not even sure what the right kind of loan product is to consolidate the card debt into something smaller and I feel getting rid of the 18% interest he pays is the first thing.

He has a decent Army pension and having done their taxes they still make more than I do, so it should be within possibility to pay it off so long as I can manage to get the actual spending reduced… It's a mess and really frustrating overall, so just looking for any advice in this kind of situation.
Last edited by sojersey on Tue Dec 03, 2019 11:12 am, edited 1 time in total.

HomeStretch
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Re: Digging my parents out of debt

Post by HomeStretch » Tue Dec 03, 2019 10:52 am

Agree about getting spending reduced so the credit card debt doesn’t recur.

Look into credit cards with an introductory zero interest rate on balance transfers for 12-18 months. You can research CC on drofcredit.com.

If you are going to be helping manage your dad’s finances (with his approval), suggest your dad execute a durable power of attorney naming you as POA. The POA should be submitted to his banks and brokerages.
Last edited by HomeStretch on Tue Dec 03, 2019 10:55 am, edited 1 time in total.

gr7070
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Re: Digging my parents out of debt

Post by gr7070 » Tue Dec 03, 2019 10:52 am

Typically, over-spenders who consolidate consumer debt end up running those credit card balances back up *and* then have the consolidation loan on top of the big credit card balances.

Unless they've changed the bad habits (changed and stuck with it for many months) that have landed them where they are I would not consolidate debts.

Dave Ramsey is probably the best approach to debt removal.

This is heavy lifting so to speak and requires a significant effort to change ones bad habits. Good luck to y'all!

gr7070
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Re: Digging my parents out of debt

Post by gr7070 » Tue Dec 03, 2019 10:58 am

Agree about getting spending reduced so the credit card debt doesn’t recur. Look into credit cards with an introductory zero interest rate for 12-18 months. You can research CC on drofcredit.com.
Unless one is 100% certain the borrower will change their habits (hint, not going to happen the first time around) and pay off all this debt this is an awful way to go.

It's incredibly unlikely a 70 year old, life-long over spender will be instantly successful and change their ways. I can't recommend against this approach enough.

While the OP might be a typical Boglehead the subject in question is the furthest thing from one.
Last edited by gr7070 on Tue Dec 03, 2019 11:20 am, edited 1 time in total.

Shallowpockets
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Re: Digging my parents out of debt

Post by Shallowpockets » Tue Dec 03, 2019 11:03 am

He makes more than you do. You have some health problems. Let it go. He has lived his life this way. Nothing will change. Best to get on with your life. Why compromise your own situation with his failures. Failures that continue.

This is what the slackers do. The fiscally irresponsible. They live their lives like they want and then require, maybe demand that others step up to the plate when help is needed.

Or, make your play. Give it a try to help him. Then come back in 6 months here and give us a report on how that's working out for him, and you.

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White Coat Investor
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Re: Digging my parents out of debt

Post by White Coat Investor » Tue Dec 03, 2019 11:09 am

sojersey wrote:
Tue Dec 03, 2019 10:34 am
Hi guys, wondering if anyone has good advice for this kind of scenario (or, the right kinds of mechanisms)

Long story short, my dad is in his 70s with ~$25-30k in credit card debt -- separated but still married/financially entangled with my mom who is in her 60s (who also didn't save much for retirement and won't have a pension). Kind of a classic spent their lives making good money yet still living beyond their means, not saving, late fees, and not paying attention. Perpetually in a hole. My dad's always been bad at finances/spending, and his mental faculties are unfortunately fading.

Health issues aside (which I'm now also dealing with), what are the best avenues for consolidating the high interest debt? My dad gets hammered by mail daily with things that I'm not really sure seem reputable… in an "are they just targeting gullible Veterans" kind of way?

Part of my instinct is trying to somehow get control of finances, but I'm not even sure what the right kind of loan product is to consolidate the card debt into something smaller and I feel getting rid of the 18% interest he pays is the first thing.

He has a decent Army pension and having done their taxes they still make more than I do, so it should be within possibility to pay it off so long as I can manage to get the actual spending reduced… It's a mess and really frustrating overall, so just looking for any advice in this kind of situation.
All you're doing by paying it off is increasing your inheritance. The older you get the more sense it makes to borrow money with the intention of never paying it back or only paying it back with assets you don't end up using during your life. Keep that in mind as you decide what to do.

Obviously when he truly is incapable of managing his life you can get a court order to take over, but until then....good luck getting an old dog to learn new tricks. The good news is that pension- at least there will always be something to live on, but eventually the credit card companies may wise up and quit lending to him.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

CZjc1330
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Re: Digging my parents out of debt

Post by CZjc1330 » Tue Dec 03, 2019 11:11 am

Hi All
A lot of tough love here. BUT extremely good advice. Good Luck!!

mptfan
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Re: Digging my parents out of debt

Post by mptfan » Tue Dec 03, 2019 11:17 am

Assuming your father's credit card debt is in his individual name and his name only, then no one else will be responsible for his credit debts after he dies, that is the nature of unsecured credit. And if he has no probate estate, the credit card companies get nothing.

http://www.early-retirement.org/forums/ ... 26181.html
Last edited by mptfan on Tue Dec 03, 2019 11:22 am, edited 3 times in total.

Point
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Re: Digging my parents out of debt

Post by Point » Tue Dec 03, 2019 11:19 am

We went through managing parents out of perpetual debt and finance charges. The POA is very important, and banks may require their own. Removing credit cards is another thing to consider, or putting them in blocks of ice in the freezer. Also, eliminate recurring charges and online purchasing accounts.

Creating a spreadsheet tally of current debt and updating it weekly helped us manage them.

Make a list of the last 90 or 120 days of expenses (needs) by category: electricity, gas, auto, insurance, food, etc. columns for each month showing totals. Separate block on the list for spending on _wants_.

There are a few parts to the process: educating them on what they have used their money for; working down the debt; showing them how to plan to use their money; introducing friction into the spending process (frozen cards) while hammering down the debt.

Good luck!

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Stinky
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Re: Digging my parents out of debt

Post by Stinky » Tue Dec 03, 2019 11:24 am

Has your father asked for your help?

If he has, you can do all kinds of things for him. Most importantly and urgently, he needs to have a budget that tracks his spending. He needs to see why he's spent more than he makes, and from that you can help him work his way out of the mess he's in.

But if he hasn't asked you for your help, there's not a darned thing you can do now except offer your help. You can offer all day long to help guide him to a better place - but if he doesn't recognize that he has a problem and ask for your help, you can do nothing.

Hopefully he's receptive to changing, and you can help. But if he's not going to change, you need to walk away (as hard as that is). Keep the door open - he may come back to you some day.
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Brianmcg321
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Re: Digging my parents out of debt

Post by Brianmcg321 » Tue Dec 03, 2019 12:13 pm

The last thing he needs is another loan.

He needs to change his behavior.

If he isn't on board 100%, as another poster said, your just going to be spinning your wheels.
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URSnshn
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Re: Digging my parents out of debt

Post by URSnshn » Tue Dec 03, 2019 1:26 pm

People can change their behavior at any age.

And, some changes aren't easy no matter how old one is.

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BL
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Re: Digging my parents out of debt

Post by BL » Tue Dec 03, 2019 2:01 pm

Never use the card that has debt on it. You will owe immediate interest on it.

Thegame14
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Re: Digging my parents out of debt

Post by Thegame14 » Tue Dec 03, 2019 2:02 pm

sojersey wrote:
Tue Dec 03, 2019 10:34 am
Hi guys, wondering if anyone has good advice for this kind of scenario (or, the right kinds of mechanisms)

Long story short, my dad is in his 70s with ~$25-30k in credit card debt -- separated but still married/financially entangled with my mom who is in her 60s (who also didn't save much for retirement and won't have a pension). Kind of a classic spent their lives making good money yet still living beyond their means, not saving, late fees, and not paying attention. Perpetually in a hole. My dad's always been bad at finances/spending, and his mental faculties are unfortunately fading.

Health issues aside (which I'm now also dealing with helping him address), what are the best avenues for consolidating the high interest debt? My dad gets hammered by mail daily with things that I'm not really sure seem reputable… in an "are they just targeting gullible Veterans" kind of way?

Part of my instinct is trying to somehow get control of finances, but I'm not even sure what the right kind of loan product is to consolidate the card debt into something smaller and I feel getting rid of the 18% interest he pays is the first thing.

He has a decent Army pension and having done their taxes they still make more than I do, so it should be within possibility to pay it off so long as I can manage to get the actual spending reduced… It's a mess and really frustrating overall, so just looking for any advice in this kind of situation.
Can he roll over his balance to a credit card that has no interest for a year. Some people play this game for awhile to not pay interest.

delamer
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Re: Digging my parents out of debt

Post by delamer » Tue Dec 03, 2019 2:16 pm

Assuming that your dad is onboard with your helping him, start with finding out what his credit scores are.

High scores means he may have options to refi the debt. If the scores are low, then he may have none.

What percentage of their income is going toward credit card payments? Are they having trouble paying other bills because of the CC debt?

soccerrules
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Re: Digging my parents out of debt

Post by soccerrules » Tue Dec 03, 2019 2:56 pm

A little hard to know what next step without knowing what has been done so far. Did your dad confess his CC to you ? or did you see a bill on the table or get a call from a creditor?
Have you (and siblings) discussed your concerns with each parent? if so what was the response?
If you haven't -- maybe next step ?
I think you will have a difficult time unless there is at least a willingness for you to help them. I think a discussion of "play the tape out" --where does this lead if they keep spending, don't pay off debt etc, live beyond means ? what happens when x occurs? (Lose possessions, loss of house, too much debt becomes overwhelming?)
Are you or sibling willing to take them in if it gets to that point ? how do they feel about it?

It is really hard to change behaviors for someone that has been behaving this way for 30-40-50 years. In addition their mental and physical states are changing as they age. There likely needs to be an interest and desire for help-- and even then it will be hard.
ask your dad -- what is your plan for paying off this debt?
do you want some help getting your finances in order so I can help you in the future?

You may likely decide if you WANT to step in and "save" them.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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CAsage
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Re: Digging my parents out of debt

Post by CAsage » Tue Dec 03, 2019 3:03 pm

Your parents might want to reconsider or defer being separated, as I am guessing that will not help reduce their combined household expenses. That of course is not true if one of them has simply moved in with another relative or somewhere free/cheap. Are they getting along well enough to work on this or do they both see an issue, or is a divorce imminent and you are only trying to salvage what you can? I am guessing they don't have any other assets.
First, they (or Dad) have to admit they have a problem and need, desperately truly need, to fix it. Don't let them think you will save them if they fail, as you can't sabotage your own life. There have to be consequences.
Then, David Ramsay lifestyle - it's temporary. No more credit card use, toss all Christmas catalogs, make a budget, slash all unnecessary expenses and live within what sounds like an adequate income. The total debt level isn't really that bad, so perhaps it's just a little chronic overspending for years rather than a really large lifestyle issue. The commitment has to come from your parents, then lots of useful help can be found.
Last edited by CAsage on Tue Dec 03, 2019 3:05 pm, edited 1 time in total.
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Re: Digging my parents out of debt

Post by Sandtrap » Tue Dec 03, 2019 3:04 pm

sojersey wrote:
Tue Dec 03, 2019 10:34 am
Hi guys, wondering if anyone has good advice for this kind of scenario (or, the right kinds of mechanisms)

Long story short, my dad is in his 70s with ~$25-30k in credit card debt -- separated but still married/financially entangled with my mom who is in her 60s (who also didn't save much for retirement and won't have a pension). Kind of a classic spent their lives making good money yet still living beyond their means, not saving, late fees, and not paying attention. Perpetually in a hole. My dad's always been bad at finances/spending, and his mental faculties are unfortunately fading.

Health issues aside (which I'm now also dealing with helping him address), what are the best avenues for consolidating the high interest debt? My dad gets hammered by mail daily with things that I'm not really sure seem reputable… in an "are they just targeting gullible Veterans" kind of way?

Part of my instinct is trying to somehow get control of finances, but I'm not even sure what the right kind of loan product is to consolidate the card debt into something smaller and I feel getting rid of the 18% interest he pays is the first thing.

He has a decent Army pension and having done their taxes they still make more than I do, so it should be within possibility to pay it off so long as I can manage to get the actual spending reduced… It's a mess and really frustrating overall, so just looking for any advice in this kind of situation.
1. Does he want advice?
2. Will he act on that advice?
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LilyFleur
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Re: Digging my parents out of debt

Post by LilyFleur » Tue Dec 03, 2019 3:10 pm

Chances are your mother will outlive your father. Will she get any survivor benefits from his pension?

ohai
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Re: Digging my parents out of debt

Post by ohai » Tue Dec 03, 2019 3:37 pm

I think it is a bit premature to count on dad passing away... he might live for another decade despite declining mental ability.

What is the long term plan for your dad's care anyway? Is he going to need assisted living, or will he need someone to live with him? At some point, you or someone else will need some kind of legal authority over his finances (and other things). Maybe it will be easier to manage his debt then.

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Re: Digging my parents out of debt

Post by Mactheriverrat » Tue Dec 03, 2019 4:13 pm

I know you love your Parents but if they are not willing to change your going to get burned. Don't put your name on anything that make's you liable . If their that deep in debt , pay the minimum on the debt, help them with their daily expenses . When they are gone the credit can't do squat to them and they can't pin it on you.

You can't save the world how hard to try.
Last edited by Mactheriverrat on Tue Dec 03, 2019 4:37 pm, edited 1 time in total.
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Nate79
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Re: Digging my parents out of debt

Post by Nate79 » Tue Dec 03, 2019 4:30 pm

Ideally they would cut up the cards and freeze their credit with you having the passwords to the credit freeze to prevent them from opening new credit. Financial POA to maybe help control their finances.

This is a behavior problem, not a math problem and no reduced interest debt will help in any way. They will just re dig the hole. If they won't take your recommendations I would let it be their problem.

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sergeant
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Re: Digging my parents out of debt

Post by sergeant » Tue Dec 03, 2019 5:22 pm

This scenario has been gone over a thousand times here. Has anyone reported back with a positive outcome? I would love to hear one success story.

I have a friend who's father was in similar circumstances as OP. Timeshare debt, CC debt, car loan debt, mortgage debt, hoarding, and digging deeper everyday. His failing physical and mental health necessitated drastic measures. Friend's sister stepped in, took total control of all finances, put him on a $125 a week cash allowance and straightened everything out over the next 9 years. He died last week. Instead of being homeless with debt he left a 500k estate. It certainly wasn't all roses, the hoarding diminished but was still a problem and the guy constantly complained.
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ridebikeseveryday
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Re: Digging my parents out of debt

Post by ridebikeseveryday » Tue Dec 03, 2019 5:25 pm

sergeant wrote:
Tue Dec 03, 2019 5:22 pm
This scenario has been gone over a thousand times here. Has anyone reported back with a positive outcome? I would love to hear one success story.

I have a friend who's father was in similar circumstances as OP. Timeshare debt, CC debt, car loan debt, mortgage debt, hoarding, and digging deeper everyday. His failing physical and mental health necessitated drastic measures. Friend's sister stepped in, took total control of all finances, put him on a $125 a week cash allowance and straightened everything out over the next 9 years. He died last week. Instead of being homeless with debt he left a 500k estate. It certainly wasn't all roses, the hoarding diminished but was still a problem and the guy constantly complained.
$500k he could have spent but didn't... seems like a bit of a conflict of interest, no?

Katietsu
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Re: Digging my parents out of debt

Post by Katietsu » Tue Dec 03, 2019 5:34 pm

A financial success story anyway. $12000 in credit card debt on a $30k ish income. Signed up for Medicare advantage saving about $4000 a year. Refinanced credit card debit at 6% instead of 18%. Paid off over a couple of years. The sad part is that the wife died a few weeks before the last loan payment was due and she was the driving force behind the debt payment. It did make it much easier for husband to continue without wife’s SS. No debt during his remaining years.

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sergeant
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Re: Digging my parents out of debt

Post by sergeant » Tue Dec 03, 2019 5:38 pm

ridebikeseveryday wrote:
Tue Dec 03, 2019 5:25 pm
sergeant wrote:
Tue Dec 03, 2019 5:22 pm
This scenario has been gone over a thousand times here. Has anyone reported back with a positive outcome? I would love to hear one success story.

I have a friend who's father was in similar circumstances as OP. Timeshare debt, CC debt, car loan debt, mortgage debt, hoarding, and digging deeper everyday. His failing physical and mental health necessitated drastic measures. Friend's sister stepped in, took total control of all finances, put him on a $125 a week cash allowance and straightened everything out over the next 9 years. He died last week. Instead of being homeless with debt he left a 500k estate. It certainly wasn't all roses, the hoarding diminished but was still a problem and the guy constantly complained.
$500k he could have spent but didn't... seems like a bit of a conflict of interest, no?
Yea, my buddy kind of felt the same way. Most of the 500k is in the value of his home which he was a few months from losing when the sister took over. For sure the take over was necessary as he would have been living in a motel if no actions were taken. The dad sure could have spent some of the estate but I don't think it would have increased his enjoyment. Prior to the takeover he was giving money to drug addicted "friends" that he met at the market.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.

fru-gal
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Re: Digging my parents out of debt

Post by fru-gal » Tue Dec 03, 2019 6:02 pm

Shallowpockets wrote:
Tue Dec 03, 2019 11:03 am
He makes more than you do. You have some health problems. Let it go. He has lived his life this way. Nothing will change. Best to get on with your life. Why compromise your own situation with his failures. Failures that continue.
It's the Dad who has the health problems.

yogesh
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Re: Digging my parents out of debt

Post by yogesh » Tue Dec 03, 2019 6:47 pm

Create mint.com budget and show the graph/pie of expenses by category and by merchant.
Tackle the top hitters even if it means removing credit cards and going straight to debit or prepaid cards.
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gretah
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Re: Digging my parents out of debt

Post by gretah » Tue Dec 03, 2019 7:28 pm

One option is to declare bankruptcy.

Their credit card companies will cancel the cards and no one will issue them new ones.

Then they should try Dave Ramsey's Financial Peace University to live below their means.

Dave also has some good advice for adult children of parents like yours. One is they do not listen to their children. Let the bankruptcy attorney, the credit card companies, and Dave Ramsey be the bearers of bad news.

I'm not saying abandon them. Go ahead and help them out with things they really need, especially in the first year. Gift them new tires or a tune up when needed, pay the January heating bills, pay to get the computer fixed.


Sounds like Dad could be looking at a dementia care nursing home in the coming decade. Learn about Medicaid nursing home qualifications to help pay for this. The rules are complicated. Ex: The application process took 5 months for my friend to get her husband Medicaid-qualified for a few hours of home care each week and later a nursing home.

Good luck!

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