I’m doing well financially but my family is not

Personal finance would be easy if it were only about the numbers. But it's not. Money management not only requires that we master our own whims and emotions, but that we navigate the sometimes rocky waters of our personal relationships. Rachel wrote looking for help with a stormy situation. What happens when you gain control of your finances but the people around you continue to struggle? Here's her story:

I'm having issues because I'm doing well financially and my family is not. Here is some background information: I am twenty years old and about to move out and live on my own for the first time. I live in California, but am moving to Maryland in three weeks. I am working three jobs to save money for the move, the third (and most lucrative) of which I acquired completely to put directly into my ING Direct savings account. (See? I do pay attention!) I also:

  • Have about $1500 saved, and by the end of the next three weeks it will be about $3000.
  • Filed my taxes on time.
  • Pay my credit card off every month.
  • Am planning to open a Roth IRA as soon as I have a little more for an emergency fund.

My mom, however, is drowning. My parents divorced a few years ago and were doing well financially when we sold our house. But somewhere along the way my dad developed a gambling habit and squandered all of his share of the money, and put himself into debt with the IRS. They started taking everything but what he needed for rent and basic necessities. They even took the money for child support because at that point the divorce was not finalized and they saw his child support as voluntary.

That's when my mom's debt started accumulating, and it's just been piling up ever since. She already owes me about $2000 from the past year or so, and every month she asks me to borrow some money for rent, but usually she gets a check from my dad right in the nick of time. I can't afford to lend her the money because it would put me behind in my goals, but at the same time she needs to support herself and my fourteen year old sister, and what am I supposed to do, let them just end up on the street?

She has exhausted every available resource she could possibly borrow money from, and is looking into declaring bankruptcy because her business is not generating enough income to make up for the small amount of child support she receives, and all of her debt. My dad gets paid slowly because he's working contractually for different companies as a software consultant, and as he's not on the regular payroll it can take weeks for the checks to come.

I don't know how to continue to grow as a financially stable person while knowing this is going on. I don't know how to keep myself from giving in to her need to borrow money — or should I? Which is more important, making sure my family has a home now or looking out for my retirement in 50 years? I'm just not experienced enough in the world to know how to handle this.

Some readers will say, “Give up and move on.” Others will say, “Family comes first.” But to me (and, apparently, to Rachel), it's not that easy. There's a balance to be found. But how? Where is that balance? It's a difficult question. As a reference point, I consulted my library of 141 personal finance books. Do you know how many discussed this issue? One.

On page 81 of Dave Ramsey's The Money Answer Book, he explores the question, “My parents are financially irresponsible. How can I help them? How can I forgive them for teaching me their bad habits?” His answer?

Most parents do not want their children's advice. It's just a fact of life. They do not want correction from their own children, especially if it's unsolicited. The best thing you can do to help your parents is give them your personal testimony, give them a resource like this book to start them thinking, and just keep the option open so that they can come to you if they want to.

What do you think? Have you faced a similar situation before? How did you handle it? What would do if your parents did have chronic money problems? Should Rachel move out and move on? Or is her obligation to her family?

Mini-rant: Did you see that stat? One out of 141 personal finance books in my office address this subject. That's the problem with mainstream personal finance education. It focuses on raw numbers to the exclusion of all else. And most of our financial problems come from that “all else”.

More about...Psychology, Debt

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Cap
Cap
12 years ago

That’s a very very tough situation. It’s especially made more tough when the family members in question are your parents. I hope I’m never in such a situation (and I seriously can’t see my mom or dad in such scenarios), but the question asked has no solid answer? Both are important. Your own future well being and your family’s current well being should be equally important — at least, that’s my opinion. There’s too many variable for Rachel’s situation for me to give any worthwhile suggestions, but one thing I know for sure is that… if the father doesn’t get… Read more »

Tom
Tom
12 years ago

Is reconciliation possible with your parents? Could they be better together than apart? Obviously, I don’t know your home situation. Divorce can be the destroyer of wealth.

Julia
Julia
12 years ago

For me, I’d generally only feel comfortable helping family (or friends) if they’re already making the right financial decisions. Sometimes family may want or need help with medical bills, unexpected emergencies or in financing a home. If it’s their poor decisions and lifestyle that are giving them financial problems, then I’d really hesitate to throw money at the problem. Throwing some additional money won’t make the problem go away. In that case, I might offer some educational assistance, but not straight money, and even then, only if I knew the person would be open to hearing it.

Mitch
Mitch
2 years ago
Reply to  Julia

Im glad your not my daughter. In regards to the question should you help your mother. Yes you should you would not be who you are today without her or your father. But please listen to what I have to say next so you dont make the same mistakes I made. Help your mother and sister. Would you consider shareing a flat or house with them? If not than truly only give a little of what you can afford. I made the mistake of giving to generously over a decade of continius giving not only to my parents to ensure… Read more »

Diatryma
Diatryma
12 years ago

Key point: this situation is not your mom’s fault. From what you’ve said, she is financially responsible, but didn’t plan for a long-term emergency of this type. It’s your dad who’s made poor decisions, and your mom and the rest of your family shouldn’t be lumped in with him. To my mind, this doesn’t count as “My family has made poor decisions and wants me to bail them out” so much as “My family is in trouble they didn’t expect and didn’t plan for, and they need my help.” It wouldn’t be any different if someone were sick, if the… Read more »

Sakoro
Sakoro
12 years ago

Michelle Singletary (personal finance columnist for the Washington Post) writes about these situations from time to time. Her advice would be for Rachel to figure out how much she can comfortably give her mother or father per month without putting her too far off her goals. Give that amount and no more and don’t have any expectations of ever seeing it again. Be very clear that this is it. If it were me, I would try to get my father into Gambler’s Anonymous and my mother into a legitimate credit counseling organization. It sounds like money alone will not solve… Read more »

Beth
Beth
12 years ago

I feel for Rachel. I was in a similar situation years ago. What I learned is that people who have poor money habits (or people who don’t find a way on their own) will not change until they either want to or have to. If Rachel continues to lend her mother money, her mother will never have the need to figure out how to make it on her own. It may sound harsh, but I find it interesting that Rachel is working three jobs — how many jobs is her mother working? It sounds as though her mother has had… Read more »

Nicole
Nicole
12 years ago

Yup, telling parents what to do is not a good idea. Talking about what you do with them is fine and may plant the idea. Part of life is learning that you can’t help people who don’t want to be helped (or control people who don’t want to be controlled).

COD
COD
12 years ago

The question is much more complicated than whether or not the parents are financially irresponsible, or just unlucky. Many, maybe most parents sacrifice savings, forgo luxuries, etc in order to provide for their kids. Private schools, hobbies, sacrificing to live in a better school district, all cost lots of money. Money that a rational analysis would certainly say belongs in savings. However, family isn’t rational. It’s quite possible that parents are at least partially under water financially because of the things they did to provide a good childhood. It’s not as simple as coldly deciding that your parent’s should have… Read more »

Morgan
Morgan
12 years ago

Tough call. You can prepare for the future all you want and get smeared by a bus tomorrow. And all your storehouses are for naught. In the meantime, the woman who raised you and helped you to be the responsible young adult you are, is struggling. Sit with her and figure out what needs to be done. Is this a short term problem? Is she taking adequate care of your younger sister while she struggles with this? I guess the best answer is, at the end of the day can you look at yourself in the mirror and be happy… Read more »

Winnie
Winnie
1 year ago
Reply to  Morgan

But What if she never gets a handle, and now your future is on hold indifferently?

Jessica Eastman
Jessica Eastman
12 years ago

Whenever folks call in to the Dave Ramsey show with these types of questions, he tells them to read the book, “Boundaries: When to Say Yes, How to Say No” by Henry Cloud. It might be helpful in your situation.

libraripagan
libraripagan
12 years ago

I have to agree — from the sounds of this, it isn’t his mother’s fault. You could offer to go through finances with her to see if you can figure out any ways for her to save. You could see if you can find them a more affordable place to live. You could stock her groceries — it would still cost you money, but, it doesn’t translate to “money spigot” the same way as a check. You should also see whether she qualifies for any assistance. And… at last resort, Chapter 11 sometimes is the way to go. Figure out… Read more »

Wesley
Wesley
12 years ago

See JD, there’s the title of your book “Get Rich Slowly, It’s not all about the numbers” 🙂

Great article. This lady is in a tough situation. I’m not sure how I would handle it, but I tend to lean toward the “leave people alone” strategy. Her Mom ultimately needs to learn how to support herself.

musicman
musicman
12 years ago

I can empathize with Rachel. I am a bit older than she but have several of the same elements in my story. My parents are still together but have spent a lifetime making poor financial decisions. What’s worse is that they’ve passed their behavior on as “normal” to my younger siblings. My 25 year old sisters have moved back in with them to help with bills. The really sad part is that they are living in a four bedroom rental that they’ve been in for almost 20 years. They could own it by now. I’ve encouraged them to downsize and… Read more »

Mary
Mary
12 years ago

I have been in a similar situation with my sister, although it’s my parents who keep bailing her out, not me. What I have seen is that if she thinks our mom and dad will send her a check, she will not take on an additional job, or move to a cheaper apartment, or make any other tough decisions. She “needs” the bigger apartment and free time to do her art, you see. So she puts off making hard fiancial decisions because she *can*. Rachel says that her mom’s business isn’t making enough money. So does she need to take… Read more »

Jon
Jon
12 years ago

Would her problems be solved by getting a job, moving to a smaller house, or even simply cutting unnecessary expenses? If the house won’t sell, can she rent a room out? Most likely some combination of those things would solve your mom’s financial problems, although her standard of living might decline a bit (a common result of divorce, sadly). I don’t think you should sacrifice your plans just because your mom is going through a rough patch. It may sound cold but be realistic — you can’t be a surrogate husband who provides financially for your mom forever. Significant changes… Read more »

dogatemyfinances
dogatemyfinances
12 years ago

Too many things missing here about mom. How old is she? Is her rent reasonable? Does she have a job? The answers to these questions change whose “fault” it is.

It’s a fine line between enabling a mooch and supporting someone in honest need.

April D
April D
12 years ago

There are a lot of variables to this. Is she already living frugally? Has she gotten a second job? Has she worked out a plan, even if it just means buying a Dave Ramsey or other type of financial book to start? If she’s doing everything she possibly can and still can’t make ends meet, maybe it is time to file bankruptcy. If your mom is already doing all she can, maybe you should set aside a certain amount that you can comfortably give. Don’t give it to her if she isn’t in need, but if she comes to you… Read more »

Sam
Sam
12 years ago

It doesn’t sound like the mom is financially irresponsible, it sounds like she is trying to recover from her former husband’s gambling problems and the financial devastation of a divorce. If I were the OP I would totally help the mom and sister (the sister clearly is not at fault in this situation) if I could. Now, the OP says she can’t help her mom/sister and accomplish her own financial goals. What I might do is start a mom/sister emergency ING fund and start putting money into the fund and if the mom is in a real crisis (i.e. going… Read more »

Jim_W
Jim_W
12 years ago

If you live at home, you need to help. However Mom needs a plan, because her situation isn’t working and when you move you don’t need to help. Although you may want to. To cite the author JD mentioned Dave Ramsey has a scale of baby steps, and helping others comes after your set up with your emergency fund and retirement.

If she doesn’t have a way to make more, she needs to spend less. I suppose that means moving; maybe even low-income project since the divorce has changed her situation so badly.

crsandus
crsandus
12 years ago

There is no right or wrong answer to this. I was in this exact situation but even worse and for a much longer period of time (technically you could say I’m still in this situation). I could tell you my story and will if requested, but in my shoes this started in my later years of college and still goes on til today (6 years). In my case, my father’s ex-wife’s refusal to pay child support and my father’s exhaustion from money struggles for nearly a decade has had major effects. I’ve literally “lent” tens of thousands of dollars to… Read more »

PW
PW
12 years ago

I really feel for this person, it is such a difficult situation.

I also have to agree with JD on the personal finance books. Forever I was reading them but they did nothing for me because none addressed the emotional stuff like compulsive shopping, our culture of consumerism, etc. Personal finance blogs like this one have given me hope.

Ryan
Ryan
12 years ago

I agree with Ben, Jon, and others above. The problem seems to be the mother’s anxiety. Monetary aid isn’t the best solution. It seems like the mother is trying to hang on to a failing small business. One way to minimize anxiety is to search for a stable job and pursue frugal lifestyle change.

@ COD – If you’re paying for ice-skating lessons or *a horse* for your child and then are in a position a few years later to consider bankruptcy, it’s likely that “luck” didn’t have much to do with things.
😉

Chris
Chris
12 years ago

It sounds like your mother still keeps an eye on her finances, which is positive. I think you should keep the lines of communication open with her to make sure she is still getting along, but you shouldn’t kill yourself to keep both yourself an another person afloat. Considering you’re moving to Maryland, the $3000 saved is a good start but won’t last long here. I moved to Baltimore metro about two years ago, and it took about 6 months to recover from those expenses (even with a better salary and a tight budget / savings plan). Good luck with… Read more »

Matthew
Matthew
12 years ago

A friend of mine, Tom, financially counseled a friend of his, Brian, personally for 18 months to help him get out of credit card debt. All money earned and spent went through Tom. Over the course of these 18 months Brian learned which of his spending was pointless and he’s now paid off all his credit card debt. I guess what I’m saying is, if your Mom is already borrowing from you, then I think you have license to ask her to let you partner with her in her finances. Chances are there are things that can be changed to… Read more »

Chief Family Officer
Chief Family Officer
12 years ago

Oy, what a tough question. I would recommend including a “help Mom” item in the budget and figuring out how much she can afford to give each month. The thing is, she doesn’t necessarily have to give it – she can keep it in a savings account and let it build up. When/if Mom needs money, she raids that account. And if Mom gets to the point where she doesn’t need the money, then Rachel can invest it. Adding this item to the budget may mean re-adjusting her personal goals, but at least this way it is predictable. Depending on… Read more »

Dave
Dave
12 years ago

You’ve got to look after yourself first. Period. Helping out someone who can’t manage their money just ruins your financial security. They won’t manage the money you give them any better than they managed money they sqaundered. The best thing you can do is take care of yourself, and if you do really well in the future, then you can help them out. Don’t make them dependents because then they’ll count on you. I’ve seen this happen in my family. It’s not pretty. Of course, if you have a close relative or friend who manages their money well but falls… Read more »

Kate
Kate
12 years ago

It sounds like this is largely not Mom’s fault; Dad has left her in a bad spot. It may be she is not making the wisest money choices — if she was used to living well, she may be a hard time learning how to live within a much more limited income (I know — I grew up in an upper middle class family and took years to adjust to a lower income life). Just leaving Mom to deal with her financial problems seems a little harsh to me under the circumstances. I would urge Rachel to ask herself the… Read more »

christina
christina
12 years ago

It makes no sense for Rachel to try to bail debt out of her mother’s sinking boat if the debt is coming in faster than what Rachel can afford to put in. That’s just delaying the inevitable. I think there’s a middle ground between Rachel moving away and offering no assistance, and staying and putting all her money towards trying to save her mother’s financial shipwreck. I think the best thing for Rachel to do is to move out and get her emergency fund built up solidly. Moving out will probably reduce her mother’s expenses, and will give Rachel a… Read more »

Jason
Jason
12 years ago

Decide what you *can* afford. If that’s $600/year or $6000/year, just know what that number is. Find some balance between meeting your goals maybe a little more slowly, but also understanding that you’re better able to help them when your financial house is in order. Once you’ve got that number, you’ve got a baseline beyond which you can tell your mom “I’m sorry, I just can’t afford that”. Don’t plan on ever getting paid back for any of the money you give your mom. If you think she’d be receptive, give her a personal finance book focused on getting out… Read more »

JenLovesPonies
JenLovesPonies
12 years ago

I would recommend the PF/etiquette book “Isn’t It Their Turn To Pick Up the Check?” for help on this. For me, I don’t know what to do- I am in situation that is quite similar, and I can’t say I have a better answer. I think the one thing that stuck out to me was that Mom has her own business, and Dad works non-regularly. I think the number one piece of financial advice I could offer is- get a “real” job, or at least a steady one- yes, it might be more fun to have your own business and… Read more »

AC
AC
12 years ago

It’s perfectly reasonable for Mom to ask Rachel, at 20 & apparently not a student, to contribute to rent. I think she should write off the $2000 loan & tell her Mom to think of it as rent money — but also make it clear that there’s no more where that $2K came from. Then Rachel can focus on herself and, if she’s able, her sister. Mom was divorced several years ago, not just a few weeks or months ago — the time of crisis is over, and it’s time for her to take care of herself. (Yeah, Dad should… Read more »

Emil Lesner
Emil Lesner
12 years ago

I am sorry if I repeat something above for I did not completely read all of the comments. But from my experience, giving money to anyone in debt is the wrong thing to do. They have gotten into spending habits that need to be broken and if they have another source of income, well that’s what you will become. I learned this from my mother, who raided my bank account. She quickly was taken off because I closed the account. Her spending habits never have changed and now she is living on a fixed government subsidized income in a decent… Read more »

Caitlin
Caitlin
12 years ago

If you’re moving out of home, maybe your mother could move to a smaller place or else take a boarder into your old room. That could help with her finances. Help your mother with the budget and talk to her about your concerns. Also talk to your dad and urge him to get help if he hasn’t already. Decide whether you feel more comfortable being an emergency fund when your mother needs to borrow money, or whether you would prefer to give a set amount each money that at least you can budget for. Hopefully it’s only for a couple… Read more »

B Smith @ Wealth and Wisdom
B Smith @ Wealth and Wisdom
12 years ago

JD-Too many facts that aren’t known. On the surface it sounds like the mom is semi responsible and the dad isn’t. That being said, it isn’t just the father that got them in trouble. It sounds harsh, but you have to cut through the emotion before you can solve the problem or give advice. Listen to Dave Ramsey. What does he do? -He empathizes (not sympathizes) with the caller. This helps him connect so they are willing to share. It also helps the caller to set aside the emotion and get to the problem. -Once he has connected and gotten… Read more »

Liz
Liz
12 years ago

Let me rewind a few years to 20, or even 19: I was working 50-70 hours a week at two jobs, had transferred from a college 1200 miles away to one that was within commuting distance of my mom’s house, had moved back in to help my mom with the bills, and was doing all the grocery shopping. My mom had a low-paying ($35k/year) job and didn’t know how to get anything better; her credit was still damaged from her ridiculous and protracted divorce six years prior, so all her debt was piling up at inflated interest rates. I took… Read more »

J.D. fournier
J.D. fournier
12 years ago

Not knowing the specifics your mom needs to look at the following: 1)Can she increase her income by finding a better job, instead of having her own business, 2) Get a second job to supplement the business, 3) lower expenses by moving to a cheaper area or cut back on things, or 4) move in with someone else to split expenses like a friend or someone else who might me be struggling. Sounds like she should only be paying the basics now like rent, food, utilities, and care for her kids. No extra school costs or college, minimal on clothes… Read more »

Lynn
Lynn
12 years ago

I am in her shoes also. My mom has been in financial difficulty as long as I can remember and I’ve given her tens of thousands of dollars up to this point (I’m in my late twenties). I see no end, but I am doing very well financially and I don’t think I can ever say, ‘it’s your problem, not mine’. I now pay for her health insurance and one of her credit card debt. I have no idea what I am going to do when she retires. She could sell her house, but she would be losing so much… Read more »

DollarDream$
DollarDream$
12 years ago

My 2 cents. I believe Rachel has gotten the responsbility at very young age and I commend her for thinking about her family and at the same time being so practical. As other readers have already asked some of the questions like 1) does her mom work? 2) can her mom and sister move to Baltimore with her? ( since California is way too expensive) 3) Do they want the Dad in their future lives? (Sometimes, emotional stress of a bad relationship can bring you down, financially and emotionally) I am not relationship expert, but one thing I believe in… Read more »

Tina from Frugal Sisters
Tina from Frugal Sisters
12 years ago

Unfortunately I have had plenty of experience in this catigory. What I learned is that you don’t give people cash or check. If they need food, go to Aldies or a discount store and buy the food. If they need to pay rent, make the check out to the person or company renting the house. I only make the payment or buy the food after they have agreed to sit down and make a plan to get themselves out of trouble. If they refuse, then they are just wanting a someone else to be responsible and are making excuses not… Read more »

CherylM
CherylM
12 years ago

One other finance book that does address this is Love and Money: A Life Guide to Financial Success by Jeff Opdyke. Having said that, it sounds like he completely comes from a different situation than your emailer does. Opdyke’s parents have been consistently irresponsible throughout his whole life, and his response to bailing out parents is based on that.

Bill
Bill
12 years ago

You’re only twenty. You probably are not as well off as you think. See how you’re doing after you move out. Make sure your solid before helping anybody. Otherwise, two of you will be in trouble.

Joe
Joe
12 years ago

Love your blog, I check it two or three times a day. My frustration with most personal finance books, guru’s and advice givers is that compassion isn’t in their vocabulary. Saving is vital, paying off debt is vital, but family and the needy are more important. Even Dave Ramsey, as great as he is, doesn’t influence people enough to focus on those around them. This girl’s situation is quite difficult, if she goes it’ll break her own heart. If she stays, it’ll be awesome to see her bless her mom, but really tough on her own psyche. It’s shameful that… Read more »

Dally
Dally
12 years ago

Nowhere did I read anything about how this young woman was paying her share of the expenses at home. Perhaps she just left that out, but it’s been a big beef of mine when earning grown children expect their parents to pay all their expenses for them. It really steams me up and I see it all the time: selfish grown children who think everything is for them them them. This young woman should be paying 1/3 the food bill, 1/3 the electric bill, 1/3 the cable bill, 1/3 the rent, 1/3 the insurance, 1/3 the heat… she talks about… Read more »

Bradly
Bradly
12 years ago

J.D. – So is that topic going to be in your book? That could be a great new direction and could fit really well if your book is based more on personal experiences and not just the numbers. I’m purely speculating here

angie
angie
12 years ago

How much is Rachel contributing on the rent front, in total? I don’t think having to help with some of the shared living costs is too much to ask – if she’s 20 and living at home, not going to school, working, how is living with her mom different than living anywhere else? I’m guessing she’ll be paying rent when she moves to MD, right? I second/third/whatever the commenters who asked why Mom isn’t taking up a second job. The sister is 14 – can she be babysitting on the weekends for her own spending money? I do not agree,… Read more »

elizabeth
elizabeth
12 years ago

In my culture, we would do absolutely anything for our families, even if they had made their own mistakes. That being said, though Rachel is doing well for a 20-year old, she is not well off enough to support a family of 3. Loaning her mom money would only put Rachel in debt and delay – but not halt- the bankruptcy. (And the whole family might need the money in case of an emergency). Rachel needs to work with her mother to reduce costs or figure out how to increase her mother’s income. Loaning the kind of money Rachel could… Read more »

jb
jb
12 years ago

Hopefully the person writing is paying for room and board while living at home. That said: Its worth noting that its not like the person writing in is really doing *that* well. Considering she’s 20, she’s doing well. But she doesn’t have much of an emergency fund and is about to move out on her own. Its not like she has accumulated big savings. Is Mom’s income low because her business isn’t doing well? If she could cover her bills by getting a “regular job”, then Mom needs to do just that. End of story. (I have lots of respect… Read more »

LM
LM
12 years ago

This is a BIG issue in my family. I’m 26. My older sister is 34. My little sister is 22. Our parents are pretty much broke. My little sister *finally* after so many months and years of being a financial strain on the entire family, has found a full time job and kept it. My older sister caves in a lot when the family needs money — she earns the most and is doing pretty well. After a few years of bad financial decisions, I’m finally doing well also (paid off CCs, got some savings, opened a Roth IRA, etc).… Read more »

elisabeth
elisabeth
12 years ago

It sounds like this family is trying to do things on their own, and should be finding out what the community offers — there may be a state program to ensure that the child care comes through, and with a 14 year old in the home, there are probably some other social programs to help her. Often, it is hard for people to let the rest of the world know that things aren’t working, but R’s mother should be talking with her church if she has one, with her local authorities and so on, not just depending on family members… Read more »

Anne Keckler
Anne Keckler
12 years ago

Wow. My comment probably won’t even be seen in this sea of responses! Anyway, I think children have an obligation to their parents and immediate family members, just as their parents had an obligation to the child. Just as the parents shouldn’t allow a child to starve or do without, just because it would get in the way of the parent’s personal financial goals, so the child should not treat a parent that way. Now, if the parent were getting herself into this mess, or if she were refusing to do things to make her situation better, then I can… Read more »

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