Rachel
Dryer sheet aficionado
I am looking for some advice.
My daughter is 23, a college grad who is employed and living in a low-cost city. Her take home pay is $2000 monthly and she is just barely making it paycheck to paycheck. Of my two children, she is the less financially savvy and knows how to spend but not always how to save. Not for lack of advice! In my own defense, my son is the exact opposite and is a big saver and frugal.
The dilemma: she purchased a NEW Ford Escape about one year ago, to replace the hand-me-down heap I had given her (which I would have preferred she drive into the ground!). She took out a 36 month loan at 5.5% (the person who sold it to her was her boyfriend's father who owns a car dealership--but that is a whole 'nother story!!!). Her monthly payment is $458.51 which is about 25% of her take home pay. She has no emergency fund, and has not signed up for her company's naked 401(k). The only good thing is that she has no credit card or student loan debt (free ride for college tuition--yay! she's a smart girl in other ways) and can just barely makes her monthly expenses work (as long as there are no unexpected expenses).
So, any suggestions? I have the financial means to pay off the loan totally for her, which should enable her to start accumulating an emergency fund and eventually save for retirement. If I did this, am I enabling her? Should it be a loan? Should I let her wrestle with the monthly payment and risk having to give her a big bail out if she runs into a true financial emergency? Should I insist she sell the car and buy a used junker? I want to keep my sticky fingers off the controls but I am not sure I can stay completely out of this.
How does one help shape a financially sensible young adult when it comes to consumer debt?
My daughter is 23, a college grad who is employed and living in a low-cost city. Her take home pay is $2000 monthly and she is just barely making it paycheck to paycheck. Of my two children, she is the less financially savvy and knows how to spend but not always how to save. Not for lack of advice! In my own defense, my son is the exact opposite and is a big saver and frugal.
The dilemma: she purchased a NEW Ford Escape about one year ago, to replace the hand-me-down heap I had given her (which I would have preferred she drive into the ground!). She took out a 36 month loan at 5.5% (the person who sold it to her was her boyfriend's father who owns a car dealership--but that is a whole 'nother story!!!). Her monthly payment is $458.51 which is about 25% of her take home pay. She has no emergency fund, and has not signed up for her company's naked 401(k). The only good thing is that she has no credit card or student loan debt (free ride for college tuition--yay! she's a smart girl in other ways) and can just barely makes her monthly expenses work (as long as there are no unexpected expenses).
So, any suggestions? I have the financial means to pay off the loan totally for her, which should enable her to start accumulating an emergency fund and eventually save for retirement. If I did this, am I enabling her? Should it be a loan? Should I let her wrestle with the monthly payment and risk having to give her a big bail out if she runs into a true financial emergency? Should I insist she sell the car and buy a used junker? I want to keep my sticky fingers off the controls but I am not sure I can stay completely out of this.
How does one help shape a financially sensible young adult when it comes to consumer debt?