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Old 08-28-2020, 11:07 AM   #41
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Mostly I agree with you .. although I do feel like this one-time only loan (or bail-out) is appropriate - she'll have to pay it back. If she took it from the brokerage, the money wouldn't find it's way back there...if she fails again, yes, she's on her own...
No she doesn't! and that is exactly what happened to us. NEVER LEND FRIENDS AND FAMILY MONEY! It is the quickest way to loose both. Give it to her, don't lend it. If she says she will pay it back, tell her that would be nice but not necessary. I speak from personal experience. When she was 'unable to repay' it caused a riff. I told her to forget it, it was a gift, and if she ask again it would be a gift. If you can't afford to give it to her, you can not afford to lend it to her.
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Old 08-28-2020, 11:22 AM   #42
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Our rule with our kids: it is one thing if something happens that is not your fault, we can be flexible. But if you dig yourself into a hole, we will help you figure how to get out, but it will not be with our money.
I agree with The Stomper.

I am currently helping both my children to a limited extent. They were both doing well until the CV19 hit. One lost her job and the other lost her source of cheap child-care (public schools). I split my $1200 stimulus money between them. I now help with child care for the grandchild both in time and $s. The other child found a 2 day a week job, so I may be needed in the future.

I see no point in letting this CV mess drive them into the financial pits while they wait to inherit from me in 20+ years. I'll help them now, when they need it, and they will simply inherit a bit less in the future. Win/Win.
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Old 08-28-2020, 11:30 AM   #43
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No she doesn't! and that is exactly what happened to us. NEVER LEND FRIENDS AND FAMILY MONEY! It is the quickest way to loose both. Give it to her, don't lend it. If she says she will pay it back, tell her that would be nice but not necessary. I speak from personal experience. When she was 'unable to repay' it caused a riff. I told her to forget it, it was a gift, and if she ask again it would be a gift. If you can't afford to give it to her, you can not afford to lend it to her.
If our only child were in a position of need and we chose to help, it too would be a gift. I agree that loaning money between family and friends can go horribly wrong. The question for some is whether the gift would be "wasted" on someone who wouldn't spend it to the satisfaction of the giver. In that case, don't gift.

I think the belief that all children learn their lifetime spending/saving habits from parents may be a bit misguided. I've known plenty of people who had great parents and who lived a nice life under their roof, only to have numerous failings when out on their own (college, work, etc.). Real life isn't so cut and dry. Sometimes, all it takes is one really bad decision to undo a lifetime of good teaching and habits.
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Old 08-28-2020, 11:33 AM   #44
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No, there is no objective evidence that the daughter is living beyond her means. ...
That she can't pay her rent or her credit card bill without selling securities in her brokerage account might be a leading indicator.

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.... If she did not have $26,000 in savings then yes you could say she was living beyond her means. Her "means" include the $26,000 in savings, which belongs to her....
It is unclear whether the $26k is savings from her income over the years or the accumulation of gifts, etc and growth over many years. IF the $26k is substantially a result of her savings then I think you have a valid point. I suspect it is probably more the latter.

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....The notion that if OP were to give his daughter her money back, it would create a "sink or swim" situation, is ludicrous. ..
It's not "the OP giving his daughter her money back"...... her name is on the brokerage account... she can access them any time she wishes. While the OP hasn't been specific, I presume that she knows of these accounts and has decided not to access them and to allow the OP to manage them for her.

You make it sound like you think that she doesn't know that the brokerage account exists or is barred from accessing it.

The "sink or swim" is your position of giving the daughter her brokerage account, washing your hands of the situation and walking away and not counseling the daughter.... just throw her in the deep end of the pool and hope that she doesn't drown.... seems foolish to me.

Like I say, I disagree.
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Old 08-28-2020, 11:44 AM   #45
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I see your daughter is working in NJ. Rent can vary greatly in that area. Is she in an appropriate apartment for someone just starting out or did she go into a high-end place? Maybe she can go 5 miles further away to an apartment that is $500 less per month or get a 2 bedroom and get a roommate. I looked up teacher salaries in the area I think she is working and they seem very reasonable so that's not the problem.
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Old 08-28-2020, 12:21 PM   #46
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When I was about your daughter's age, I made a similar call to my parents for a similar amount (less in actual dollars but it was almost 40 years ago). I had a good salary but I was was definitely living above my means and spending too much. My parents loaned me the money. I have often thought that I would have been so much better off if my parents had said no.



Don't loan her the money. This is a situation she can get out of on her own. She may be able to work with her landlord on the rent. She could withdraw the money from the brokerage account (not perhaps wise but she could do it). She can live more frugally to pay off the credit card bills. She can solve this. If she was out of work due to Covid, it would be a different situation perhaps. But this is something she can solve. Even if her apartment is a 1 bedroom, she could get a roommate. My daughter has a roommate in a 1 bedroom apartment. She sleeps in the living room.

I know many people here say that what made them frugal was having frugal parents. Well, I had frugal parents and hated it. When I got out of school and got a good job it felt like I had been let out of prison. I had a lot of pent up demand.

Anyway, they did loan me the money. I paid off the credit card bills. But, I ran them back up and basically learned nothing from it. I didn't intend to run the bills up again. I didn't intend to not pay back the loan. I wanted to live to a budget, etc. But I had a good job and could get lots of credit and in some way I thought of credit on a credit card like it was money. (Yes, I understood interest but having something now had more appeal).

So the money didn't help me and did, in fact, enable me to continue doing what I had been doing. I did eventually learn how to manage money but it took years.


If you do loan money get her to sign a note. For some kids that does make a difference as it gives a hard time when repayment is to start. I would start payments a few months from now and make them a reasonable amount for her budget. But, really, this is a problem she should solve. You should let her do it. We did so much better with our daughter when we stopped solving these problems for her. She is now about to move into a larger apartment because she stop spending too much, started saving, and now has the money to pay more rent.
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Old 08-28-2020, 12:25 PM   #47
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So, in three months time, the budget has been blown by $5,200 which is over $1,700 per month. That is a large amount and there were no emergencies so that says to me that she never really had any intention of following your budget in the first place.

Now, after your new loan to her, you still think she is going to start following the budget - but it is going to be even smaller and harder because she now has a loan payment to you.

I don’t think this is going to work out the way you want it to, sorry. For her to get on the “right track” is going to take significant behavioral changes and there doesn’t seem to be any sign of that yet.

I would say that she should need to use her own money to pay off her own debt.
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Old 08-28-2020, 12:31 PM   #48
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Agree with Katsmeow that if you do loan her $, have her sign the note, print out a payment schedule, discuss what the consequences of late or missed payments will be.

I borrowed money for the down payment on my first house... We had it formalized with a note, I paid interest, and never missed a payment. Having that contract/note made it much more real and I didn't want the shame of failing to pay.

That's if you loan her the money....

You've been given lots of perspectives here. Now it's time for you and your wife to figure out what you're going to do. No easy answers - gifts might be enabling, loans might be enabling or cause family angst in the future, letting her suffer her own consequences is a harsh lesson she might not be ready for.... No easy answers and people will criticize you regardless of what you choose.
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Old 08-28-2020, 12:41 PM   #49
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Hi... I'm 61 years old, FIRE'd since November 2018. DW is 62 - 2 daughters - a 24 year old and a 21 year old (w/ some special needs).The 24 year old is a teacher at a local high school and moved out to her own apartment in May. We helped her plan for this move, setting her up with all the $'s she needed to make it through the summer (with no teaching income) and worked with her extensively on a budget that would work for her. We gifted her a return of all the rent money she paid to us while living with us since college - including help with buying a new car.

3 months in to her new apartment life - she's in financial trouble. Not enough money to pay September's rent and about $3K on her credit card. After a long, tear-filled phone call yesterday - offered her a 3 year, 1% interest $5,200 loan to give her a clean slate. She needs to work her loan payments into the budget and refrain from all the extra spending that got her in trouble. She went hog-wild on clothing and furnishing the apartment as well as miscellaneous other things she wanted. Despite years of working with her, she has no control over her spending - shopping addiction - warned her multiple times that if she came back to us not being able to pay the rent, it would be a painful conversation - it was (for all of us). Told her that if she gets in trouble again, our only help is pack up the apartment and move back in with us (which none of us wants).

She does have about $26K stowed away in a brokerage account. It's her money, in her name, but, at her request - we manage it and don't give her access to it. Advised her not to draw on that for this situation and to take the loan instead - take the pain to learn the lesson - we hope.

Should mention that we're in the process of selling and building/buying a new home - so our finances are a bit in flux - not crying poverty, but cash flow is important right now - so, lousy timing.

She's working with a therapist on a number of issues right now (including this "shopping issue"). I also advised her to give me her credit card until she gets control of the issue.

So, any other advice? How do we get this girl on the right track?

Thanks
Sorry to hear about your and your child's troubles. It sounds like there may be deeper issues that she is getting help with, which is great. My only suggestions would be to encourage her to cut up her credit card in front of you (vs. you holding it) - that will have more ceremonial impact to her - and encourage her to use cash (or a pre-paid cash card) for all spending until she can control her shopping impulses. Also may be a good idea to encourage her to sell some of the furnishings/stuff purchased over the last 3 months. When she sees how little people will pay for something used, it may give her some pause about buying brand new things (clothes and furnishings) in the future.

Good luck and I hope it all works out in the end.
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Old 08-28-2020, 12:53 PM   #50
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You've been hand-holding a bit too much IMO. You don't want to become someone who will always bail her out (even with a loan with a 1% interest.) unless she's physically ill or something else that warrants assistance. She needs to learn the lesson of "actions and consequences", and the sooner she learns, the better off she will be. She also probably should manage her own money so she can learn.

Having said that, I would suck up and pay for the rent and the credit card debt and see if she could break the lease (if there is one.) unless she cannot use her saved money. If I had to pay for her debt, I would offer her to move back in, but I would have her sell all the stuff she bought on eBay-type places and I would take the proceeds to pay for the debts/accured-rent I covered. If she's not willing to sell her stuff, I would do it myself, but I would take away her car and sell it to pay off the debt and she can take public transportation from now on. I would suggest she find a room somewhere to live instead of paying the rent for a full apartment.

I know my suggestions are drastic, and you don't have to take any of them, but I hope you will do something. Like I said, there should be consequences for her actions. I wouldn't learn much from getting a loan with a penalty of 1%. She needs to feel the weight of what she did NOW and whatever the consequence she will face needs to hurt a bit.

From now on, I would not rent her money and I would not give her any big monetary gifts. (And I would let her know that and stick to it...)

Life was tough when I first started out, living in a roach-infested studio apartment, and I had to change busses twice to get to work. I remember my mom saying "Use a stiff cardboard box as a table until you have enough money saved up." I felt a sense of accomplishment when I had enough money to get real furniture from Goodwill. I'm grateful that I got to experience this when I was young.

Whatever you decide, good luck to you.
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Old 08-28-2020, 01:28 PM   #51
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Maybe a compromise solution is one possible approach. For example:

- She cannot pay Septembers rent. Nothing was said about subsequent months. Give her September's rent as a gift. But tell her that gives her a month to find a supplemental/part-time job to avoid this happening in October. I see lots of stores looking for part time workers these days.

- She has 3K in credit card bills. Do not give her a loan to pay it all off now. Figure out what the minimum monthly payment is needed to keep her credit in good standing, and have her pay that off and show that she is not adding to it. Her bills remaining high, near the credit limit, will help keep her from adding to them again rapidly.

- If you choose the loan route, do a lesser amount, and make it contingent on her going through a program like Dave Ramsey or something similar.

This type of approach makes her suffer some pain, but you are not putting her into an immediate "sink or swim" situation. You are throwing her a rope but towing her back to port, not letting her climb into the boat. She can make the effort to pull herself along the rope to get into the boat.
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Old 08-28-2020, 01:51 PM   #52
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..... I remember my mom saying "Use a stiff cardboard box as a table until you have enough money saved up." I felt a sense of accomplishment when I had enough money to get real furniture from Goodwill. I'm grateful that I got to experience this when I was young.

....
I used 2 cardboard boxes covered with a cloth as my coffee table. Works really well if you tape the boxes shut.
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Old 08-28-2020, 01:55 PM   #53
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Well - let me clarify - she's going into her 2nd year of permanent job - she did sub replacement jobs for a year before that - so really her third year. Yes, the main problem is spending discipline - if she had direct access to that $26K, fear it would be gone in the blink of an eye.
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Mostly I agree with you .. although I do feel like this one-time only loan (or bail-out) is appropriate - she'll have to pay it back. If she took it from the brokerage, the money wouldn't find it's way back there...if she fails again, yes, she's on her own...
Coincidentally, I just had a discussion with visiting daughter (30), who is starting a non-teaching job at NJ school. Her situation is complicated, but I can empathize with you since it's the same state and a daughter. Special rules apply, right?


I explained our family bank concept and how loans work, then gave her the amortization chart for free! The loan is for an advanced degree in her field, maybe two loans to cover her 2nd year. She already paid for year 1 of 2. She'll set the terms and when to start payments.

People say don't lend family money, but I'm willing to risk this. She knew the reasons we're in good financial shape, and was happy to tell me in her own words. She understands that this bank is not a magic fountain, and how she treats this loan and other matters will lead to a brighter future.

I know how your daughter's story turns out, mitchjav.
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Old 08-28-2020, 01:57 PM   #54
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I used 2 cardboard boxes covered with a cloth as my coffee table. Works really well if you tape the boxes shut.
When the young wife and I first married, we used our boxes of college books as a TV stand. We got the couch and chair because the lady across the street was throwing hers out after 30 years of service and asked for our help carrying them out to the street for the trash man. We just kept on going right to our apartment. The cushions were torn, but we just put a blanket on it. For other stuff, we shopped the curbside on big trash day.


We never had a coffee table until about 4 years ago.
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Old 08-28-2020, 02:02 PM   #55
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I used 2 cardboard boxes covered with a cloth as my coffee table. Works really well if you tape the boxes shut.
I'm 41 and I still have never purchased any furniture unless you count a bed. I just recently purchased my second bed in the 22 years I have been on my own. Basic metal frame for each bed and average quality new mattress. Too many people these days expect to have every luxury right from the start.
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Old 08-28-2020, 02:06 PM   #56
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Sounds like she learned nothing. And you learned nothing. I think you're just prolonging the inevitable on this. I have no children so of course I think I know all about parenting.
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Old 08-28-2020, 02:10 PM   #57
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Time to give her control of the brokerage account and let her pay her bills off. Another loan doesn't help with low income.

Why didn't she work this summer? Does she have a job lined up for fall?
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Old 08-28-2020, 02:22 PM   #58
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I'm 41 and I still have never purchased any furniture unless you count a bed. I just recently purchased my second bed in the 22 years I have been on my own. Basic metal frame for each bed and average quality new mattress. Too many people these days expect to have every luxury right from the start.
You certainly have a LOT of restraint !
Must be easy to vacuum (if you have one).
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Old 08-28-2020, 04:17 PM   #59
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I would pay September rent only and let her pay off the CC debt herself at a high rate.
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Old 08-28-2020, 04:44 PM   #60
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You certainly have a LOT of restraint !
Must be easy to vacuum (if you have one).
I have furniture, I just didn't pay for it. My couch and sofa are hand-me-downs from my parents. They are 30 years old but still serve their purpose. I have a lift chair that I got before my hip replacement from a local charity. I have not returned it since I am permanently 40% disabled. I have several end tables for various uses that were all hand-me-downs. Cheap but serve their purpose. No reason to waste money on new stuff when the stuff I have works.
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