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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Me vs. My Parents $40K Debt (Long)||Date: 9/6/2004 12:06 PM|
|Author: IslandFoolin||Number: 189344 of 309100|
Wow... I must say I did not expect to wake up this morning and find this many replies, I am thouroughly delighted.
The main theme throughout everyones replies seem to be "don't touch the pension." It is hard for me to read that because, as you all could tell, that was the backbone of the plan. But, I realize that people who have done this know better than the people that haven't (myself) so i'm taking heed. My worry is that this was also the gleaming ray of hope for my parents as well, and I don't know how receptive they will be to hearing me say don't do it, yet.
The worry is that they will fall back into or never get out of their habit of using credit cards. Relapse is a possibility with any "addiction" however my parents have already made changes to their spending habits (while not all are good changes), in terms of CC's, well before I became involved in helping them. All of the CC debt from above has been sitting on those cards for a long, long time. They no longer carry any of the cards with them. Everything is paid for through their ATM/Debit card. Everything except the CC bills that is. My dad got into the habit of paying off one debt by incurring another, perhaps we could call that the melting of the snowball. My mom never uses a credit card, shes no worry.
Now that they have a shared goal (the house in Florida) I can see that both of them are alot more serious (for lack of a better word) in changing the way they spend. My mom wants that house badly, I mean really really badly. She's been the shining star of LBYM all her life thanks to the way HER parents raised her. In the past couple of months she has spoken out against my dads spending like she never has before (and he's been receptive) and I think she will continue to be more of a support for this while I am gone.
So basically what I'm trying to get across is that due to the changes I have seen thus far from them, I have faith in them that they can change their habits for good. There is the risk that they will fall back into old habits, but that's a risk I think we're willing (or going to have) to take, but not blindly. With them now using Quicken (we sit down and use it about 3 times a week together) they have an early warning system that lets them know, "Hey, you're over your budget, get back on track", they've never had that before. We're setting up the beginnings of their budget today. And I have turned them onto the Fool, by printing out articles for them to read at dinner, and by emailing them links to certain areas or posts on the boards.
Also, it is a very good thing you are moving. More than once you mentioned nagging your parents. While that makes you feel powerful and superior to them, it is very destructive and has no positive value whatsoever. You need to address your anger and work it out in some other way than directing it to your parents. They will feel your anger and react to it rather than their problems and can make things a lot worse than they are.
I can where you are coming from with this, and really its just a lack of "knowing my parents". I am by no means lecturing them or nagging them and getting them upset. I know how to get what I want out of my parents, heck i've been doing it for 22 years its just that know it will benefit them, not me. Constantly getting on them about it is the only way, and its worked so far, and it will continue even when I move. Thats just how my family works.
My Sister: Typical 17 year old girl, heart of gold, hole in her pocket the size of Montana. She has been privy to all of what is going on with my parents, I make sure of that since they are still her source of income. Starting her first job soon, already knows she's putting away 10% of what she makes. I pay her $1 for every Fool article she reads with the understanding that she cannot spend that money, rather she has to put it towards something she has learned about. But man, it's tough getting a 17 year old girl's mind off of boys, cars, and clothes!!!
Back to the pension loan. I'm still going to heed all of your advice about teaching to LBYM, Proving to be able to LBYM, then taking the loan. But, and correct me if i'm wrong, wouldn't it be a bit "better" to not be accruing all of the interest and fees that come along with that $30K in debt (we're talking about $500 in fees from 3 cards in 1 month)? I mean they will still have about $10K to pay off even after the loan, so they start snowballing on that. *Also if someone could point me to the direction of some snowballing method articles/posts I'd be greatful*
Again I thank you for your replies, I hope to get many more. I'm going to sit down with my dad in a few to lay everything out and get this thing rolling. We'll see how they react to NOT taking out the pension loan.
"Whether you think you can, or whether you think you can't, you're right"
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