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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Me vs. My Parents $40K Debt (Long)||Date: 9/7/2004 12:19 AM|
|Author: IslandFoolin||Number: 189370 of 308043|
Win, Lose, or Draw.... I'll call it a draw.
Again i'd like to extend my gratitude to all of you. While I may not respond to every reply I have carefully read each and written down most for my parents to consider. I sat down with both of them tonight at dinner and talked everything over.
Things I found out that I did not previously know:
* There has not been a new purchase on most of their cards for a long time. Some of the higher balance cards date back 8, 10, 12 years. This switched on a lightbulb. My parents/dad, while he still spends impulsivley, does not do so via credit card. Seems he just has no idea how to handle / repay debt. AKA poor money management skills, but hopefully getting better. I think this is a great reason for me to believe in the following...
* My parents have committed to a change of spending and eliminating their debt. They told me that after we first talked a few weeks ago and they saw everything on paper that it really hit home and made them talk things over. This mainly applies to my dad, the impulse spender. This, coupled with his new vigor to lose weight is, hopefully, the beginnings of a major lifestyle change. With enough support from the people around him, and my mom keeping a better eye on his spending, I have faith that he can do it, as well as the rest of the family, myself included. After all, all that extra food he won't need will save a few bucks on every trip to the grocery store.
* Aside from the numbers I (UnFoolishly) posted earlier, there is a stafford loan in the 10K 4.4% range that needs repayment. There is equity in the house, part of it was used to help fund my college education and there is currently around 50K "left". The mortgage is also not a pretty number around 150K.
* They have no idea how they are going to pay for my sister's college education. I don't like this, nor have I (or they) even begun to figure this out. (Guess what I'm reading up on tonight and forwarding to dad tomorrow???)
* They feel / realize / think that they need to use their last resort. This is where I did not argue. I resigned from the notion that this is MY problem. I do not know what it feels like to have $40K+ in debt looming over your head for more than a decade. They are ready to move on and they have chosen the pension loan to be their 2nd step (the 1st being a commitment to wiser money management). When regurgitating the warnings that were imposed on me, by you all (thank you) I got an unsuspected reply from my dad... "You think we don't already know how risky this is". I didnt know what to say to that.
This is their problem, as many of you have stated, and if they are willing to take this path, knowing the risks involved, then so be it. I will do my best to calculate those risks or put them in touch with someone who will, so they better understand what exactly they are doing. They have stood behind every decision I have ever made (except buying the motorcycle, but thats a whole different story, which does infact have a happy ending) and I will do the same for them, helping them along the way as best I can.
So that's that... with warnings gone unheeded (or heeded depending on how you look at it) they are moving forward with the pension loan. IF, I say IF, they can uphold their commitment that they have made against credit cards, and IF they can actively manage and monitor their cash flow, and IF they can stick to their budget, and IF they can find a way to put my sister through college without resorting back to high interest lenders.... I think it may be able to work. But that's a hell of a lot of IF's.
As Im sure many of you are shaking your heads, I hope you will be of a continued assistance to me and my family as they trek into this. I'm going to start a new thread on this board with the specific questions and implications of the pension loan and paying off the CC debt and then another on the Paying for College board regarding my sister. I'd like you all to throw in your .02 (or .05 if you're feeling generous) on those threads. Again thanks for all the time you've taken out of your days to help me help my family. I wish I could buy you all a round of your favorite drinks... during happy hour of course ;)
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