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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308557  
Subject: Re: Me vs. My Parents $40K Debt (Long) Date: 9/6/2004 12:41 PM
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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.

Greetings, IslandFoolin, one way to preface this is to admit to your dad: "I was wrong about the pension loan being a good idea." Then explain the risks of proceeding that way - the risks of cannibalizing the pension are quite real. He is only 54 and could have another 40+ years to live!

Consider the high interest rates a "stupid" tax on his prior fiscal behavior (but don't tell him that!). That tax will go away once his behavior improves. The interest he will pay on his prior unfortunate financial choices is a pittance compared to the future he puts at risk by raiding the pension.

DON'T DO IT!! (Is that strong enough :-) ?)

Your parents will eventually be in far better shape once they jointly decide that their deficit spending must cease. Your family may "work" by pressuring one another (only you know best) but on the off-chance that you would yourself not respond well to a similar application of pressure - some may consider it bordering on manipulation or potentially disrespectful, from either parents to child or child to parents - perhaps the "continuing education" could best take place in the form of continued discussions about ways to go about living below one's means, as opposed to a sudden "solution" to their financial woes which may prove ephemeral and even destructive before they have mastered money management. Revolving debt as your father has done is not the same thing as stopping the outflow.

Read back on the board (or better yet, allow them to reach this inspiration for themselves) about the climbs people have made out of the debt pit. Invariably, the process is slow and initially uncomfortable but accelerates with the snowball approach and begins to become invigorating once small progress is sustained. I think it would be quite difficult to find posts by those who got suddenly out of debt (inheritance, lottery win, 401(k) raid, etc) who STAYED out of debt. The staying power comes from the practice of better habits, over time.

Did I mention not to touch the pension?

Great going for raising their consciousness! That's where it starts. And about your 17-year-old sister: not all of us who were once 17-year-old girls were necessarily clueless about financial management, nor consumed with pursuing boys, cars and clothes. I think you as her older brother may indeed be a good influence upon her, too, through demonstrating an alternative financial pathway to habitual spending. She may be quite receptive to sound financial management once she sees that she is achieving success.

xraymd

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