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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308447  
Subject: Re: Me vs. My Parents $40K Debt (Long) Date: 9/7/2004 6:21 PM
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IslandFoolin,

I have not yet read all of the replies but I wanted to chime in with a couple of items that really concern me with your proposed plan:

* No 401's, IRA's, Nothing.

Immediate payoff of $30K worth of debt and the subsequent interest savings. Improved credit rating (I hope). Learning to LBYM due to $627 less that comes in each month.

I won't be able to get on my dad about these things from the VI like I do while I am here at home, and I don't know if he has the discipline to maintain such a plan once it is implemented.

Now for my explanation. Due to the fact that your parents have zero savings/investments outside of their pension plan, they are going to rely on that pension to live in retirement. Between their two pension plans and the SS projections, it looks like they will have a nice income in retirement.

The main reason these items concern me is because it does not sound like your parents have changed their habits that have put them in their current situation. If they raid the pension plans and then rack up more debt, now they are in a worse situation where they are in debt up to their eyeballs and they have nothing for retirement.

Also, by taking from the pension plans, I would not consider the debt to be paid off but rather transferred to a possibly more rewarding location. Sure they have a lot to gain by a reduced interest rate and all of that but I think they also have everything to lose if they have not fixed the bad habits.

I am not saying this plan cannot work, but I would urge extreme caution before considering this plan. If your dad does not have the discipline to stay on a plan without your assistance, who says they will be able to refrain from racking up more CC debt?

I look forward to seeing what others have had to say thus far but I had to throw my concerns out there right away.

dt
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