I (24F) am about to start a full-time job soon with a decent salary after finishing my postgraduate studies, but last night I found out my parents (53F, 54M) have around 100k in debt. Note that they live on rent, so it is not from a mortgage.
To explain my background, my parents have an extremely low salary and do not have post-retirement savings set up. My dad is a missionary and my mom is a housewife. My dad never earned a steady salary in his life, as his income comes from donations and a part-time job as a pastor, which he has now quit. He earns around 3-4K in euros a month in total. My parents describe it as “God’s grace” that we managed to get by (which I obviously think is delusional).
Although I am not aware of how much went into the degree, my parents basically pulled everything they owned for my dad to complete a postgraduate degree in theology. After his degree, I continued to move around a lot, so my parents decided to send me to international schools where tuition was expensive. I got financial aid for most of the tuition, but my parents scraped whatever they could as well to finance the remainder of it. I am guessing some of the debt comes from this phase of our lives.
Throughout college, I worked multiple part-time jobs to pay for my own living expenses. I did not pay any tuition for my degree as I got a full-ride scholarship.
Recently, I borrowed 10K for my postgraduate degree, which I wrote a loan contract for my dad, as I intend to pay him back within one year. At this time, I did not know of this debt.
I found out recently about the debt because my sister inquired about their financial situation.
I don’t understand the source of their 100k debt, as like I mentioned, they do not have a mortgage.
I know I’m not obligated to help, but I do want to help. My parents don’t have a proper pension plan set up and are not the healthiest at the moment, so I am unsure of what kind of other work they can do to pay off the debt. I believe that if I don’t step in now, things will only get worse for them, which is also spread to me. The religion and finances parts aside, I also love my parents a lot and am aware that they did sacrifice their youth for me and my sister.
But at the same time, I am dealing with a lot of resentment and fear. It’s been hitting me these past few years that they have been financially unwise. I also resent my dad’s decision to choose a career without a stable salary while raising two children and that my mom had never worked when she had been healthier.
I am also angry that for the past two years my mom had been joking about me “feeding them when they’re old.” I am very scared that this in fact might be the reality. I also feel a little bit of resentment because I feel like if my parents did not want help from us, they would not have revealed the debt to me and my sister in the first place.
I am also scared that this will not be the only time I will be stepping in, but the first of many. I have been planning on getting married in the next 2 years, so this is also very startling news for me.
What is the right approach to take in this situation?
Concerned about my parents’ debt
byu/anheylo inpersonalfinance
Posted by anheylo
12 Comments
First, you need to find out what their budget is
Frankly, there is nothing you *can* do to change their situation. If you gave them $100k to pay off their debt, they would just dig themselves right back into that hole. And even if they did magically turn over a new leaf, they don’t have enough time left for it to matter. They will have to live with the consequences of the choices they made.
What you *can* do is learn how to manage *your* money better so you don’t end up in the same boat yourself.
Where are you located (country or state/province) would be helpful for context and local laws, as they vary greatly wrt caring for elders and legal obligations.
It sounds like you have a lot of anxiety around uncertainty. What is their retirement plan? How will they afford to live? Where will they live?
Have you asked them these questions?
Reddit won’t have these answers. The right approach is to take Step 1 and have a conversation with them.
Remember like in an airplane safety briefing, put on your mask before you take care of the parents next to you. Make sure that you are financially sound and then deal with them.
Then decide exactly how much you are willing to assist them. Hey, families grow over time. You are the one who gets the chance to break the cycle of bad decisions for your family. Make sure that you do well for yourself then figure out how to deal with them.
Make a budget for yourself and use that to guide how much financial help you are able to provide your parents: https://www.reddit.com/r/personalfinance/wiki/commontopics (if your country has a PF sub, they probably have a version of this flowchart that is customized to your local situation, if not, you’ll have to adjust the parts about saving for retirement to how those work where you are). How much you help them is not about their need, but your budget. If you want to prioritize helping your parents, that’s fine, but it has to fit in your budget, and you need to understand the trade-offs of paying their debt and/or expenses instead of using the money for your other priorities.
You can’t make good choices for them. I would encourage them to start looking now into what programs in your area exist to help elderly people with limited resources – if there is income-based housing, food assistance, etc., they need to find it and sign up for it. Make it clear that you will help according to your ability, not their need.
It’s going to depend a lot on what type of debt it is and where you are. Credit card debt is probably worse, education debt is probably better. That’s a lot of debt, but they could pay it off over the years with a full time gig. Depending on the church they might be able to find some work for him. It’s worrying for them, but having children with good financial sense and stability will be a big help to them in 30 years time so make sure you don’t take too much out of your pocket too line theirs at this point in your life.
I would look into bankruptcy laws. 100k debt with an extremely low salary sounds like it could insolvent. You need to find out the nature of the debt and bankruptcy laws in your country. There is no reason to step in and help with $$ if they can discharge this debt. If it can be discharged via bankruptcy then waiting until after that to help out with $$ would be the way to go.
Why are you resenting them and also bothering their debt ? Did they ask you to help ? Ur resentment is unwarranted. God will provide for them, you have nothing to worry about.
Have respect for your parents first of all, money isn’t everything.
3-4k euros a month is not terrible. Sounds like something is wrong or hasnt told you the whole truth
You have mixed feelings about the whole situation and that is very understandable as you thought that you wouldnt need to help your parents. And you question their life choices as you would have made different ones.
First of all, calm down and get the facts out. You have to sit your parents down and ask politely and unpolitely from what did the debt come out. Your parents dont sound like irresponsible people buying more stuff online that they need so they definately are probably not the worst handling with money. They have made a vocational choice in their life to devote their life to their faith and that doesnt sound the worst thing in the world to do.
However that is a lot of debt and the reality is that very probably you have to give them food on the table. Quite literally.
The debt is too much for you to pay unless you get very lucky and get a high paying job. Maybe find out what happens in your country if people go backcrupt? So I would concentrate on you budjeting now without the debt. Im sure they are not thinking that you should pay the debt but as your sister asked they told honestly maybe hoping that you both will help them enough so that they will not starve. Which doesnt sound unreasonably if your family bond is good and strong.
So find out what the bare minimum budjet for them would be like. Electricity, food, insurances and then talk with your sister. I hope you will get a well paying job enough so that you can help that minimal amount and when you help, pay the bills, brings groceries and just dont give money as such. Then you know the help is going exactly where it should go.
But just forget the debt.