Before we get to today’s topic, a quick update on the eating out hiatus. I’ve had many people tell me they’re joining me in this or at least cutting back. I hope it’s going well for all of you!
Cuz we had a slip-up.
On Saturday we helped two of our very best friends move to their new house. I remembered to pack myself a salad to have for lunch, but A thought he could actually go 8 hours before we got the dinner provided for our labor. He’s a genius, but he’s also just silly sometimes.
So from their old house to their new house I stopped at Evolution Fresh in Bellevue with a friend so we could pick up some lunch for our significant others. I was going to stick to my salad, but the Quinoa, Kale, and Butternut Squash Signature Bowl was so tempting. I got that for me and the Buckwheat noodles for A. It set us back $20, but with the exception of weekly froyo, it’s the only eating out we’ve done in a week and a half!
I have to say it is really hard to walk to work when all I want is another coffee and I have to walk past 2 Starbucks and Specialty’s in the 4 block from my bus stop to the theatre.
How are y’all doin’ on your own variations on this challenge?
Ok, on to the topic!
So I was on one of my favorite shows Marketplace Money back in November. I had called in to suggest they do a show about how adult children should deal with their parents’ finances, not just from a practical, but an emotional standpoint. They ended up asking me to come on their Getting Personal section and ask my question on the air. You can hear me here, I’m the first caller!
Back in November my parents were in quite a pickle. My mom had been unemployed for a year, they were living in a house that was seriously underwater and had been living off of their home equity line of credit, which they had maxed out, and had decided to stop paying their mortgage, mostly because they literally did not have the money to. They had opened their line of credit at the height of the market under the advisement of their accountant and had borrowed a lot. The bank had offered them more, which they refused, thankfully, since the market would crash and their house would lose most of its value soon thereafter.
As you can hear, I was advised to find my parents a fee-only financial planner, mostly so I could put myself at arm’s distance from their finances and not get too involved. My brother and I had planned to give them a few sessions as a Christmas gift and I set out looking for a financial planner.
I went through the phone book and the CFP site and not one financial planner out of the 12 I spoke to would take on my parents. Part of it was because of their tricky housing situation but also some just refused because my parents’ net worth wasn’t high enough. Which, I’m sure you know, pisses me off to no end given that I work with people every day whose net worth can sometimes be negative!
So in February I started working with my parents as if they were my clients. And I have to say it was sort of tricky. They got their acts together. Wrote a budget for the first time in 20 years, monitored their income and expenses and even did a serious accounting of the retirement. They’re on track for retirement and if they can just push through the next few years with some belt tightening, once they’re collecting Social Security and drawing on their 401(k)s they’ll be super comfortable and can retire pretty much anywhere they want to. The only reason why they both don’t retire now is because my dad’s health insurance through his employer is amazing and they’re still 3-4 years away from Medicare.
Yesterday, I read this story about a son who manages his mom’s finances. He started when he was 11 and has an impressive list of accomplishments. And while I applaud parents who want their kids to understand personal finance and teach them about it, I couldn’t help but think that this ventured into irresponsible parenting, and many commenters agreed with me. 11 is a little young to take on the burden of paying the bills every month, monitoring credit card balances and checking credit scores. I believe there is only so much of your finances you should reveal to your kids for fear they become overly involved, feel too much responsibility for making your finances work and feel burdened by the knowledge of how much they cost.
In my own experience, once I knew how much my parents made and I did the math of how much financial support they were giving me out in Seattle, I felt guilty, though in a tricky situation since I couldn’t live without their support.
I feel now I’ve struck a good balance. I know they’re on track for retirement without knowing the nitty gritty of their day-to-day spending. I know they have the tools through their budgeting and monitoring their cash flow. And I still worry about their housing situation since they’re now going through a loan re-modification even though the house is too big for them and they ultimately want to leave Florida to retire (that’s new, right?). Florida is a recourse state so they may be on the hook for what they owe if they end up walking away.
They keep me updated on what I need to know and for the rest of it, I assume they have it covered.
So what do you think? How much should a kid be involved in his or her parents’ finances? When is it the responsibility of the child to take over? How to siblings play a part in this?