My mom called me yesterday freaking out, on the verge of tears. Her finances have been a mess for years (and I've been aware) but they've hit a point where she doesn't feel like she can dig herself out and wants to just walk away from everything and start fresh. She asked for my advice. She did not ask for money, but she did ask for help in getting out of this situation like if she walks away from the house, she needs help moving and finding a new place, that sort of thing.
There are a lot of contributing factors to her financial mess, not excuses by any means but things that propelled her further into debt. One, she has a 6-year-old daughter. She thought she was old enough to go through menopause and ended up getting pregnant. Having a kid in her mid-40s (she's now 50) is not something she expected and it's expensive even with buying second hand and such.
Two, she married her daughter's father. I think she thought that it would be good for her to grow up in a two-parent home but he doesn't understand the value of a dollar and constantly wants to spend money on things they don't need like a newer car (he doesn't even drive), game systems, TVs, etc. He also smokes and refuses to give up his expensive Mountain Dews in favor of something cheaper.
And finally, she works a job where she's underpaid compared to others who do the same job because she's not as highly educated. She works at a factory and was promoted from the production floor to work in their offices on lean production stuff. I'm not sure of her exact job title but she has told me that she makes about $4/hr less than the recent college graduate they hired and they do the exact same job. Now, I don't know how true that is because my mom may see it differently than it actually but that's what she told me.
Here's what I know of their financial situation:
- Combined, they make about $68,000 a year, she is the higher earner of the two but I don't know exact numbers. The last number I knew was $38,000 for her but she has changed roles to one with a higher wage but also lost all overtime so I'd assume that it's slightly higher now but not by much
- Mortgage was for ~$70,000 in 2005, it's been paid down to ~$50,000
- She has received foreclosure paperwork and her mortgage company will not take any more payments but they did say there's a way back into the loan (not sure what that is)
- They have a car payment for a minivan for ~$500 per month
- They have at least 2, if not 3, payday loans out, my mom said she's been taking them for $25 less each time in hopes of finally getting rid of them
- My mom filed bankruptcy in 2012
- My mom has very little in her 401k and wants to cash it out if she changes jobs (I'm trying to talk her out of this)
- They live in the midwest in a small city with a low cost of living
My mom has stated that she wants to get rid of the car and buy something outright with her Christmas bonus (~$1000). She has hinted around that she's considering divorcing her husband due to his lack of interest in helping her get out of the financial situation that he helped make (among other things - he's an ass). She has stated that she's considering letting the house go and getting a rental. She has stated that she wants to get another job. She does not have a high school diploma, however, and she would need to get a GED before she can another job.
One of the big factors in my mom deciding whether to move is deciding if she wants to uproot my little sister but I've suggested that she move to my side of town (there are even two rentals within a block of me) so my sister could come to my house after school and it would likely ease the transition. Also, my mom and my dad got divorced when I was 10 and I moved 3 times in a year so I think I can talk to her and help her through the tough times. This would also allow my mom some breathing room in her childcare situation so she could go to GED classes and potentially move on to a better job.
So now, I'm asking for some advice. I don't really know what to do. I've looked into things like short sales to get her out of the house without a foreclosure. My husband and I are stable in our finances (debt free, 6 months expenses in savings, etc) so the temptation to help financially is there but we have both agreed that if we did help financially, it would be in a limited capacity such as paying a deposit on a rental.
Submitted November 18, 2017 at 09:42AM by tismythrowawayacct http://ift.tt/2yTyDhf
