Hi Reddit!
I found out recently that my parents are in debt and desperately in need of help. I am incredibly worried about their financial situation and don’t know where to go from here.
They have not made the best financial decisions over the years and have very little saved up for retirement. The details:
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My 61 year old dad is currently working and earns $50,000 gross annually. He was hoping to retire within four years when the mortgage will be paid off but only has $10,000 in RRSP saved up
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My 64 year old mom retired at the age of 60 and is relying on CPP and investment income averaging $15,000 per year from the principal of her pension.
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There is virtually nothing in their joint chequing and savings account
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$15,000 in outstanding credit card bills
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An outstanding $90,000 mortgage
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A nearly maxed out $65,000 LOC (my mom says this is the only account but my dad and I have reason to believe there are additional LOCs)
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They are spending more than they are making by at least $1,000 per month
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Some items they have spent on I feel are unnecessary:
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They spend $65/month on lottery tickets
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They bought a $27,000 brand new car for me as a graduation gift and were making monthly payments. I took over the payments when I learned the severity of their financial situation and am in the process of selling the car
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My mom spends $300/month on dining out (excluding times they pay for others)
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My mom is in charge of paying the bills and maintaining the accounts, but she clearly doesn’t track if and how much they are overspending by – I think she just shuffles the debt around between the LOCs and credit cards
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I used to pitch in $1,200/month but stopped since my mom gave me no financial details when asked
When I approached my parents about their finances, my mom said we were doing fine and my dad was unsure where we stood. We sat down together to confirm how they were doing financially and were appalled by what we found out (see above). When I drew up a budget to cut expenses my dad was open to making cuts on his end but mom gave no concessions and promptly walked out of the room.
I feel that my dad is onboard with trimming expenses and is content with working past his planned retirement age to chip away at the debt. My mom, not so much. In fact my mom spent an additional $600 on furniture (we already have and don’t need) the day we drew up a budget. She is a little proud and stubborn, and will not take no for an answer. She also won’t give up on reducing ridiculous amounts spent on lottery tickets each month. I feel that my mom’s concept of house ownership is delusional since she thinks we can suck the equity out of it unlike the “less fortunate” renters who have no equity to rely on.
How can I get my parents out of this rut and repay their debt? I feel the first task at hand is to reduce spending, but how do I change my mom’s mindset? I have considered suggesting to them to sell their current two-bedroom townhouse and move to a one-bedroom condo but I am unsure at this point if the benefits of downsizing outweigh the moving costs. Also what’s to stop my mom from saving enough after the move? What other options do we have?
All this is stressing me out.
Any financial advice or suggestions on what to do would be greatly appreciated! Thank you, Reddit! :)
Submitted January 15, 2017 at 11:40PM by fortiva5000 http://ift.tt/2jmVcXo