Your Child Calls and They’re in Debt. Should You Bail Them Out?
You’ve done the best job you could as a parent; you wiped noses, bandaged skinned knees, kissed boo-boos and helped with homework. Now your children are launched into the world, and you can sit back and enjoy yourself. Or so you thought! Adult children bring a whole new set of joys and problems, and you’ve just hit a problem: one of your children is in debt and asking for help. What do you do? Here are some factors to consider before you reach into your bank account.
What Kind of Debt Are They In?
If you are being asked to help with someone’s debt relief, you have the right to know what kind of debt it is, and how it happened. We recommend you really dig into the situation – the more you know and understand, the better. There is good debt and bad debt. Good debt, like student loans or business loans, is taken on in order to achieve something—it’s an investment. Bad debt is, well, bad. It is incurred through problematic money habits like compulsive shopping and irresponsible credit card use. If your child’s debt is the good kind, and you have the money, there is no problem with giving them a boost once in a while, if it works with your personal financial situation—they will be in a better position to help you down the road, after all! But if the debt is a result of destructive habits, you have to be careful. Will helping them out right now create more of a financial problem than a solution by unknowingly reenforcing their bad habits?
Does Your Child Have Children of Their Own?
Does your adult child have the responsibility of taking care of small children of their own? Are any minor children at risk of poverty or other hardship because of your child’s situation? If so, there are ethical considerations besides your child’s debt. Unless you are at risk of poverty yourself, you should consider providing some relief to any minor children in your son or daughter’s care. Get creative—pay for school supplies, clothes or groceries. That way, the benefit can flow directly to the children. Another idea is opening a savings account on their behalf, one that your indebted child doesn’t know about or doesn’t have access to.
Is Mental Illness or Addiction a Factor?
Mental illness is an overlooked factor in a lot of family problems. If your child’s debt has to do with a mental illness or addiction (to alcohol, gambling, or something else), you may need some good professional help to assist you in caring for your child. Connect with Alcoholics Anonymous, a support group for family member of addicts, and/or educate yourself about mental health issues. If mental illness or addiction are part of the puzzle, your impulse to bail your child out of debt could actually be very damaging to everyone involved, unless you have the right advice and support.
Has This Become a Pattern?
Has this child asked you to bail them out in the past? Several times? Even if the debt is relatively “good” and your child doesn’t have health issues, it’s a problem if this is a repeat issue. Maybe your child isn’t as disciplined as they should be in their spending. Maybe they have both student loan debt and a taste for the “finer things.” At a certain point you need to draw the line, firmly. If you decide to bail them out again, tell them exactly when you want to be repaid, and give them a dollar amount. Tell them if they can’t or won’t meet the deadline, the bank is closing for good. But remember, all this only works if you stick to it! If you don’t have the backbone to stand by your statements, then you need to reconsider lending money to your children.
Most parents try to give their children everything they need, but sometimes exactly how to do that can be a tricky process. The impulse to bail your adult children out of financial straits can feel very strong, even though in theory they should be independent. It’s important to analyze the many factors involved in order to make a good decision for yourself and your family. If the whole subject is overwhelming and upsetting, it could be a sign that you need professional help. Whatever your situation, remember that the best way to help others is to teach them to help themselves.
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