Normally, this wouldn’t bother me, but my parents have a history of being clueless about money.
Recently, I’ve been slacking off in the Mom & Dad Money Monitoring department, and letting other siblings take over the reins of responsibility for that.
It wasn’t until I heard something about them signing an open line of credit that made me sit up and take notice. Here’s how the gist of our conversation went:
Open line of credit? For what?
“To invest of course“, my mom chirps.
#$&%@$&@%$&!$^! Where is the money coming from, Mom?
“Oh against our house. The money was just sitting there, and apparently we could make a lot more than 3% or whatever it is!“, my dad chimes in.
So let me get this straight:
- You’ve wiped out the equity you’ve paid into your home for 30 years
- Your mortgage is close to being paid off, but now you have this new DEBT to think about?
- ..and you are paying interest on this shiny new debt, in hopes of getting a better return on investment?
“Umm…..“, my mom falters.
Is the line of credit in your name? How much have you lost/gained so far?
“Uhh.. Yes. The line of credit is in our name against the home, and … we don’t know how much we’ve made or lost“, my dad says.
WHAT?!?! WHY?
“Because the investment accounts are not in our name. They’re under __insert sibling here__’s name,” my mom counters.
…….*dead silence*…… *crickets chirping* Okay, so add to the list that the debt is in your name, but the money in an account is under my sibling’s name, and you think everything will be fine?
“Well they’re blood! They won’t steal from us. I trust them,” my dad huffs.
Okay, you can trust my sibling, I GUESS (NOT!), but consider that there’s a marriage to be concerned about.
What if something happens?
Where does the money go?
Who does it go to? Who has to pay back whom?
You can’t just trust the spouse to do that, people turn crazy when they hear money disappearing, especially in those six-figure amounts.
If everything is in their name, and it isn’t in yours, but you’re carrying the debt, NOBODY KNOWS THIS LEGALLY.
That’s when the conversation went into a huge lecture about keeping finances separate and making sure you have papers to back up all of this ish.
It isn’t like my sibling is single and childless here! What if they divorce? They have to split it all in half.
I think a little stepping in to figure this ish out is in order, I can’t believe how trusting and naive my parents are sometimes. They just don’t see the big picture of the real world, filled with separations, divorces, bankruptcies, spending more than you make and the legalities of everything being proposed.
And just when you think you can trust someone to just make sure that Mom and Dad saves some money for retirement, has a budget and doesn’t spend more than you make, you come across some of the stupidest decisions I’ve ever heard.
I feel like this is my fault. I should have stepped in sooner and I should have been more involved. Now I’m kicking myself because the money could be gone, and totally spent. 🙁
UPDATE: IT ISN’T QUITE AS STUPID-ASS BACKWARDS AS IT SEEMS
Turns out, my sibling is also formally in charge of my parents’ investment assets by the bank, and as a result, he gets the statements forwarded to him at his address to manage, but they are legally under my parents’ names.
They just don’t ever ask about those statements because they come from another part of the branch (the two departments don’t intermix), which is why they have no idea WTF is going on, but since they still pay the bank their mortgage and the interest on their Line of Credit, they get the statement for THAT every month to clear.
I also wouldn’t put it past my mom to get a statement like that and read it wrongly, thinking: Oh balance means I have money, rather than I owe money or vice versa.
I’m 99% sure they hand over anything financial to my sibling to handle, and he sorts it out for them, which I find pretty dumb.
He’s just making financial weaklings even weaker by not involving them in the decisions and listening to what they want, and advising them to be MODERATE in their risk strategies, seeing as they will be retiring in about 20 years.
I still think it’s still pretty damn STUPID to take out equity on your home just to invest it (also fairly sure they lost 50% of their assets in doing so), but at least everything is in their name.
Still going to call a huge family meeting.
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I feel your pain. My BIL “borrowed” $80,000 from his parents six years ago and has never paid back. There is nothing in writing. Their parents are acting clueless with vague promises to get the money back. In the meantime, BIL and SIL own a second home, travel and had a maid (daily) until FIL finally put his foot down. A little too late, I say.
Ouch! I was in banking for a long time, so i feel you on this one. good luck with the family meeting.
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Thank you!
My brother and I have tried having this family meeting with out parents and it left us both just banging our heads against the wall. My mom has 6K sitting in a CHECKING ACCOUNT earning her NOTHING while her retirement account has how much? You don't know? Well that's okay, she doesn't know either.
Fill us in on this family meeting.
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I will definitely write about the family meeting as much as I can. I feel like dragging everyone together and knocking their heads. I am not the most financially savvy person in the world but c\’mon now.. some common sense please!!!
OMG just read this FB- i am MORTIFIED! Poor you, I mean wow…lets hope your siblings are better at money management than mine! Thank god your parents have someone like you around to explain this kind of stuff to them. I'm notoriously anti-debt (for pretty much every reason under the sun!) and at work last week i had someone try to persuade me to take out a huge student loan for DH just so we could invest the $$$- I told them NOT a hope in HELL! …and these are financial professionals!!! Eeeeek!!!
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Your parents must have been super diligent to have raised you so well money-wise. Mine.. are more.. laissez-faire hippies.
I read somewhere this week that when you take away the oppostunity from someone to do something for themselves then you are crippling them because that opportunity is gone for good.
I think that opportunity is long gone.
Somehow, I doubt that your parents are declaring the earnings in the 'investment account.' Can you say TAX EVASION. Even if your sibling pays taxes on it, it's still illegal.
Firstly, your comment is pretty rude.
Please be more cognizant of it in the future because you are accusing my parents of being tax evaders based on a post without all the information.
I know they pay their taxes, every year, on time and they claim everything including things they aren’t sure about because my mom is paranoid about not doing the right thing.
Secondly, I think they actually lost money overall. I’m not sure they earned anything, if it is invested, and I’m not sure the money IS invested.
Perhaps my sibling just took it and used it to pay for stuff around the house and new cars. Whatever it is, they’re paying the interest in the line of credit but not seeing the money because it’s not in their name.
Hopefully you will update us after your family meeting. It seems like your parents may have inadvertently put themselves in a messy situation. If your sibling makes capital gains on this money, it could pose further tax problems for your parents, possibly? I'm not an accountant…so I do not know. Maybe it is structured to look like a gift to your sibling? I think our limit in the US is $10,000 for a gift or something like that.
Our IRS is pretty formidable…I'm sure like Canada's. Wish you the best in resolving this situation.
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I have no idea. I just know they took out the money and I don\’t know where it went, except they are under the impression that it has been used for investing.
Or maybe my parents just don\’t know what they\’re talking about.
The other thing too, is that it might have been over the past 15 years, and we just never paid attention (well, I knew about it sort of in high school but I was just a kid).
Like $10,000 each year. Or maybe the statements are all e-statements (to save money) and/or they go to my sibling\’s address and not theirs. Or my mom just tosses all the envelopes into a pile and forgets about it.
I have no freaking idea. They are so financially disorganized.
two more!
3. In general, they don't have a grip on what's going on day to day. My mother hides money from my father and then thinks that if she uses their joint checking account to write checks out to herself-he won't realize that she's spending money The funny part is that he doesn't realize and they both end up bouncing checks.
4. neither of them has a dime in retirement. They don't "believe in it". They are totally depending on Social Security. My mother has worked off the books (read: she babysits) for like 20 years. I can't seem to get them to understand that their SS income is goign to be very very little.
Oh honey, you win. But that\’s just.. it breaks my heart to read that. 🙁
I\’m so sorry. Sometimes people just won\’t change and I wonder how you\’re going to deal with it when they can\’t work any longer and they have to be supported by their kids, namely you and your brother.
My parents take the cake:
Here are some examples:
1. Take out a line of credit on their home (which had about 80% equity) to let my brother pay for his coop in CASH. Didn't even THINK to insist that they be on the title as well. Bro stops making payments and my parents are stuck with what is HIS mortgage on THEIR home.
2 . I realized how bad they were with money when my father attempted to help me open my first checking account. Being a minor, I had to have his name on it. He had this bright idea (of course, from one of his very trustworthy friends) to invest it in some crazy scheme and get 20% interest on it. I was 14 when he did this and I lost ALL of my summer money. I acutally didn't know all until the next summer when I went to deposit my earnings. It kind of breaks my heart that he tries all year to get my money back.
I can go on and on. Their stories never end. They trust too many people and never ever think.
Do I win?
FAB, I would definitely get to the bottom of it – or else you could end up with a situation on your hands like my ex's family.
I just wrote on this tonight – it really can happen to anyone… http://singlemomrichmom.com/families-finances-fav…
Not saying your sib is shifty or anything, but with great power comes great responsibility and some people don't get the concept of stewardship.
And he should have consulted us. He said: I am helping mom and dad invest
I had NO IDEA he was taking out equity in their home to let them invest!
This is so frustrating. I should\’ve asked more questions but I had no idea he\’d do something SO STUPID.
If they don\’t have the cash, they don\’t have the cash to invest (read: lose).
Oh dear. Well, if your parents are bad with money now, it is only going to get worse. Your intervention could make a huge difference in their ability to retire somewhat comfortably.
My spouse's mother was terrible with money, as are his siblings. It is easy to say, "Well, they're adults, they make their own decisions." But it is quite another to later say "no" to a mother or a brother when they come to you with serious problems and truly need some money. Much better to get them back on the road to financial stability–especially a paid off mortgage!
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Tell me about it. Not having a paid off mortgage? What the hell are they thinking?
And here she is, thinking they only have $60,000 left to go on their mortgage to be cleared in 3 years.
THEY HAVE ANOTHER LOAN AGAINST IT. Gosh.. it\’s just so… mind boggling.
If my sister suggested this harebrained idea, and they went with it and put it in her name, I would raise Cain. I remember discovering many years ago that my mom's name was on my sister's checking account, so mom can deposit checks into her account. My mother never did that for me! They kept it a secret from me for a long time.
I assume that this sibling is clueless about money to suggest this sort of thing. And why is it in their name? I think calling a family meeting is a great idea. You can't sit on the sidelines. I'm surprised your parents are so young and with a paid off house. Gambling with $150k is pretty scary…I do not know what Canada's markets are doing.
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None of my siblings are clueless about money, but they\’re.. naive. They think that they can do anything, and they\’re better than anyone else.. etc etc.
I think it is in their names because it will \”save on management fees\”, like having to pay a $50/year fee or something stupid like that
And they might be afraid my parents will take the money and blow it all, but if they don\’t learn how to manage it on their own with a little bit of monitoring, they\’ll NEVER learn.
Well my parents had some money before to pay for the home as well, so it wasn\’t like they started from 0.
Canada\’s markets are tanking like the States. At least, in the same way, although we\’re starting to come back.
I know how you feel. Even though I strenously begged my parents not to take out 403b and profit-sharing withdrawals to pay off their BMW/Mercedes about 5 years ago, they did. They reached 59 years old then, but still making six figures. Therefore, it meant a big tax hit that they got to experience for paying off a car with pre-tax money. So, my mother decided to take out a $10,000 403b loan to pay off her credit cards instead of cash flowing it. I could do nothing but watch all of this happen. They are actually minimalists without even knowing it. My parents never owned high-end cars until 2005—when they lost their minds.
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This kind of stuff makes me want to tear my hair out
My parents aren\’t into luxury vehicles seeing as they feel as though they can\’t afford it (and rightly so!) but it sounds so similar.
You def can't blame yourself for this. So recently I have been around my parents even more and it has brought back the bad money decisions that they made before. These decisions still happen and are not good. I guess it brings back bad memories and all you can do is educated them on what they are doing and the impact. In the end, they are parents and will make their own decisions, just hope that they open their eyes and take your advice, in the same way they would want you to take their advice back in the day.
But in all honesty, sometimes people never learn!
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I feel like they\’ll never learn. Never. Ever.
Wow this sounds all so surreal to me. My mother is THE person to go to for any of our money problem. She always researches everything, plus she's dealt with such issues before (i.e. investing money). My dad on the other hand is very spending-happy sometimes, of course compared to my mother just about everyone can be considered that 😛
I hope you manage to solve this, without any further (major) incidents. :
My parents are both spend happy. Well, my dad is more frugal (read: cheap), but he likes to do his fair share of spending too.
Can I ask a question? Are your parents immigrants who are not native English speakers? I ask because this type of situation seems very common in families where the parents aren't comfortable enough to communicate with the bank in English, and therefore turn over control to the children.
Naw. My parents speak perfect English.
It\’s definitely not the situation. My parents are more money-management-shy and naive than they are uncomfortable with English.
Oh. Wow. Holy. Crap.
That is messed up.
This is why I try to stay out of my family's finances because I don't even want to know about shit like that because I know they won't listen to me anyhow. When I do find out about stuff or even just expectations of certain things between family members, I tell them, "That's between you and them, but PLEASE get it in writing." Not that I think anyone will listen to me about that, either 🙁 But at least then they hopefully won't expect me to be keeping track in order to come vouch for them when there are problems.
And yeah, what they're doing is dumb, dumb, dumb on multiple levels but especially involving others in it, especially with him being married. Relationships can and do go south. I have a friend who just lost her car that she's been paying on because she split with her boyfriend and his brother's name was on it to help her get the credit (so, yeah, he took it). I understand why she did it because she really needed a car, but stuff like this happens.
I just. I\’m baffled. Really baffled. And I\’d never ask my parents to do something that stupid with their money and then not put it in their names.
Yes, I know exactly how you feel.
I am HORRIFIED at how my parents handle their finances (they think equity is free money with low interest). My parents and I can never see eye to eye in the way we handle our finances and whenever we talk about it, we usually end up arguing. And every time I think of my parent's finances, I want to pull my hair out!
I think that's another reason why it pushed me to be find out how to handle finances or I USE to think that financing is the greatest thing that happened on earth!
Hope everything works out for your family after you have the talk! Just try to keep calm (I know it's hard, but no use getting your parents and siblings all defensive) 😀
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You and I are on the same page. It\’s definitely why I\’m \”so into money\”, as BF calls it.
My parents are just the opposite.
yup ~ i get soooo stressed out every time I had to talk about it or think about it @__@~ and there's nothing I can say more after they say "don't worry.. it's all taken care of" ~ @__@~ *smack my head on the wall*
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You really want to shake them sometimes. I called my mom again last night and pleaded with her to grow a spine. (In a nice way). Without me there to help, she tends to let people steamroll over her.
I agree with watsoninc, I would definitely talk to the sibling and try to figure out what the heck were they thinking. The focus should be on your parents retirement not on your siblings' financial well-being. Have mercy, I pray it all works out and that it never happens again.
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I\’m just confused. It\’s SO STUPID. IF you don\’t have the cash to lose, don\’t play with it. It\’s so simple.
Oh no, FB. I hope you can get to the bottom of this.
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Soon to be discussed.
Do you other siblings know about this? I think that its crappy that its in a sibling's name. It sounds like they were talked into this. This isn't an idea that not very financially savvy people think up on their own. I would say either your sibling or a broker convinced them it was a good idea.
They just found out via my angry email. *sigh*
My sibling is definitely behind this harebrained idea.
Having the account in your siblings name is a disaster, but taking out a 3% loan to earn 10+% in the stock market is a great idea in my opinion.
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I really have to disagree with this one..
1) We couldn\’t have predicted it but the stock market killed my parents\’ earnings (if there were any). They\’re older, with less time to save. What if they lose everything?
2) This is equity paid into a home that they took a LOC out upon, which means they now owe another $150k, when they were (before) set to retire comfortably.
3) They\’re gambling with money, essentially. This is something I don\’t condone unless you have cash, free and clear to do so.
It is just as bad (for me) as taking out an RRSP loan to put into your accounts at an interest rate when you don\’t already have the money.
What if something happens? What if you can\’t pay it off? Now you have money in your retirement funds, locked in, unable to be withdrawn to clear that loan you took out to play and gamble with on the market.
My rule has always been: if you don\’t have the cash, don\’t buy it, and it goes for not having cash in hand to invest free and clear.
Oh, this is awful! People who are clueless about money are sooooo vulnerable. Hope you get things worked out.
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Thanks. I gave my mom a good tongue lashing but she\’s not a very aggressive or assertive woman.
Oh shit, this is bad news. So sorry to hear about this, FB 🙁
I hope they haven\’t run off with the money.
This is certainly not your fault in my opinion. Your parents are grown people, as is your sibling. Everyone should be old and smart enough to make their own money decisions. This doesn't decrease your pain regarding their mistakes, but I definitely think it decreases your responsibility. I didn't hear whether your parents were receptive to your advice. Parents often aren't, so if they are, that would be necessary for me to step in.
If this was me, in addition to helping my parents undo this mess (if they were willing), I think I would have a stern talk with my sibling and tell them that anything else that they do that could be construed as abuse would not be tolerated.
Thanks.
I think that\’s what I\’ll be doing when I am back in the city, calling a family meeting.
Agreed FB. A family meeting is probably the best way to make sure that everyone is on the same page.
I hope all goes well.
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This is a hugely crappy situation, but don't put all the blame on yourself. Your parents are grownups and so is your sibling – they should be more responsible. I know they're not, but still. You can't tell yourself it's all your fault just because you're not watching them like they're toddlers trying to put their fingers in lightsockets. You're a grown woman with your own things to deal with. Cut yourself some slack, and try to move forward by helping your parents out of this bad situation as best you can. <3
My parents make the stupidest money decisions I\’ve ever heard of. Ever since the beginning of my childhood, it hasn\’t been awful, but it\’s been pretty dumb at times.
Oh my goodness! Can't believe your sibling allowed that! Are they going to continue with this?
I don\’t know. I\’m heading back in 2011 to take care of this. We need to nail down WTF is going on here. My OTHER siblings are totally clueless.
Please don't think that this is your fault, it isn't. Your parents are in their 40s or 50s? They should definitely know better by now and they both seem to have a false sense of security. I don't know, maybe get them simple personal finance books like your money or your life, or your money the missing manual, something they can look over to help them understand finances. The best thing you can tell them is that no one cares about their money like they do.
I don't know what to tell you, I'm an only child usually my parents are the ones who give me advice, but I think the best thing you can do is be patient with them, help them understand that they should be in charge of their finances. But don't feel bad, sometimes even when we want the best for people, we can't make the changes for them.
My parents are in their mid-40s.
They just.. trust too much. My parents trust everyone in their family too much, when in fact they should be very careful about how far they trust someone legally. Especially on PAPER.