Dealing with financially irresponsible family members. This reader’s sister’s house has a lien on it and her credit cards are maxed out, again.
Q: I enjoyed Ilyce’s radio show for many years when she was on the air in Atlanta. I’ve also signed up for Ilyce’s informative newsletters.
Unfortunately, my sister is the one who really need help. She is, and has always been, a financial disaster. Her ex doesn’t pay her child support although he’s supposed to. She has three kids, one who is currently in college, one on the way to college and another going in a couple of years.
The IRS has a lien on her house, which is falling apart and her homeowner’s association is suing her due to the home’s appearance. She’s trying to settle her debts with the IRS and a couple of years ago, I helped her pay off her credit card debts. Shortly after that, she had maxed out the cards again. She pays over 20 percent interest on those credit cards. I’ve told her to get help from a credit counseling service.
Our parents have also helped her out over the years but none of us know what to do. What advice do you have for her or for me to get her on the right path before she ends up homeless?
Dealing with Financially Irresponsible Family Members
A: It’s truly hard to help family members who don’t have a good handle on their finances and seem confused by the basics: Spend less than you make, bank the rest.
Part of the problem is that people don’t know what they spend. So, they spend too much given how much they earn. In a recent CareerBuilder survey, some 78 percent of Americans reported living paycheck to paycheck. That’s terrifying, given that around 40 percent of Americans don’t just have one job, they also have a “side hustle” or second job to make ends meet.
Clearly, that’s not working so well. And, spending more than you make is a recipe for disaster – as is having friends and family members who are willing to bail you out, over and over again.
Which brings us back to your sister. You’ve helped her clear some (maybe all?) of her debts. But she immediately started charging up her credit cards again. Your parents have helped, too. More than once? Probably.
Is she going to change? Probably not. Your sister seems to be the type of person who knows she doesn’t have to: someone will be there is there to catch her before she hits rock bottom. For whatever reason, perhaps because she truly doesn’t earn enough (without financial help from her ex-spouse) to keep the wheels on her financial bus, her financial life doesn’t make sense.
Helping Family with Money Problems
If you’re determined to help, your sister’s IRS debt isn’t the most immediate issue she’s facing with her home. The IRS has unlimited patience and will wait out a sale. However, if she is falling behind in her mortgage payments, her real estate taxes, or her homeowners assessment, she could be in imminent danger of losing her home.
So, consider buying the home from her. If you and your parents have the financial wherewithal, you could buy the home, bring the taxes to current, get someone to settle with the homeowners association, and negotiate with the IRS.
Then, sit down with her and walk through her finances. A not-for-profit credit counseling service (find one at the National Foundation for Credit Counselors, NFCC.org) is a great idea but she may need your steady hand to help organize her enough for an effective counseling session.
At the end of the day, she has to want (and welcome) your help, not just your money. And, if she doesn’t, please reach out to her children and offer them some money lessons so their financial lives are more in control.
Thank you for being a fan of Ilyce’s radio program in Atlanta and subscribing to her newsletters from ThinkGlink.com.
More On Dealing with Financially Irresponsible Family Members
When No One in the Family Wants to Pay Property Taxes, What Can You Do?
Should You Hire a Family Member to be Your Listing Agent?
What Happens to Your Taxes When You Rent-to-Own to a Family Member?
Should a Family Member Be Your Realtor and Charge Commission?
How to Buy Out a Family Member’s Share of Investment Property
What’s the Best Way to Help a Family Member with a Private Mortgage?
What’s the Best Way to Transfer a Home Title to a Family Member Who’s Been Living in the Home?
Living within your means requires a lot of discipline. This is an immediate gratification society. As you rightly pointed out, “she has to want” to change. We must build character first before we build or buy our home. Most probably, she may declare bankruptcy and be done with it. There is no shame attached to bankruptcy or getting hand out. This has to change.
Ilyce, I too enjoyed your radio show in Atlanta.
Yvonne:
Thank you so much for letting me know. I love doing radio and I do miss having a weekly check-in with my listeners. One of my goals for 2020 is to launch a podcast where listeners can ask questions the way they used to call into the show. I hope you’ll continue to tune in and sign up for the newsletter in the meantime.
Best,
Ilyce