I need some help to help my parents

jimmy9999 · 25 January 2005 at 9:16PM

I originally posted this last week but it was lost during the forum software changeover. I did not get to read any replies so I am posting it again.

I have been a regular reader of these forums. This is my first post and I am writing to ask for some advice. It is not for me but for my parents. I think they have debt problems but they do not appear to realise and/or admit this.

They have had the mortgage on their house for 23 years. However, unlike a lot of people they still owe £35,000. This is more than the purchase price (£28,000) all those years ago. They recently extended the mortgage to 2012 by which time my dad will be 64! Worse still the fixed rate deal with the Halifax finished in July 04 and they still have not arranged a new mortgage. So since then they have been paying the SVR which I think is currently 6.75%. I have tried many times to get them to change their mortgage. Unfortunately I have not had much success. My dad usually makes excuses and seems to think the current deal is good and my mum says it is not down to her.

As they are in their mid 50s they only have around 10 years left to pay it off before they retire. If it was a lower interest rate they could pay it off quicker. But they don’t seem to get this bit.

They also have quite significant credit card debts.

£8000 on Virgin (interest free balance transfer from Barclays and Capital One). After much persuasion they managed to do this.

£10,000 on Mint and Egg. This was interest free but finished 2 months ago. Costing a total of £110 per month in unnecessary interest.

£600 on Barclaycard. Did a balance transfer 2 months back. However, they have decided to spend on it again. Currently a massive 18.9% APR. I expect this will be a few thousand again by the end of the year.

Current account –£2,300. This bobbles around overdraft limit and regularly incurs paid referral fees of £25 a time. Last February I got them to clear the overdraft by transferring it to Egg.

Roughly they are in debt by £55000 including the mortgage. This is approx the same their combined yearly income.

Before balance transfer deals were commonplace my parents transferred the credit cards and current account debt to the mortgage and then spent on the cards again. This is why the mortgage is still so large. I do not think they realise they cannot keep doing this forever. One day they will have to pay the money back.

I bought my dad a copy of Martin’s book for Christmas but he has not found the time to read it yet. He prefers to play hearts or command and conquer on the computer instead of dealing with this. Whenever I try and discuss things with my mum she gets all stressed and says it is down to my dad.

My mother is currently out of work and income is even lower than usual. She did get some redundancy money but spent it on a cruise.

There is some good news, for some reason my dad has been paying regularly into a cash ISA. He also has some share options from work. The total amounts to £6000. However, the main reason I have posted on here is I think they are about to make a big mistake and make things worse. My dad is planning to replace his car at a cost of £6000. There is nothing mechanically wrong with the old car although it is 12 years old. I recommended that they use the money from savings and shares to reduce the credit card debt. Thus reducing monthly outgoings. But they do not seem to understand. They spend first and pay later, much later.

If they avoided the unnecessary credit card interest and changed the mortgage, their current account would not be on the overdraft limit all the time and the money spent on £25 bank charges could go to paying back debt.

The bottom line in all this is that I don’t see my parents having a happy retirement (which they deserve). Instead of going travelling etc they will still be paying back lots of debt.

Any advice on how I can make them realise the seriousness of the problem and help them get out of debt is much appreciated. It is currently getting me stressed!

Rafter · 26 January 2005 at 1:10PM

Nice of you to be so concerned about your folks.

Total debt equivalent to 1x their gross annual salary is not to be sniffed at but is a lot better than many situations people find themselves with.

Does your dad have a good pension scheme?

If they are planning to use the equity in their house to fund a lavish retirement they may be in for a shock.

If he is planning on state pension alone their lifestyle will have to change dramatically in 10 years time: No car, no cruises etc etc when they will still have many years of healthy retirement ahead of them hopefully.

My only suggestion is that you get them to remortgage and convert the interest earning credit cards to an unsecured loan, rip them up and make sure they don't apply for any more. At least that way the debt is reducing over time. You can of course continue to shuffle the debt to 0% offers if their credit rating allows.

Good luck.

R.

Spendless · 26 January 2005 at 2:38PM

Have you asked them how they would manage if the other died suddenly?

aliasojo · 26 January 2005 at 4:14PM

MartinsGroupie (*cough)

has a good point.

There's no point in trying to offer specific advice to your folks if they don't think there is a problem in the first place. You need to make them start to think deeper and a remark about death and the future may have the desired effect.

They have obviously been going along on the same route for some time and it has suited them up until now.

As you say though, they cannot live like this forever. Your first problem is trying to get them to see things from a different angle.

Parents are notorious for doing the best for their kids, but are guilty of letting things slide for themselves. Maybe you should consider asking them for help as a way of starting the ball rolling. You could always invent a ficticious debt problem and ask your Dad what he thinks? That may open the door to further thought and discussion?

After sorting out your 'problem' he may then start to think about his own problems. You could point out that you don't think your Mum would be able to cope with things as they are at present if anything happened to him?

I can imagine it's a frustrating situation for you, but unless they want to change the way things are, then it's not going to happen.

Good luck, I really hope you make some headway with this.

jimmy9999 · 26 January 2005 at 7:42PM

Does your dad have a good pension scheme?

He does have a pension scheme but he hasnt checked the value of it for ages. My mum has actually told him to check this one (many times).

Have you asked them how they would manage if the other died suddenly?

Not yet but could try that. They have cover to pay the mortgage. Not sure about anything else.

You could always invent a ficticious debt problem

I dont think they will believe me on this one because apart from my student loan I dont have any debts

. They know I am 'careful' with my money.

Thanks very much for the advice so far.

elona · 2 February 2005 at 10:28AM

I was really touched by how much you feel responsible for your parents.

Unfortunately while your dad has his head in the sand it will be almost impossible to do anything.

Usually in a couple - one is a spender and one a saver - but it looks like both your parents are spenders.

I agree with you that it is important to take charge now before things get worse but I doubt that your parents will listen to you.

Is there an older family member that they would trust?

Could you put their name up for a money makeover?

It scared me reading this because I would hate to put any of my teenage daughters in your position. ( I have not done any of the things your parents have - honest)

Good luck

Queenie · 2 February 2005 at 11:15AM

If your Mother

... gets all stressed and says it is down to my dad.

then it's my guess that she IS concerned about her financial status and is merely "casting the monkey" onto your Dad; especially when you also say:

He does have a pension scheme but he hasnt checked the value of it for ages. My mum has actually told him to check this one (many times).

So, there is the nub of it and the angle to use! You need a man to man with Dad and explain that, should anything happen to him how will Mum cope with the finances? Be sexist if necessary! (How on earth will poor Mum cope sorting out the mortage/life insurances/pensions etc., etc., women aren't traditionally savvy in those areas, blah blah blah). If he enjoys being on the computer, maybe, as well as Martin's book, you could have bought him a money programme such as say, Microsoft Money, where he could do forecasts and look up the internet links within the program etc.

Of course the other thing is, no matter how commendable your concerns, they may well feel it is none of your business; the more you try to tackle them about it, the more you may be pushing your Dad's head into that sand! Equally, there could be a reluctance on Dad's behalf to take your advice because he envies your own responsible attitude towards money and it makes him feel bad that he isn't as pound proud!

Reverse tactics? Try the "Wow, if you have £xxxx and invest it for xxx you could EARN xyz" He may be tempted to say "Can't afford it/where would I get THAT sort of money" ... then, KERCHING, you can then give him your ideas on creating that amount by the methods you've been trying to tell them anyway.

The thing about advice, in any form, is this: we take it best when we've asked for it! Unsolicited advice usually falls on deaf ears.

Always remember, "You can take a horse to water, but you can't make him drink!"

I do wish you all the very best because it's clearly something you worry about and want to help them with.

Queenie · 2 February 2005 at 11:20AM

PS: I'm very willing to adopt you, then you can sort out my finances

bert · 2 February 2005 at 5:12PM

Sounds like they have a similar mentality to myself. Why suffer at this stage in life cutting back so much to make payments to lenders. It makes more sense to keep defering payment, enjoy life, and wait until you die. I don't have a clue about inheritance of debt, but if it is your responsibility to pay of your parents debt when they die that is very selfish of them and surely a reason for them to at least make a start to minimising debt - for the sake of the family tree.

Maddie · 2 February 2005 at 8:55PM

Hi Jimmy9999

Sorry to hear about your (parents) situation, i can emphaphise to an extent. My parents are always up to the limit on their overdraft, several loans, often not paying bills until the final warning etc. They never have time to do anything about, always something more important to do.

Also it seems that as soon as the situation gets a little better, more money gets spent. They'll say "I should be able to afford it", meaningless, if you can't afford it you can't afford it, if you sorted out your finances you probably would be able to afford it!!!

I also only have student loan debt (0% overdraft repaid on monday when I got my pay cheque

), currently don't pay any rent to my parents and have not paid back any rent etc that they paid whilst I was at uni. They do not expect this, but I will always see it as money I owe them. Thing is, whilst I would save the money, they would probably just waste it, so in a bit of a predicament about this too. (sorry went a bit off topic!)

I have managed to improve a few little things, but it is a slow and tedious process. We are now on Talktalk and got quite a lot from them for referring others, also my dad has got an egg card with 0% interest on. Try suggesting little things every now and again, rather than making a big deal of it. Pick interesting things out from Martin's book for your dad to read, the whole book at once might be a bit much for him.

If you live at home, you can try to free up time for your parents by helping with chores (im not implying that you dont do this already

), then say "now you've time to look at this great remortgage deal" etc

Sorry that I can't offer much help, as I've not been very sucessful myself. Everything is so complex in my family, nothing is done as it should be

Good luck, and please share any sucesses and tips!

margaretclare · 3 February 2005 at 6:01PM

Hi Jimmy

Well, this is a difficult one. You are more worried about your parents' financial situation and future than they are themselves!

They seem to have got stuck into a long-term rut and see no need to get out. Hard to see what you can do!

How much are they paying each month on the existing mortgage - will they be able to afford it once retirement kicks-in? Have they obtained a pension forecast from The Pensions Service - do they know what level of pension they'll be on, will your mum have one in her own right or not?

I can't understand your mum's very outdated attitude and as someone has said, what happens if dad suddenly drops dead and she can no longer say 'it's all down to him' - it won't be then, will it? I've heard so many sad stories of women suddenly left or widowed who hadn't a clue about anything to do with the house, finances, anything. Very old-fashioned idea, should have gone by now!

Not much help I know, sorry!

Margaret

I need some help to help my parents

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