Planning for the Unpredictable

After reading J. Money’s post about what it means to “have to” use your credit card, I was reminded of a funny little habit I formed a few years ago when I realized my parents were drowning in debt.

There’s always a backstory with me, isn’t there. In this tale of fiscal misery circa 2003, my mom’s car was breaking down every week and I was worried that it was going to do so in a way that would land her in the hospital. So I bought her a really good used car for $9K, and the day before the deal was to be done, she said, in a trying-not-to-sound-humiliated voice, “I can’t cover the $300 registration and fees.” So the morning of the transaction, I felt like death in a pale, sweating, cramping kind of way – but took a housecall request because after $9K, I didn’t have another $300 to spare and that client would put me over the top. Afterwards, my mom and brother came into the city by train, picked up the cashier’s check and some cash, and went without me. I spent the afternoon cuddled up with the toilet, except for the hour I spent giving a massage to a former NFL tight end (sidenote: hottest name every for a team position). I normally would have declined that appointment too, but I had $20 left in my pocket and $1500 rent due in less than 10 days. I was scared.

There’s a second part to this story, which is where I got burned by not knowing the cornerstone of Suze Orman’s money-relationship philosophy: You don’t solve money problems with money. When I had tried to negotiate my mother’s credit card rates down and failed (only one out of six would budge) a few months earlier, I moved a chunk of her 24% Discover card debt onto my prime+1% Bank of America Visa.  I give you one guess as to how she paid for the $3500 of repairs to the dying car. Then a few months after the used car purchase (which I made sure came with a transferable warranty), I successfully talked her into declaring bankruptcy, which of course did not discharge the $5K balance transfer in my name. On the plus side, it has been her only debt for the past 4 years, and it’s down to about $2K. What an annoying lesson to learn.

Backstory over.

Even before I got into the whole 3-months-of-expenses-in-the-bank thing, I started making sure that I always had enough money on hand to cover whatever my most expensive emergency would be. I didn’t (and don’t) own a car or a home, and medical bills can always be negotiated or paid over time. I came up with one thing: a last-minute plane ticket to Colorado should anything happen to my sisters. That can run anywhere from $350 to $2000 depending on the season. And since, until 2 years ago, my mom didn’t have an Emergency Fund, mine had to be big enough for two because in a pinch, if there was only enough money for one to go, it would be just her.

Wow, the backstory was WAY longer and more interesting than the actual story.

And PLEASE don’t think “What a wonderful daughter/sister you are”. The above is an example of my doormat tendencies. It’s also a micro-example of what can happen when you get into the habit of bailing others out (federal government, take note!). The one good thing to come out of all this is that my family realized how financially irreponsible they were when they saw how “easy” it was for me to come to the rescue. I put that it quotes because it wasn’t easy by my standards, just theirs. I became an example to follow, but the lesson wasn’t cheap – for them or me. I’m just glad they were all smart enough, proud enough, yet humble enough to learn it.

That, and I now charge them 6% APY on any loans over $500. Heh.

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3 Responses

  1. I have to think “what a wonderful daughter/sister you are” because you’re able to recount that story without any kind of resentment.

    I have bailed certain family members out multiple times, and the resentment has grown into a giant ball… to the point where I can’t look at them or hear their voice without getting angry.

    I guess eventually (when my relatives come to the same realization as yours – that they’re financially irresponsible) my resentment will dissipate?

  2. I agree that it’s not a great thing that you bailed your mom out of her car issue and took on her debt in your name.

    I guess its good if it made anyone sit up and take notice that it doesn’t take a 6 figure income to be financially prepared!

  3. The reason I don’t feel resentment is that Mom never asked for the car. She wouldn’t even hint at such a thing – no one knew I was capable of cobbling together that kind of money on 2 weeks’ notice. Remember, these are people who could barely pool $900 amongst them all. I did it because I really felt that her life was at risk (and I’m not a worrier by nature).

    My ability to do that “woke up” everyone in my family to their own financial shortcomings – like Danielle said, some people need to see that it doesn’t take a 6-figure income to do things like a buy a car with cash.

    So I still feel good about the car purchase, but yeah, transferring her debt into my name definitely makes the Top 5 list of Dumb Money Moves I’ve Made.

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