Dear Eric: I got a good job, started making good money ($55,000 to $81,000 per year), and moved out. My parents and two brothers, who live together, keep asking me for help with expenses and the mortgage, which is now owned by a lender.
They’re afraid of losing their house. Their rent is $8,500 per month. They’re waiting for interest rates to come down so they can pay less. They also own a condo that they’ve been trying to sell for $1.6 million, but no buyers are offering this much. One offer was $1.3 million.
They hope to use the money to buy their house back and pay off their debts. I don’t understand how they could remortgage their house to buy a condo, only to have to sell the condo to re-buy the house.
I’ve been reluctant to help because I’m saving up for buying my own place. My parents say when they’re old and don’t want the house anymore, I’m entitled to one-third of it. So, if I want a share of the house, I should help them try to keep it.
They also want me to move back in and pay them rent because then at least I would be getting some of my money back when they pass the house down to me.
I personally don’t care for the house. I’ve been helping with $500 to $900 a month, and I pay for one of my brother’s expenses once in a while because he’s a minor and I feel bad for him. Should I keep helping them with rent? Honestly, I can’t keep it up every month.
– Homeowner Hassles
Dear Homeowner: This isn’t a financially feasible plan for you or your parents. Or, as I like to say, the math ain’t mathing. Back of the envelope calculation time! A common rule of thumb for affordable rent or mortgage is that it should be equivalent to 30 percent of your gross earnings. (Caveat: this “rule” was developed in the late ’60s in a different financial landscape and doesn’t take into account major monthly expenses like student loan payments or childcare or retirement savings, not to mention the cost of living where you are.)
Based on the range you provided, your affordable rent is, very roughly, $1,375 to $2,025. If you’re paying $900 to your parents for their rent, you see how little is left for your own rent. How are you building a secure financial foundation?
Families often pass down bad money management practices. It’s important that you avoid whatever parts of this “inheritance” that you can. There’s a dizzying circular logic to their plan that’s also complicated by their refusal to take less than the asking price for their condo.
If things are so dire that they’re taking a quarter of your post-tax income to stave off financial collapse, it’s time for them to sell an asset. That’s, in part, what assets are for!
Your parents should seek help from a debt counselor right away. It is not too late. But this isn’t your problem to solve. Moreover, while it’s a lovely gift to pass on property to another generation, the way they’re framing it for you feels more akin to a pyramid scheme. You have to put money into something you don’t want in order to (hopefully!) get money out at a later date? It. Ain’t. Mathing.
Have a sit-down with your parents and set a clear boundary that’s based on your financial reality. Your budget isn’t secondary to theirs. While there are ways that you can help them out of this jam, they need to make use of professional services, which are often available for free or little cost. Depending on their debt situation, they need to figure out their own priorities.
Dear Eric: Initially, in my advancing years, I resisted younger persons’ expressions, such as ” my bad” for their apologizing for making a mistake, but I finally realized language changes, that’s life. And I eventually grew to like “You’re welcome” being replaced by “No problem.” The problem is, sometimes “No problem” as a response seems inappropriate, implying instead that there was indeed a problem.
I love a younger person’s “No, you’re fine” response to an apology, so it’s not only the circumstance that a younger person expresses whatever sentiment differently. Am I wrong to sometimes view the “No problem” response as a problem?
– Some Problem
Dear Some: I love that you’ve embraced language’s fluidity! I agree that on a semantic level “no problem” doesn’t quite jibe with “you’re welcome”. Personally, I’m weirdly cool with “no, you’re fine” to which I always want to reply “no, I’ll tell you I’m fine!”
Words hit us all differently, based on where we are at the moment. Try to hear “no problem” in the spirit in which it’s mostly delivered: the utter absence of any troubles, worries, or “bads”.
(Send questions to R. Eric Thomas at eric@askingeric.com or P.O. Box 22474, Philadelphia, PA 19110.)
