The Moneyologist: One of our kids wants $75,000 in loans paid off — my wife says no


Dear Moneyologist,

One financial accomplishment my spouse and I are proud of is helping both of our two kids to finish college without any loans. They both worked hard to get substantial scholarships and worked while attending school. Fast forward 10- years, and in having the family “talk” about finances as we age — we are retired and in our mid-60s — we let them know that we have plenty of money and will never spend it all. We’re absolutely sure.

Neither kid has ever asked for a dime, but they have been given generous gifts over the years. We have asked them if there is anything that would help them at this time instead of waiting for an inheritance. Turns out, one of our children has substantial loans not related to student debt and an iffy profession — not always working, and not always paid well despite his best efforts at loan repayment. He would like our help. Our other kid, not in need of funds, is fine with this.

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We agreed to begin paying off the loans, and have now paid off two smaller ones, totaling $25,000. Now my spouse is backing off, regretting “telling” them about our financial situation and offering to pay loans. Despite several reasoned discussions, nothing has changed. One more thing — my health is compromised and this is something I’d like to do before I am too ill. I could simply take my own funds and pay off the loans of around $50,000, but I wondered if you had other thoughts.

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Conflicted Father

Dear Father,

I don’t know how much money you have in your bank account, but I take you at your word that you are comfortable. For now. One of the reasons people leave their children money in their will (rather than to a charity that will take care of your pets) is because they want the peace of mind that their kids will be all right after they’re gone. These are all noble intentions. They also want them to have a better life than they had and, perhaps, reach a place of comfort earlier in life. That said, different children will have different weaknesses and strengths and will have made different mistakes.

Americans have reason to be concerned about whether their wealth will last. The middle class made up just 26% of incomes in 2014, down from 46% in 1979, the Urban Institute, a nonprofit and nonpartisan policy group, concluded. The upper middle class controlled 63% of all income in 2014, up from 30% in 1979. Wealthy Americans saw their incomes and net worth grow at a faster than usual rate, while others stayed the same: 81% of U.S. households had flat or falling incomes between 2005 and 2014, the McKinsey Global Institute, a global management company, found.

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How does this all of this affect you? You don’t know what will happen tomorrow. If your son is getting himself into financial fixes and can’t get out, I commend you for helping him. But you should know that this may not change him. He may make these mistakes again. And by helping him so generously now, it could even enable his future financial folly. (Apologies for the unintentional alliteration.) What’s more, you don’t know what illness or caregiving needs you may have in the future that could cost tens of thousands of dollars for one year alone.

It’s always good to act as a team. I posted your question on Tuesday evening in the new Moneyologist Facebook group and one of our readers raised an interesting question: Does your wife know something you don’t? It’s worth considering. And even if she does not, she is trusting her instincts and believes you have gone far enough helping this one son. I assume you will deduct the money you have given him (with interest) from his final inheritance, but if this is causing discord in your marriage, or even threatens to, you already have your answer.

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Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyologist and please include the state where you live (no full names will be used).

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View more information: https://www.marketwatch.com/story/one-of-our-kids-wants-75000-in-loans-paid-off-and-my-wife-says-no-should-i-do-it-2017-03-15

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