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Should son go to college or pay off credit cards?

Dear Dave,

My husband and I are debt free, except our home, thanks to following your plan. However, we have a son who’s going to be 21 next month. He’s supposed to pay for part of his tuition. I also told him I wanted him to keep an emergency fund with at least $1,000 in it in case he needs car repairs or another emergency. I also warned him before he went to college not to fall for the credit card offers. The other day he left out some of his papers and I saw bills for about a dozen credit cards he’s opened and he owes about $13,000 on them. His car needs repairs and he doesn’t have the emergency fund. I asked him to cut up the credit cards and he refused. He said he wasn’t using them, which I don’t believe, and told me to mind my own business. Should he go ahead and borrow money to go back to college or stay home and work to pay off the credit card debt?

Cindy

Nashville, TN

Dear Cindy,

My kids and I have a rule: I do not fund their disobedience and stupidity. If they want to work from a smart plan, I’ll help them. If they want to go off and be stupid, I’ll still love them, but I’m not going to fund it.

Your son wants your money, but he doesn’t want your advice. You said he wants you to stay out of his business. So stay completely out of his business, including funding it, until he grows up and acts responsibly. Your son can leave college for a semester, work like crazy, build up an emergency fund, cut up the credit cards and pay off the balances or he can quit coming to you for money altogether and work a bunch of jobs trying to live on his own. If he wants to be 21 and be a man, it’s time to start acting like one.
Dave


Should we repossess our child’s car?

Dear Dave,

My husband co-signed a car loan for both of our grown children, against my better judgment. Now the older child is not making his payments. Our cars and house are all paid off, but now my husband wants to buy a motorcycle. I told him he’s already got a car payment – the car payment that the older child is not paying. I also told my husband that we should repossess the car and try to sell it. What do you recommend?

Marilyn

Nashville, TN

Dear Marilyn,

Your husband just learned a lesson from Proverbs…co-signing a loan is stupid. We all want to help our children, but there’s a reason your kids couldn’t get a loan on their own in the first place. They probably don’t have a good history of paying their debts.
In our house, we never borrow money to buy vehicles. We were blessed, after having worked and saved, to be able to offer our kids what we call the 401(Dave) program. For every dollar they save to buy a car, we’ll match it. My older daughter saved up and bought a very nice used Mustang. My younger daughter hasn’t saved as much and says at this rate she’ll end up with a really nice bicycle. However, after seeing that nice Mustang, my son is saving like a wild man and I’m almost afraid of how much money I’m going to have to match for him. He’s liable to end up with a Lamborghini.

I agree with you that it’s time to repossess the car and sell it. It’s not easy, but it will be a good lesson for this person who’s supposed to be an adult. However, make sure you turn this into a teachable moment. Explain that you’ve worked and saved and paid off your cars. Tell them that their lack of responsibility has placed this burden on you and forced you to take this action. Let them know that you will never again co-sign for a loan. On my radio program, I tell my listeners to save and pay cash to buy a car. Maybe this experience will drive home that message for your child.

Dave


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