While you never want to see your offspring suffer, it’s useful to know when you should pay off your grown child’s debt — and when you shouldn’t.
OK, so you just got the phone call every parent of an adult child dreads.
No, not “I’m in jail.”
But rather, “I’m in financial trouble, would you please bail me out?”
There are times to say yes to this question — if you have the means to help — and there are times when you should say no.
5 Questions to Ask Before You Pay Off Your Grown Child’s Debt
1. Will It Impact Your Budget Negatively?
All other considerations aside, you have to make sure your decision won’t put you in a financial hole too. Helping your kids at your own peril is a bad move. Granted, in the case of a medical emergency or if they’re about to lose their home, this will be a tough decision. However, if they need money to clear up credit card debt and helping them would put you in a tight situation — it’s best to say no.
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2. How Did the Problem Arise?
Did a sudden emergency throw their spending plan way out of balance? Or, was it sheer indulgence? Did they buy a new car when they knew they couldn’t really afford one? Did they run up their credit cards on an extravagant vacation or some other frivolity? If yes, helping them out will probably serve only to encourage them to do it again once the current problem is resolved. If they believe they can always run to mommy and daddy to fix their mistakes, you can bet they’ll keep right on making them.
3. Do You Think They’ll Backslide?
Again, having the “Bank of Mom and Dad” upon which to fall back can enable some particularly irresponsible behavior. Here, you’ll have to be frank with yourself. You’ve watched this person grow and develop from infancy. You probably know them better than anyone else does. From what you’ve observed, do you honestly believe this experience will change their behavior? Or, will your help render the problem so painless they won’t learn anything from the situation?
4. Could No Be the Best Possible Answer?
Sometimes, tough love is the best affection to provide. One of Sigmund Freud’s psychological theories posits human beings are largely driven by two basic motivations — the desire to experience pleasure and the need to avoid pain. Some people only learn and grow when they experience adversity.
Within this framework, rather than bailing your kids out, it’s more beneficial to steer them toward the tools they need to bail themselves out. This is where referring them to a credit counseling agency or a debt settlement firm like Freedom Debt Relief can be of tremendous benefit. They’ll come up with a strategy they can use to get their debt under control, and they’ll get the satisfaction of solving the problem on their own — with help from professionals.
RELATED: How to Say No
5. Are They Asking to Borrow the Money?
This one gets us back to accountability. Asking to borrow some cash to keep the hounds at bay while they implement a strategy to put things right is way different than asking you to pay their way out. With that said, if they’re asking to borrow the money, you should approach it in the same manner as any other lender would. What’s their financial situation? Can they show you a spending plan demonstrating their ability to repay the loan over a given period of time? In other words, are they approaching it responsibly?
When it comes to the question of should you pay off your grown child’s debt, most experts recommend empowering them to handle it on their own as much as possible. However, if you’re inclined to help monetarily, never put yourself in financial jeopardy to do so.