Our kids are fortunate to be growing up in the most progressive and exciting time in history. Sadly, the very culture that offers them the world is also perpetrating this lie:
You are entitled to have everything you want even if you don’t have the money to pay for it. It’s not a problem. You deserve it. Get it now and you can pay for it later!
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There’s a huge consumer-credit industry out there planning to give your kids their very own credit cards—personal passports into the abyss of consumer debt. This will not require your permission or approval, something that one reader is experiencing first hand.
Dear Mary: My daughter who is in college got a credit card and now she is in over her head, unable to pay what she owes.
She works part-time and makes a very small salary. With the high interest and late fees, the balance is now over $2,500. I will have to step in and handle the account.
How can I negotiate with the credit-card company to settle for less? I don’t know how she got this card on her salary but she kept quiet about not being able to make the payments until we started getting collection calls for her. I appreciate your thoughts and expertise. Millie
Dear Millie: Honestly, I doubt very much if anyone will speak with you at customer service because you are not on the account. If your daughter wants to add you to the account, that might be an option. And I’m sure the company may welcome that, particularly if they’ve had a lot of trouble working with her.
Credit-card issuing companies give young people who are enrolled in college outlandish lines of credit because they know parents will rescue their over-extended kids and not just one time. Recent data and a variety of studies indicate that parents who bail a kid out of credit-card debt once are far more likely to do it again!
May I step in here with some unsolicited advice? Don’t do it. Don’t bail her out even if you feel you can afford it.
Unless your daughter has to suffer the consequences of her actions she will not learn. Even if you were to bail her out now, I predict that within two years she will be $5,000 in credit-card debt. Unless she does the hard work to repay her debt, she will not learn from her mistake.
You don’t want to see bankruptcy and/or divorce in her future but that’s exactly where she’s headed if this problem isn’t addressed now.
For parents in your situation who cannot be deterred from performing this kind of financial rescue, there is something monumental they need to ask themselves: Can we afford it?
Frequently, I hear from readers who are facing their own financial problems—often a result of trying to help their kids. For certain, parents should not even think about paying off their children’s debts—or co-signing a loan—if they don’t have a sound retirement plan in place for themselves.
Unless you have your retirement on track, then to me, that’s the end of the discussion. Retirement pensions aren’t what they used to be. Social Security is not going to provide the same kind of income that previous generations had. No one is going to be there to help you.
As painful as it will be for you to step aside and not rescue your daughter, this could become a valuable maturing process to allow this child to become a responsible adult.
Your daughter may have to drop out of school to go to work full-time. If she’s really interested in getting an education, she’ll be back.
That may sound harsh, but she has to understand how unacceptable this is and that no one is going to bail her out.
Last, make sure you are ready to offer lots of emotional support and encouragement. And it wouldn’t hurt to have resources handy when she is ready to accept help.
My first recommendation would be the National Foundation for Credit Counseling. Oh, how I respect and support this fine organization, which has been around for many years—certifying Consumer Credit Counseling Services (CCCS) offices in nearly every city across the country.
I would suggest that she go to NFCC.org to get in touch with a qualified counselor. After an initial interview, should she be accepted into a debt management program, she’ll get invaluable support, reliable guidance, and excellent financial education, too. Credit counseling from NFCC is like having a personal trainer for your finances.
Between your daughter’s debt and the hard work ahead as she gets out of this mess on her own, she will mature right before your very eyes.
If she’ll read a book, I can recommend some good ones, too 😉 !