Parents have lots of debt and no savings

[meesh1070]

Hi all, I’m looking for some outside perspective and advice regarding my current situation. This is going to be a bit long.

I’m 28 y/o, current take-home pay is ~RM4.5k. I have a net worth of RM246k (includes EPF, ASNB, StashAway, stocks, PRS, FD & money market funds) and no current loans.

Monthly savings is RM2.4k which includes savings for retirement, potential house, sinking fund, general savings and investment. Monthly expenses is around RM1.5k to 2k depending on the month (this includes giving RM700 to parents).

If I just had myself to take care of, I think I’ll be okay. The problem is that my parents are terrible with their finances and have a lot of debt and no savings. While they haven’t directly asked me to start funding their day-to-day expenses (and their retirement), I know it’s inevitable, seeing the current situation.

I’m still living with my parents and they still owe the bank almost RM200k for our current house. There are other debts on top of that, but I don’t know the full details, I just know it’s a lot.

On one hand I feel like I should know so that I can perhaps try to plan for the future (since the burden will very likely fall on me), but on the other hand I don’t dare to ask because I don’t want to open that floodgate. My philosophy so far has been “if they don’t ask me to contribute directly, I’ll pretend I don’t know” because I know whatever I earn will never be enough to cover their monthly repayments for their debts, in addition to daily living costs.

My mum is still working but earns less than me, while my dad has been out of work for a long time and is essentially retired. Both are in their early 60s and my mum is depleting her EPF very quickly and once that runs out and she stops working, they’ll be completely reliant on me.

My dilemma is this: I can’t change their debt or spending habits, and the best I can do is provide a monthly sum as “rent” since I’m living with them. I feel like I definitely should increase the amount since they’re struggling and personally I’m in an okay place financially (I think), but at the same time, they’re so bad with money that I’m afraid an increase will mean they will simply waste it - and tbh, it makes me angry to see the way they’re still so careless about spending when they’re drowning in debt. I suppose I can pay for some bills and debt directly, but I don’t want them to wrongly assume I can afford it easily.

So, I feel it’s better for me to hold on to whatever extra money I have and build my savings and investments so that I’m in a better position to support them when the time comes. Cutting them off completely is not an option, but I also don’t want to enable their bad decisions.

Any advice? Your perspective would be much appreciated - I’m too deep in this to see it objectively. Thank you for reading!

 

[eng]

@meesh1070 Call a family meeting and ask them point blank what they plan to do with the debt. Housing loan perhaps you can help since you are staying there.

If you are willing to help on their other debts, tell them it has to be on your terms. Similar to how the IMF bails out broke ass countries. Your money, your terms. No compromise.

 

[meesh1070]

@eng Discussions with my parents almost always end in arguments and everyone getting angry with nothing getting resolved, but yes, I know I need to bite the bullet and have that discussion. I can’t afford to pay the full monthly instalment for the housing loan, but can contribute some amount.

I find it difficult to assert myself because I’ve grown up with the “I’m your parent so you listen to me” dynamic, but I know I need to break out of it.

 

[amoulton]

@eng Also if the father has no sickness and is fit for working, it is better to ask whether he can work.

 

[babies4me5]

@amoulton I'll be upset if my son asked my to work at McD instead of letting me sit on my couch watching netflix all day

 

[joep222w]

@babies4me5 So upset.. all joking aside, I'd be honored to have a kid like that, so mature and responsible

 

[7iceman7]

@meesh1070 My mother is similar, she likes to splurge whenever we come across the pharmacy. But she had the initiative to work. She does grab despite being in her 60s, earns a small sum but it's enough to pay the internet bill and her own hire purchase and all her goodies at the pharmacy. I forked a lot of downpayment for her bezza but it worked wonders. She has been self sustainable ever since and it definitely repaid overtime. Mentally in the right place too.

 

[historyismypassion]

@7iceman7 Damn bro your mom is very healthy. Such a blessing for sure I tell you.

 

[meesh1070]

@7iceman7 That’s great, glad it worked out for you!

 

[grampster]

@meesh1070 Do you have siblings? That might mean there’ll be someone else to be shoulder the burden of the loan and responsibility if necessary.

I have the exact same take home pay but I save way lesser, only 20% of that (purely FD) but the rest goes to investments, ASNB, Bursa and my car loan (high instalment but short tenure). My parents aren’t exactly the best at investing too (mostly just buy and the stock gets delisted) but they haven’t bought much so far. Lucky enough that they trust me with their money so I move majority of that around different banks with the best FD (can do online now so it’s convenient), help them with EPF contributions or see what are the safest investments at that point of time. They also gave me some money to invest and I guess I’ve been doing ok in Bursa? I mean the market is terrible but my profits that I have cashed out are still covering my current paper losses.

In your case, I think it’s best to talk it out with them. If you’re the only child, I don’t see why you can’t be the one managing their finances. As for their high expenditure, are there habits where they spend a lot on monthly? I’m sure you can work something out with them. After all, you’re their child (ok this is not meant as what we call “moral kidnapping” in Chinese because you’re obliged to help but rather you’re the most qualified to help them in this situation).

 

[meesh1070]

@grampster I have a younger sibling who is currently not working due to health reasons, and is quite frankly very spoilt and still relies heavily on my parents for everything. Maybe at some point in the future he would be able to help, but at this point I have to do this alone.

I know I have to talk to them, but communicating with them is not easy. Will have to work on that. Thank you for sharing your own experience.

 

[followingtruth]

@meesh1070 I met a few elderly people who is in similar situation where they have housing debt even at old age. Their thought process is when they pass on, the house will be inherited by a child or more. The child can decide to sell the house and still earn a profit of sorts. If the child decides to continue staying in the house, the child will only pay the balance debt to own the house.

But these elderly are staying in prime locations such as PJ and Subang Jaya that selling a house and paying off the balance debt will still fetch a good profit. And another factor to consider is the inheritance complexity if there are other siblings involved.

 

[meesh1070]

@followingtruth Yes, that’s the same thought process as my parents. They felt that they needed to buy a house even though they couldn’t afford it so that they have something that’s theirs which they can pass down.

 

[resjudicata]

@meesh1070 People always say having lots of money strains relationship between family members. But this post only strengthens my belief that the opposite is true. It comes from my observation rich families are generally more loving towards one another and poor families somehow care about friends more than family. It is always shocking to me how my poorer friends treat their parents or siblings like strangers especially when money is involved.

 

[meesh1070]

@resjudicata Thanks for sharing your perspective. I’d like to offer a potential explanation for your observation, based on my own experience. In some poorer families, there’s likely to be a lot of stress and conflict because of lack of money, which leads to resentment and general unhappiness for everyone. When you can’t turn to family for emotional support, you’ll turn to friends. It’s easier to be more loving towards family when they’re not the source of your constant stress

 

[elenamaria_9]

@resjudicata IMO siblings who are married are a different story. Basically, you are actually dealing with a stranger.

 

[resjudicata]

@elenamaria_9 r/technicallythetruth if two long lost siblings married each other

 

[theologybuff]

@meesh1070 Being in debt or bankruptcy won't stop them from receiving care and daily necessities from you, or forbid them from living with you in your home. Their debt won't transfer to you. So basically get ready to get a home of your own (or buy their home from them, with name transfer and all) and go independent. If their debt goes off the rails and they get screwed financially, they can move in with you and you can give them pocket money to spend, assuming of course they don't take from loan sharks, who will then harass you instead.

 

[meesh1070]

@theologybuff This was what I was kind of leaning towards when I wrote this post, but I wanted to hear other opinions. If possible, I would like to live on my own while still supporting them financially but that depends on whether I can afford it with my salary. Thanks for your comment.

 

[rickinpearland]

@meesh1070 due to my personal experience, I'd cut my parents off. My mom is now demanding for money for "savings", but she buys cigarettes and drinks. I am an asthmatic and I hate smokes but she doesn't care. she is also financially alliterate. I'd rather put my money somewhere else than give it to her.

i don't know your relationship with them, so my advice is to either talk to them about their situation and help them with conditions. Since you have ASNB, I am pretty sure your parent can open an account too. Tell them about it, maybe they'll get motivated to save more.