Parents have lots of debt and no savings

[meesh1070]

@rickinpearland My relationship with them isn’t that good, I keep most things to myself. They’re also financially illiterate and as far as I know, have never planned much for the future. They always expect that something will work out, which is what stresses me out.

I’m sorry to hear about your own situation, do take care of your health.

 

[fndnstne]

@meesh1070 I think your current situation is pretty well balanced already. Your RM700 monthly is sufficient.

Just continue to grow your savings and investments, strive to earn more.

I know, you're probably feeling this sense of impending doom but it may not be as bad as you think.

When you get higher salary, maybe increase your contribution but you have to make it clear to them that this is all you can afford.

 

[meesh1070]

@fndnstne Yes, I’m definitely feeling the sense of impending doom. I’ve increased my contribution as my salary increased over the years and will continue to do that in the future. Thanks for your comment.

 

[hikairop]

@meesh1070 I think you need to have a serious discussion with yourself. What do you believe in? How do you view independence? Does a child bear responsibility towards their elderly? If so, under what circumstances? Am I equipped to care for them? What price am I willing to bear for the purpose of their livelihood?

Questions that are philosophical in nature but provides great clarity towards your financial responsibility towards your parent.

My parents raised me with great level of independence. Islam doesn't teach me to forgo self responsibility purely due to old age. But Islam does teach me to care for the elderly due to the health and physical challenges faced and to provide good care to your parents. I hope these lessons help you as much as it has helped me.

 

[meesh1070]

@hikairop I know I want to live away from them because I value having my own space, but will still provide for them financially. But that doesn’t mean I want to contribute to them blindly and repeatedly enable bad financial decisions. I never want to end up in their situation and so I need to find a way to balance things.

 

[eng]

@hikairop What a butt load of horse manure

 

[tkchapin]

@meesh1070 I think talking to your parents is a good start but whether it will change them or not it’s hard . Either way they may not have the capacity to pay due to their age and the size of the debt .

Then the effort should be best focussed on growing your income . How can you grow your income either by 20% or 30% or more every few years .

One way is by changing jobs which may not be easy now due to the economic condition

Second is to look at career growth at your current place . Have you talked to your boss on opportunities to move up and the possible income growth that comes with moving up . Consider planning for a promotion once every 2 years or 3 years to facilitate your income jump .

Third is by doing a side gig for additional income . This may need some time to materialise but you may consider to start now .

If they have credit card debt maybe consider they shift it to AKPK as one choice .

If you have a house loan and want to minimise interest can consider to refinance the credit card debt into your house loan . That will extend your payment and lower your expenses as credit card have higher interest rate .

If you expect to own the house subsequently it can be said you are paying it off this way . This could give you a clean slate and they need to manage it better going forward .

 

[meesh1070]

@tkchapin Thanks for your detailed reply, lots for me to consider. I think my best bet now would be to increase income, which I have managed to do every 1-2 years so far. Currently trying to expand my skill set at work by taking on different projects; I hope that goes well.

I’ve tried a side gig for around 2 years during MCO period but was quite draining for me and was not really what I want to do for long term, so I decided to stop so I can focus on being better at my main job and hopefully get promoted faster. But the idea of a side gig is definitely at the back of my mind.

 

[ac96]

@meesh1070 All i can say, speaking from my own experience, not all parents deserve to be parents.

 

[ineedadvice101]

@meesh1070 Don't avoid the issue until its too late. Have a serious discussion about finances. Work things out. You say your parents draining their EPF, better step in and stop the drain now. House loan still not paid off now, work out a plan.

Make it clear to them what you are willing to pay for their upkeep in the future.

 

[meesh1070]

@ineedadvice101 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.

That’s why I’m now trying to determine how much I can afford to pay without sacrificing my own planning so that I don’t land myself into a similar mess in the future.

 

[ineedadvice101]

@meesh1070 In that case maybe just make a shared savings account with them and put money in it every month that you can part with. They can do whatever they want with it. Everyone happy.

 

[meesh1070]

@ineedadvice101 I’m currently giving RM700 but thinking to increase it. Not sure how much to increase yet. Anyway, thank you for taking the time to share your thoughts, appreciate it.

 

[smilingbluebug]

@meesh1070 This is not an Asian way of thinking, but the phrase - You can't set yourself on fire to keep someone else warm - is something you could think about. You can't help your parents if you don't build a secure financial future for yourself. Not asking about their financial situation won't help if you will be part of their financial situation when they run out of money. It won't be easy, but you need to look at all the finances if you plan on helping support your parents so that you know what you are getting into.

On another note, do some research into investing into ETF's. It's a long-term lower-risk investment strategy to build a nest-egg for retirement, and the sooner you start, the better.

 

[meesh1070]

@smilingbluebug I agree with you. If I don’t manage my finances properly, I won’t be able to help them, and then we’ll all be in trouble.

Which broker do you use for ETFs and which ones do you buy?

 

[smilingbluebug]

@meesh1070 I'm not based in Malaysia at the moment and my spouse is not Malaysian, so they are handling the ETF's investment and I have the liquid cash for our emergency fund in ASNB funds. So I'm sorry I can't help there. I just try to advise as many as possible to look into ETF's especially when young as we only discovered it in our mid-40's so it's a bigger struggle to invest enough each month.

 

[meesh1070]

@smilingbluebug I see. Thanks for your input and all the best to you and your spouse!

 

[jodi1028]

@meesh1070 Sharing my experience, my parents almost became homeless when my dad's investment gone bad and we could not afford a 7K monthly mortgage anymore with my fresh grad income of 2.5K. I think you are not in too bad position since you can continue the mortgage in any case that your parents can't pay anymore.

I used to feel frustrated that my money is not "my money" since I had to support them for years, till my dad suddenly passed away and I found out that he only had 2 rm in his bank account but he never asked more than the 1K I give him every month. That broke my heart, and immediately I felt super guilty that I felt burdened because of measly money. Life is unpredictable. If your parents are not using you and really just try to get by, just be patience, You'll get to enjoy your money eventually, your parents are not going to live forever. Just a different perspective to consider.

 

[jonis]

@meesh1070 I'm facing similar situation, albeit with a fresh grad salary so takeaway are little to none.

I made a deal with them to pay all the debts within the next few years, in return I'll get all their assets. It's a few millions worth of assets to own so it's kinda worth it in the long run.

 

[meesh1070]

@jonis That’s one way to look at it and for me to consider. Thanks for your comment.