Asked on 23 Jul 2019
I'm a 30 y/o degree grad with a mid-level job. My parents are in debt but I can't entirely help them. They refuse to do anything, i.e declare bankruptcy (they want to save face) or downgrade to a HDB. They're paying ~$4k every month to banks but are still affected by late fees .etc. That said, I'm the one covering their expenses with my salary (rent, utilities, etc). My girlfriend of 5 years understands but I feel it's unfair for her. I love my family, but what can I do from here?
Quick question - how did they amass this debt? Was it to pay for household expenses and to bring up their children?
Re: the refusal to downgrade to HDB because of a face issue - when push comes to shove, would your parents still insist on downgrading to a HDB? Maybe it would help to mention that in the grand scheme of things, the family's harmony and emotional wellbeings are much more important than 'face'.
If moving to a HDB would result in a significant amount of savings, I personally would strongly pursue that route.
Wow, what a moral dilemma.
If I were you, I would definitely draw a line. I felt that parents’ wrong decisions shouldn’t jeopardize their child’s future. Not that your parents or yourself want to end up in current situation. Unfortunately, things happen.
A suggestion is to adhere to the 20/30/50 rule. Just that the 30% on wants can be further reduced and choose to utilize it on family’s ESSENTIAL needs and expenses instead.
Have financial goals. E.g. You and your gf planning to BTO soon? Then you need to have savings for that as well.
Continue to influence and educate your parents about the urgency to make adjustments to prevent worse from happening. It’s tough to change mindset and habits. But, isn’t the happiness of family more important than ‘face value’?
Consult from professionals such as Credit Counseling Singapore or approach MSF.
Stop helping to let them understand the need to get real help.
Real help will be credit counseling bcos they have experiences w the worst of them all. If they can do nothing, u can do nothing too.
By not being a burden to ur parents is also a gift bcos u r the last line of defence if they really need food on the table daily.
If pt 2 or similar solution could not improve the insidious situation, is fated for u to cut off too.
I am speaking from living it first hand.
It's going to be hard to hear.
Don't listen to all the BS advise from people who haven't been through it. They don't know what they are talking about.
Doesn't sound like you can cover their bums. It's not your fault, remember that.
It's their shit and they were the shitheads, remember that.
Because you, especially in our Asian culture, (actually more like big brother's conditioning, but don't deviate) moreover being a son, will carry that weight on your back and will feel very bad not doing so. To the extend of robbing you of your life.
So you need to cut them off and focus on being the best version of you. If you are then successful and want to help, then do so.
It's tough because in the Asian culture, children are often expected to be the main financial support for aging parents. I would encourage you to honor your parents, but not support their bad financial decisions. That would be hurting them in the long run. So be upfront with them and let them know how much you are able to support each month and draw that line. It is up to your parents as adults to make good financial decisions that benefit themselves, and you shouldn't hold yourself responsible for the consequences of bad decisions that they make.
This is a good article that may help you make sense of it
You mention that your parents are in debt but paying $4k per month to reduce their debt. if this plan is well thought through, then just focus on this plan and avoid new debts. in the mean time, while you are shouldering the burden of maintaining the household, I hope you have done your own financial planning, including saving and investment. Remember to keep your personal finance and your parent's finance(or debt) separate. In the mean time, you should encourage your parents to pay down their debts if they have any additional cash. they need to take ownership of their debts.
I do have a few solutions, which involves unlocking many assets to service and pay down the debt.
The late fees and hefty interest will kill the OP and their parents, to the point where they are in huge debts of 6 figures and above.
But the most important thing is over here. "Face" is one thing. But if you can't service the debts, you got more to worry about than just face. Your parents will need to be able to stand in your shoes, while you stand in their shoes to find solutions to either buy a HDB, rent out the condo for cashflow to support the debt etc etc.
But if they are not listening or willing, nothing here I say can help since its implementation.
Try to get a debt consolidation from a bank to consolidate under a lower interest loan.
And please try to get them into credit counselling sessions.
Credit counselling have helped others, mostly gamblers, to get out of their debt habits. But it will take support to keep them going for the session.
Try this Debt Repayment Plan
Hope this helps.