Thursday, February 18, 2010

The difference age makes

A friend and I spent some time discussing a proposal from her parents the other day. Her parents want to cosign an adjustable rate, $0 down mortgage on a condo for her and her sister. The parents will subsidize the mortgage up front, keeping her rent at it's current level but in much swankier digs.

Five years ago when we were just out of school I would have thought this was a great setup. I would have been envious. Now I shake my head at her parent's denial and try to talk her out of it.

The problems are numerous- adjustable rate, when rates are so low? Why oh why would you do that??? I'm guessing it has something to do with crazy factor 2, $0 down. Issue three- she and her sister don't really want to live together. They both like the lifestyle they could have together, but actually being together for the past few weeks they've reverted back to their teen years.

The greater issue is my friend has a shopping addiction. She has just under $5,000 in credit card debt even though her parents paid off her balances this spring to help her start fresh when she finished grad school. I cannot begin to fathom what you would spend $5,000 on in 8 months.

Her rent is pretty low, she has a full time job and has since picked up 2 side gigs to make some extra money. She understands that she has a problem. But every time she struggles her parents try to swoop in. Partially because they love her in their own crazy way and partially because they're controlling. I can't count the times where they've offered a car, apartment, trip, etc to get her to do something their way.

On the phone I told her that I love her and will support her in any healthy way that she needs. I also emphatically said she's not ready for a mortgage. Until she can handle her day to day bills responsibly taking on a 30 year commitment just doesn't make sense. She needs to put in the work to get rid of her debt on her own. More importantly she needs to face her addiction to keep from running up more debt. Then she can think about saving for a down payment.

I'm thinking about getting her a PF book to help her on her journey. Dave Ramsey's Total Money Makeover comes to mind, but can you think of anything better?


me in millions said...

You can't help your friend unless she actually wants your help. It doesn't sound like she is really ready to face the facts. Be careful!

Aaren said...

I agree with MIM. But I would still give her the book, and then step back and let her problem be her problem. I can imagine what one person could spend $5k on in 8 months. Heck, I've done it multiple times over. I got a new card worth $2k in law school and maxed that puppy in ONE MONTH! My parents paid off $11k for me when I graduated, and told me in no uncertain terms they would not be doing that again. And I haven't asked, and they haven't offered.

Sometimes we need to struggle to break the habit. Your friend picking up 2 extra jobs shows she might be ready to make that push, but her parents are a hindrance. Don't try to fight them, just do your best to help her, and if she appears ready to take her parents up on their offer, then there's not much you can do. I wish you both well.